weg 3q09 earnings conference call presentation
DESCRIPTION
WEG 3Q09 Earnings Conference Call Presentation, held on October 27, 2009TRANSCRIPT
Conference Call Q3 2009 Results
October 27th, 2009
Page 2 October 27th, 2009Q3 09 Conference Call
Disclaimer
The statements that may be made during this conference call relating to WEG’s business perspectives, projections and operating and financial
goals
and to WEG’s potential future growth are management beliefs and expectations, as well as information that are currently available.
These statements involve risks, uncertainties and the use of assumptions, as they relate to future events and, as such, depend on circumstances that may or may not be present.
Investors should understand that the general economic conditions, conditions of the industry and other operating factors may affect WEG’s future performance and lead to results that may differ materially from those expressed in such future considerations.
Page 3 October 27th, 2009Q3 09 Conference Call
General Comments on Q3 2009
One year into the global financial crisis, testing our business model
Downturn was swift, but recovery is gradual
Greater visibility into the future
Gross revenues down by 14% Q309/Q308:”White goods” continued strongIndustrial equipments stable to slight recoveryGTD fulfilling orders backlog
Margin recovery happening faster : Improved capacity occupancy;Lower raw material costsImproved sales mixImpacts from cost and expense control actions
Page 4 October 27th, 2009Q3 09 Conference Call
Quarterly Highlights
3Q09 3Q08 Growth %Gross Operating Revenue 1.282.506 1.488.671 -13,8% Domestic Market 889.302 967.507 -8,1% External Markets 393.200 521.164 -24,6%
External Markets in US$ 210.840 309.874 -32,0%
Net Operating Revenue 1.055.465 1.223.272 -13,7%Gross Operating Profit 402.210 435.670 -7,7%Gross Margin 38,1% 35,6%Quarterly Net Income 160.103 167.130 -4,2%Net Margin 15,2% 13,7%EBITDA 254.840 300.150 -15,1%EBITDA Margin 24,1% 24,5%
Figures in R$ Thousands
Page 5 October 27th, 2009Q3 09 Conference Call
Evolution of Gross Revenues –
Domestic Market(in R$ million)
Gross and Net Operating Revenues decreasing by 14%
Stronger comparison base, strongest market before the crisis struck
Minimal contribution from FX for growth comparisons
Industrial production and capital goods production with marginal recovery
Global crises impacts across all markets, but recovery is going to be gradual
Brazilian market showing better performance. Diversification did not completely protected from recession
Evolution of Gross Revenues –
External Market (in US$ million)
Gross Operating Revenues
478,2
785,3967,5 889,3
552,5
16%
42%
23%-8%
3Q05 3Q06 3Q07 3Q08 3Q09
120,3168,6
226,4309,9
210,8
37%
34%
40%
2,3419 2,1702 1,9142 1,6819 1,8649
3Q05 3Q06 3Q07 3Q08 3Q09
External Market in US$
Quarterly Average FX -32%
Page 6 October 27th, 2009Q3 09 Conference Call
7%
Global Presence and Business Areas
Gross Revenues Breakdown –
3Q09
Domestic market grew in importance once again, as R$ strengthened further
Emerging markets being less impacted by downturn than North America and Western Europe
Same trends from previous quarter: GTD continues to grow, industrial equipment impacted by crises, domestic use becomes more important
69%
Brazil
9%
North America
5%
South & Central America
11%
Europe
5%
Asia & Oceania
2%
Africa
918
1.2191.283
62% 61%56% 46%
58%
35%
25%
25%
19%14%
14%
13%
13%
18%
15%7%
6%
5%
6%
5%760
1.489
3Q05 3Q06 3Q07 3Q08 3Q09Industrial Equipment GTD Domestic Use Paints & Varnishes
Page 7 October 27th, 2009Q3 09 Conference Call
Cost of Goods Sold
Consistent improvement of capacity occupancy
Lower raw material costs
Improving product mix
Positive impacts from all cost containment actions
Depreciation5%
Other Costs30%
Steel & Coper42%
Other Materials23%
Q3 09 Depreciation5%
Other Costs30% Steel & Coper
40%
Other Materials25%
Q3 08
Page 8 October 27th, 2009Q3 09 Conference Call
Gross margin in recovery, returning to the pre-crises levels
EBITDA margin also shows recovery, despite non-recurring items
Net income also returned to historical levels , benefiting from lower FX volatility
Profitability
212273
375436
402
33% 34% 37% 36% 38%
3Q05 3Q06 3Q07 3Q08 3Q09
Gross Profit Gross Margin
131
173
261
300
255
20% 22%26% 25% 24%
3Q05 3Q06 3Q07 3Q08 3Q09EBITDA EBITDA Margin
100
132157 167 160
16% 17% 16% 14% 15%
3Q05 3Q06 3Q07 3Q08 3Q09
Net Income Net Margin
Page 9 October 27th, 2009Q3 09 Conference Call
Strong operating cash flow generation
Strict control of capex program to avoid idle capacity and maximize ROIC
Reduction on short term debt
Foreign currency exposure contained and below policy limits
Financing Policies
September 2009 December 2008 September 2008CASH & EQUIVALENT 2.003.241 1.849.477 1.820.203 - Current 2.003.241 1.849.477 1.820.203 - Long Term - - - DEBT 1.932.624 2.161.216 1.883.178 - Current 943.532 1.314.098 1.238.442 - Long Term 989.092 847.118 644.736 NET CASH (DEBT) 70.617 (311.739) (62.975)
Page 10 October 27th, 2009Q3 09 Conference Call
Capacity Expansion Investments
96,8 109,9 103,471,8
47,819,1
24,0 20,5 24,8
20,1
15,7
13,7
120,8 130,4 128,2
91,9
63,5
32,7
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09
Outside Brazil
Brazil
Page 11 October 27th, 2009Q3 09 Conference Call
Alidor Lueders
CFO & IRO
Luís Fernando M. Oliveira
Investor Relations Manager
+55 (47) 3276-6973
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