iochpe-maxion - merril lynch small & mid cap conference presentation

Merrill LynchSmall-Mid Cap Conference

Iochpe-Maxion: Basics

Two major operations:

- Wheels and chassis for trucks, buses, pickups and agricultural machinery

- Equipments for the railroad industry

Third smaller operation:

- Autoparts for passenger cars

Plants located in the São Paulo and Minas Gerais States in Brazil.

Iochpe-Maxion: History

1918: Iochpe Group started in the lumber segment

From 1978 to 1996: period of diversification in several industries followed by divestitures and concentration in the autopart and railroad equipment segments

1984: become a public company

1994: issue of ADRs level I

1998: corporate restructuring and recapitalization – Bradesco and BNDESjoin shareholders’ agreement along with Iochpe Family

2000: joint venture in the railroad equipment business with Amsted Industries

2001: divestiture of the diesel engine business to Navistar

2002 / 2004: divestiture of the steering column and window mechanismbusiness, decreasing exposure to the passenger car autopart segment

2004: Bradesco sold its stake to Iochpe Family

Shareholder Composition

Issued Shares (*)

Voting 921,429,894 34.62%Non-voting 1,740,185,376 65.38%

Total 2,661,615,270 100.00%

Iochpe FamilyVoting 75.6%Non-voting 0.5%Total 26.5%

Iochpe-Maxion S.A.

Iochpe-Maxion

BNDES ParticipaçõesVoting 21.8%Non-voting 62.2%Total 48.2%

Free FloatVoting 2.6%Non-voting 37.3%Total 25.3%

Free Float – Sept. 03Voting 3.1%Non-voting 26.6%Total 18.5%

Shareholders Agreement

(*) all outstanding

Corporate Structure

Wheels andChassis Division

(2,974 Employees)

AutomotiveComp. Division

(1,294 Employees)

Maxion SistemasAutomotivos S.A.

Maxion ComponentesEstruturais Ltda.

Amsted Maxion Fund. eEquip. Ferroviários S.A.

(3,370 Employees)

Iochpe-Maxion S.A.(16 Employees)

Consolidated = 5,969 Employees

AmstedIndustries

99.99%

92.64%

Net sales breakdown %

9M04 - R$ 786.8 MM 9M03 - R$ 494.9 MM

Amsted Maxion (*)

AutomotiveComp. Division Automotive

Comp. Division

(*) Consolidated figures consider 50% of the net sales of Amsted Maxion

WHEEL AND CHASSIS DIVISION (*)

(*) Division of

Wheels and Chassis Division

Wheels and Chassis Division: Basics

Conformation of flat steelFocused on the commercial vehicles segment (trucks, buses, pickupsand agricultural machinery)Continuous capex resulting in an unique manufacturing facility in theSouth American market (barriers to entry)Local leadershipCost competitiveness: steel, wagesImportant export base (16% of sales)

Chassis - 51% of Division’s net sales – R$ 230 MM – 9M04

SiderailsStamped Parts

Chassis

StructuralParts

Heavy Medium Light

Wheels for Vehicles - 49% of Division’s net sales – R$ 220 MM – 9M04

Automotive Industry – Brazilian Output Thousand units

3Q04 3Q03 ∆% 9M04 9M03 ∆%

Cars 468.7 350.4 33.8% 1,302.6 1,104.9 17.9%

Pickups 83.0 55.4 49.8% 223.7 153.5 45.7%

Trucks 29.1 19.6 48.5% 79.1 58.3 35.6%

Buses 7.7 7.0 10.6% 21.4 20.0 7.4%

Total Vehicles 588.6 432.4 36.1% 1,626.9 1,336.7 21.7%

Agricultural Machinery 18.9 17.5 7.7% 51.1 44.1 15.8%

Source : Anfavea

Automotive Industry - Export Thousand units

3Q04 3Q03 ∆% 9M04 9M03 ∆%

Cars 147.1 104.8 40.3% 361.3 333.9 8.2%

Pickups 28.5 20.1 41.8% 74.5 48.8 52.7%

Trucks 7.3 3.7 98.0% 19.0 8.4 126.2%

Buses 3.3 2.5 28.4% 8.1 6.5 23.9%

Total Vehicles 186.3 131.2 41.9% 462.9 397.7 16.4%

AgriculturalMachinery 8.5 6.3 34.5% 23.2 14.9 55.5%

Source : Anfavea

Wheels and Chassis Division R$ MM

1 7 42 0 8

6 0 0Net Sales

CAGR = 39.9% a.a.

1999 2000 2001 2002 2003 3Q04 LTMLTM = Last 12 months / CAGR = Compounded Annual Growth Rate

∆% = 52.3%

9M03 9M04

∆% = 53.7%

3Q03 3Q04

Chassis – Market Share and Customer Base – 9M04

Market Share Customer Base

7 %5 %

OtherDaimlerChrysler

Volks-wagen General

Motors

Export

Scania1 5 %

1 1 %7 4 %

Maxion

Wheels - Market Share and Customer Base – 9M04

2 6 %2 4 %

1 1 % 6 %6 %

1 1 %1 6 % Other

ExportTractors

Volks-wagen Scania

VolvoTrailerOEMs

MaxionHayes

AUTOMOTIVE COMPONENTS DIVISION (*)

(*) Division of

Automotive Components Division: Basics

Light stampingAssembly of partsFocused on passenger carsLow barriers to entryLocal leadership in main productsStrong trend for globalization

Automotive Components Division

Partial Divestiture – Sept.10 , 2004

Sold assets related to the window mechanism businessBuyer: Brose do Brasil Ltda. – subsidiary of Brose International GmbHAmount: R$ 17.8 millionAsset transfer in 180 daysWindow mechanism business represents:

7% of the consolidated net sales51% of the net sales to the passenger car segment

Automotive Components Division: Main Products

HANDBRAKELEVERS

PEDALSETS

3Q04 3Q03 ∆% 9M04 9M03 ∆%

Cars 468.7 350.4 33.8% 1,302.6 1,104.9 17.9%

Pickups 83.0 55.4 49.8% 223.7 153.5 45.7%

Trucks 29.1 19.6 48.5% 79.1 58.3 35.6%

Buses 7.7 7.0 10.6% 21.4 20.0 7.4%

Total Vehicles 588.6 432.4 36.1% 1,626.9 1,336.7 21.7%

Agricultural Machinery 18.9 17.5 7.7% 51.1 44.1 15.8%

Source : Anfavea

Automotive Industry - Export Thousand units

3Q04 3Q03 ∆% 9M04 9M03 ∆%

Cars 147.1 104.8 40.3% 361.3 333.9 8.2%

Pickups 28.5 20.1 41.8% 74.5 48.8 52.7%

Trucks 7.3 3.7 98.0% 19.0 8.4 126.2%

Buses 3.3 2.5 28.4% 8.1 6.5 23.9%

Total Vehicles 186.3 131.2 41.9% 462.9 397.7 16.4%

AgriculturalMachinery 8.5 6.3 34.5% 23.2 14.9 55.5%

Source : Anfavea

Automotive Components Division R$ MM

9 29 9

9 4 9 8

2 73 7

Net Sales

CAGR = 9.0% a.a.

∆% = 28.9%

∆% = 38.6%

1999 2000 2001 2002 2003 3Q04 LTM 9M03 9M04 3Q03 3Q04LTM = Last 12 months / CAGR = Compounded Annual Growth Rate

Market Share % 9M04 Chassis – Market Share and Customer Base – 9M04Market Share and Customer Base – 9M04

7 %4 %

Volks-wagen

GeneralMotors

FordAfter

MarketOther

Window mechanism 42%

Hand break lever 43%

Pedal Set 27%

Jack 20%

Latch 9%

Knob / Key / Cylinder 7%

AMSTED MAXION FUNDIÇÃO E EQUIPAMENTOS FERROVIÁRIOS

Subsidiaries :

Amsted Maxion

Amsted Maxion: Basics

Integrated freight car operation: castings and car assemblyCapex + technology resulting in an unique manufacturing facility and design capabilitiesSteel castings

Transformation of steel scrapFocused on the railroad equipment and industrial businessHigh barrier to entryLocal leadershipImportant export base

Freight car assemblyAssembly of components and castingsFocused on the Brazilian railroad operatorsLow to medium entry barriersLocal leadership

Amsted Maxion: Main Products

RAILROADWHEELS

RAILROADFREIGHT CARS

BOOGIES

Brazilian railroad equipment market

Sales 3Q04 3Q03 ∆% 9M04 9M03 ∆%

Railroad freight cars – units 1,579 511 209% 4,195 1,339 213%

Railroad wheels – thous. units 13.6 8.9 53% 30.4 27.0 13%

Railroad castings – thous. tons 0.7 0.7 0% 2.7 1.6 69%

Does not include wheels and castings used in the assembly of new freight cars

Amsted Maxion R$ MM

9 51 2 2 1 1 0 1 2 0

Net Sales (*)

CAGR = 45.2% a.a.

1999 2000 2001 2002 2003 3Q04 LTM

∆% = 96.5%

9M03 9M04

∆% = 111.5%

3Q03 3Q04

(*) Amsted Maxion’s net sales. Consolidated figures consider 50% of Amsted Maxion’s salesLTM = Last 12 months / CAGR = Compounded Annual Growth Rate

Amsted Maxion

Market Share and Customer Base – 9M04

Railroad Freight Cars

Railroad Wheels

Railroad Castings

Industrial Castings

5 7 %1 4 %

7 %3 %3 %

Other Ferronorte

Export

Caterpillar

Amsted Maxion

Spot Orders 2004 : R$ 580.0 MM (*)

CVRD / FCA – 2,878 cars

MRS - 630 cars

ADM - 140 cars

Mineração Serra do Sossego - 42 cars

MRS / ALL - 50 boxes

MRC (Mitsui) – 150 cars

Total = 3,840 cars and 50 boxes

Delivered

As of Sept. 30 – 3,116 carsand 30 boxes

Still in 2004 – 724 cars and 20 boxes

(*) Amsted Maxion’s net sales. Consolidated figures consider 50% of Amsted Maxion’s sales

Amsted Maxion

Spot Orders 2005 : R$ 130.0 MM (*)

MRC (Mitsui) – 350 cars

C.V.G. Ferrominera Orinoco - (Venezuela) - 225 cars

Comilog S.A. (Gabon) - 76 cars

CBG – Compagnie des Bauxites de Guinee (Guinee) - 24 cars

Total = 675 cars

Amsted Maxion

Recurring Orders : R$ 132.2 MM per year (*)

Caterpillar (Brazil and USA) – tractor parts - R$ 54.0MM

ASF-Amsted (USA) – railroad castings – R$ 44.7MM

C.V.G. Ferrominera Orinoco (Venezuela) – railroad castings – R$ 10.1MM

Truck OEMs (Brazil) – fifth-wheel – R$ 8.5MM

ConMet-Amsted (USA) – fifth-wheel components - R$ 7.7MM

Metso (France) – industrial castings - R$ 3.6MM

Komatsu / CNH (USA and Italy) – industrial castings - R$ 3.6MM

CONSOLIDATEDFIGURES

Consolidated

Net sales breakdown by customer and segment – 9M04

Customer Base Segment

9 %7 %

7 %4 %4 %

Volks-wagen

DaimlerChrysler

Export

GeneralMotors

Tractors

OEMs producing in Brazil

- Bus, truck and

pickups - Passenger cars

48% 13%

Brazilian railroad operators

Export 13%

Consolidated

9M03 – US$ 24.9 MM / R$ 80.6 MM

5 3 % 1 7 %

1 % 2 9 %

Chassis

RailroadEquipment

Wheels

AutomotiveComp.

Exports by product segment and destination – US$ 33.6 MM / R$ 99.5 MM - 9M04

DestinationProduct Segment

5 3 %1 0 %

1 %7 %7 %

3 %Mexico

Canada

SouthAmerica

Asia /Oceania

EuropeAfrica / Middle East

Import 9M04 - US$ 8.0MM / R$ 23.6MM (*)(*) includes US$ 3.4MM / R$ 10.0MM of machineryand equipment

Consolidated R$ MM

1999 2000 2001 2002 2003 3Q04 LTM

615 624

374 411

Net Sales

CAGR = 41.3% a.a.

DivestiturePhase ∆% = 59.0%

∆% = 65.6%

9M03 9M04 3Q03 3Q04

LTM = Last 12 months / CAGR = Compounded Annual Growth Rate

Consolidated - First Nine Months % net sales

1 9 %2 1 % 2 2 % 2 2 %

1 7 %1 5 %1 5 % 1 5 %

9 %7 %

1 0 %1 3 %

G r o s s P r o f i t E B I T D A E B I T A f te r F i n a n c i a l E x p e n s e s

9M00 9M01 9M02 9M03 9M04

Operating Margins

Consolidated - First Nine Months R$ MM

Gross Profit EBITDA EBIT After Financial Expenses

9M00 9M01 9M02 9M03 9M04

Operating Profits

Consolidated – Income Statement R$ Thous.

Iochpe-Maxion: Fundamentals

Strong organic revenue growth

Steady operating margins

Growing cash generation

Solid capital structure – net debt / EBITDA ratio

Focus on businesses related to the transportation industry

Local market leadership

Capex aiming at a strong competitive position – barriers to entry

Growing exports

Capacity expansion in line with demand growth

Iochpe-Maxion: Capital Markets and Governance

Public company since 1984 / ADR Level I since 1994

Investor relationshipQuarterly meetings

Website – exclusive IR content

Annual Reports, press releases, etc.

Dividend payout – 37% of net income and an additional 10% for non voting shares

Growing liquidity and floatBoard with 2 independent members and no executive officer members

Audit Board (“Conselho Fiscal”) with 1 representative of the non-controlling shareholders

www.iochpe-maxion.com.br/

AdditionalInformation

02 0 04 0 06 0 08 0 0

1 0 0 01 2 0 01 4 0 01 6 0 01 8 0 0

1 9 9 41 9 9 51 9 9 61 9 9 71 9 9 81 9 9 92 0 0 02 0 0 12 0 0 22 0 0 3

3 Q 0 4 L T MC a r s

1 0 01 5 02 0 02 5 03 0 03 5 0

1 9 9 41 9 9 51 9 9 61 9 9 71 9 9 81 9 9 92 0 0 02 0 0 12 0 0 22 0 0 3

3 Q 0 4 L T MP ic k u p s

02 04 06 08 0

1 0 01 2 01 4 0

1 9 9 41 9 9 51 9 9 61 9 9 71 9 9 81 9 9 92 0 0 02 0 0 12 0 0 22 0 0 3

3 Q 0 4 L T MT r u c k s B u s e s

01 02 03 04 05 06 07 08 0

1 9 9 41 9 9 51 9 9 61 9 9 71 9 9 81 9 9 92 0 0 02 0 0 12 0 0 22 0 0 3

3 Q 0 4 L T MA g r ic u lt u r a l M a c h in e r y

Brazilian Railroad Equipment Industry Units

1 0 0 0

2 0 0 0

3 0 0 0

4 0 0 0

5 0 0 0

6 0 0 0

1 9 9 41 9 9 51 9 9 61 9 9 71 9 9 81 9 9 92 0 0 02 0 0 12 0 0 22 0 0 3

3 Q 0 4 L T MF r e ig h t C a r s

Brazilian Railroad Equipment Industry Units

1 0 0 0 0

2 0 0 0 0

3 0 0 0 0

4 0 0 0 0

5 0 0 0 0

6 0 0 0 0

1 9 9 41 9 9 51 9 9 61 9 9 71 9 9 81 9 9 92 0 0 02 0 0 12 0 0 22 0 0 3

3 Q 0 4 L T MR a ilr o a d W h e e ls

Does not include wheels used in the assembly of new freight cars

Brazilian Railroad Equipment Industry Tons

05 0 0

1 0 0 01 5 0 02 0 0 02 5 0 03 0 0 03 5 0 04 0 0 04 5 0 0

1 9 9 41 9 9 51 9 9 61 9 9 71 9 9 81 9 9 92 0 0 02 0 0 12 0 0 22 0 0 3

3 Q 0 4 L T MR a ilr o a d C a s t in g s

Does not include castings used in the assembly of new freight cars

Chassis – New Orders: R$ 19.2 MM Annual Sales

P r o d u c t / C u s t o m e r C o u n t r y S t a r t i n g D a t e A n n u a l S a l e s R $ M M

L i g h t S t a m p i n g s - A r v i n M e r i t o r B r a z i l M a y . 0 5 9 . 6

M e d i u m S t a m p i n g s - D a i m l e r C h r y s l e r B r a z i l A u g . 0 4 3 . 1

C h a s s i s - V o l k s w a g e n ( C K D - M e x i c o ) B r a z i l M a r . 0 4 2 . 3

C h a s s i s - V o l k s w a g e n B r a z i l A p r . 0 4 2 . 2

L i g h t S t a m p i n g s - D a i m l e r C h r y s l e r B r a z i l J u n . 0 4 1 . 3

M e d i u m S t a m p i n g s - P e u g e o t C i t r o e n B r a z i l O c t . 0 4 0 . 4

S i d e r a i l R e i n f o r c e m e n t - D a i m l e r C h r y s l e r B r a z i l M a y . 0 4 0 . 3

Wheels – New Orders: R$ 17.4 MM Annual Sales

C U S T O M E R C o u n t r y S t a r t i n g D a t e A n n u a l S a l e s R $ M M

W o r k h o r s e U S A J u n . 0 5 6 . 5J o h n D e e r e B r a z i l N o v . 0 4 3 . 2S t i p T u n i s i a M a y . 0 4 2 . 3D u n l o p S o u t h A f r i c a J u n . 0 4 1 . 5K u r t L e y s e r C o r p . S o u t h A f r i c a A p r . 0 4 1 . 5M A A P M o r o c c o M a y . 0 4 1 . 0B r i d g e s t o n e S p a i n F e b . 0 4 0 . 8K r i s t a n a s S p i r o s G r e e c e J u l . 0 4 0 . 6

New Orders: R$ 1,2 MM Annual Sales (*)

M o d e l - C u s t o m e r s P r o d u c t S t a r t i n g D a t e

A n n u a l S a l e s R $ M M

F o x - V W J a c k O c t . 0 3 0 . 9P i c k - u p M o n t a n a - G M L a t c h N o v . 0 3 0 . 3

(*) Does not include new orders of window mechanisms, due to the divestiture of this business

Consolidated – Net Debt Breakdown – 3Q04 – R$ MM

D E B T T Y P E S H O R T L O N G T O T A L

L o c a l B o n d s 2 7 . 3 2 7 . 3T r a d e F i n a n c e / E x p o r t L i n e s 3 5 . 9 4 5 . 6 8 1 . 5

E q u i p m e n t F i n a n c i n g L i n e s 2 4 . 9 2 0 . 3 4 5 . 2L o c a l L i n e s 2 3 . 3 2 3 . 3

1 1 1 . 4 6 5 . 9 1 7 7 . 3

( - ) C a s h a n d M a r k e t a b l e S e c u r i t i e s 2 6 . 0 2 6 . 0

N e t D e b t 8 5 . 4 6 5 . 9 1 5 1 . 3

Consolidated –Debt Indexation – 3Q04

3 % 1 3 %

1 5 %Dollar

TJLP(BNDES

INPC(consumerInflation)CDI

(interbank)IGPM(generalInflation)

Consolidated – Foreign Currency Exposure – Sept. 04

US$ MMB a l a n c e S h e e t

A s s e t s d e n o m i n a t e d i n f o r e i g n c u r r e n c y. M a r k e t a b l e S e c u r i t ie s / In v e s t m e n t s 1 . 8. A c c o u n t s R e c e iv a b l e 9 . 9

1 1 . 7

L i a b i l i t i e s d e n o m i n a t e d i n f o r e i g n c u r r e n c y. B a n k D e b t ( E x p o r t L in e s / O t h e r ) ( 2 8 . 5 ). A c c o u n t s P a y a b l e ( 2 . 6 )

( 3 1 . 1 )

N e t P o s i t i o n ( 1 9 . 4 )

Stock Performance

Consolidated – Employee Prodctivity

W h e e ls a n d A u t o m o t iv e A m s t e d C o r p o r a t e a n dC h a s s is C o m p o n e n t s M a x io n O t h e r S e p t . 2 0 0 4 S e p t . 2 0 0 3

E m p lo y e e s 2 ,9 7 4 1 ,2 9 4 3 ,3 7 0 1 6 5 ,9 6 9 4 ,1 4 0

P r o d u c t iv i t y ( * )R $ t h o u s . / E m p lo y e e 1 8 5 .5 1 0 6 .6 1 6 4 .9 - 1 6 2 .1 1 4 5 .9

C o n s o l id a t e d ( * * )

(*) Last 12 months sales /Number of employees at the end of the period

(**) Consolidated ficgures consider 50% of Amsted Maxion

BENCHMARK

Benchmark – Gross Profit % net sales

Fonte: Companies releases2004 first nine months of each company, except for Strattec with 3 months result and ArvinMeritor and Johnson Controls with 12 months results

V i s te o n

T e n n e c oT i ta n

C u m m i n sV a le o

A c c u r i d e

S to n e r i d g eM a n g e ls

R a n d o n

F r a s le

T o w e r

A r v i n M e r i to r

M a g n a

B o r g W a r n e r

M a r c o p o lo

G e n te x

T R W A u toS u p e r i o r

S t r a t te cE a to n

A u to li v

L i n a m a r

D e lp h i

L e a r

C o ll i n s & A i k m a nD a n a

D u r a

J o h n s o n C o n t r o ls

A m e r i c a n A x le

F e d e r a l M o g u l

I o c h p e - M a x i o n

0 % 1 0 % 2 0 % 3 0 % 4 0 %

3 Q 0 4 3 Q 0 3

A v g . = 1 7 %

Benchmark – EBIT % net sales

M a g n a

G e n t e x

V is t e o nD e lp h i

C o l l in s & A ik m a nF e d e r a l M o g u lT o w e r

A r v in M e r i t o rL e a r

D u r aD a n a

V a le oC u m m in sT e n n e c o

F r a s leR a n d o n

A c c u r id eS t r a t t e c

I o c h p e - M a x i o nM a n g e ls

S t o n e r id g eM a r c o p o loB o r g W a r n e r

E a t o nA m e r ic a n A x le

L in a m a rA u t o l i vT i t a n

S u p e r io r

J o h n s o n C o n t r o lsT R W A u t o

- 5 % 5 % 1 5 % 2 5 % 3 5 %

3 Q 0 4 3 Q 0 3

A v g . = 8 %

Benchmark – EBITDA % net sales

T e n n e c o

M a g n aS u p e r i o r

A u to li vB o r g W a r n e r

G e n te x

T o w e rD a n a

D u r aC u m m i n s

J o h n s o n C o n t r o lsA r v i n M e r i to r

C o ll i n s & A i k m a nL e a r

D e lp h iV i s te o n

F r a s leA c c u r i d e

R a n d o nS t r a t te c

I o c h p e - M a x i o nL i n a m a rS to n e r i d g e

M a n g e ls

E a to n

T i ta nA m e r i c a n A x le

M a r c o p o lo

T R W A u to

F e d e r a l M o g u l

0 % 1 0 % 2 0 % 3 0 % 4 0 %

3 Q 0 4 3 Q 0 3

A v g . = 1 2 %

Balance Sheet R$ Thous.

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