- 1. Motors | Automation | Transformers | Energy | Paints and
Varnishes Investor Relations Presentation
2. n One of the highest growth capital goods companies; is
number one or number two in all product lines in Latin America n
Unique business model is based on vertical integration, production
flexibility and technological innovation n Diversified product
lines allows strong growth across different market cycles n We have
a history of achieving CAGR of 18% over past 17 years through
organic growth and accretive acquisitions n WEG 2020 Strategic Plan
aims for R$ 20 billion / 17% CAGR through international and product
line expansion 1 2 3 4 5 1BM&F Bovespa: WEGE3 / OTC: WEGZY Best
way to invest in fast growing global energy efficiency and
renewable energy generation businesses 3. WEG business The global
solution with electric machines and automation for industry and
energy systems 2BM&F Bovespa: WEGE3 / OTC: WEGZY Energy
Generation, Transmission and Distribution (GTD) Industrial
Electro-Electronic Equipment Paints and Varnishes Paints and
Varnishes Motors Motors for domestic use Automation Motors
Automation Energy T&D 4. Typical Applications Ventilation
CompressorsPumps Oil & Gas Mining Sugar & Ethanol Ship
building Steel Pulp & Paper Cement General Industry Generation
plants Substations Segments ValueAdded Generation
ConversionComponents and integration 3BM&F Bovespa: WEGE3 /
OTC: WEGZY The final destination Strategic integration of equipment
into complete solutions Generators / alternators Wind Turbines
Solar inverter Small Hydro Turbines Automation (low & high
voltage switchgear, drives, controls) Critical power Electric
motors Transformers Gearboxes 5. Energy and industrial efficiency
Renewable energy Smart grid Electrical mobility Electric motors
represent around 25% of world electricity consumption Industrial
productivity increases and ISO 50.001 (energy management) drives
investments Global need to diversify energy sources and lower GHG
emissions Scale and technological development increases viability
Increasing urbanization adds to congestions and need of new
solutions Electric vehicles, hybrids or alternative fuels will
become more common Electricity distribution network has to become
smarter More sensors, more automation, more efficient generation
and use of electricity 4BM&F Bovespa: WEGE3 / OTC: WEGZY Our
industry is undergoing major change Megatrends cause changes in
demand and create opportunities 6. Appliance Industrial HighVoltage
Generators BiomassSystems SmallHydro Wind Power Dry Distribution
Substations Drives Controls Panels Gearboxes Gensets HydroTurbines
SteamTurbines GasTurbines NewBusinessMotorsEnergyT&DAutomation
5BM&F Bovespa: WEGE3 / OTC: WEGZY Strategic Positioning 7.
19,3% 23,1% 9,1% 11,3% 6,3% 5,2% 4,0% 6,6% 4,9% 3,7% 3,0% 1,7%
-0,1% -3,0% A WEG B C D E F CAGR 2005-2009 CAGR 2009-2013 6BM&F
Bovespa: WEGE3 / OTC: WEGZY Revenues Growth (US$) Profitability
(EBITDA Margins) Strategic Positioning WEGs revenue growth and
EBITDA margins are among the highest WEG B F E C A D 8,0% 10,0%
12,0% 14,0% 16,0% 18,0% 20,0% 22,0% 24,0% 2009 2010 2011 2012 2013
8. Competitive Advantages Large and synergistic portfolio Worldwide
presence One-stop shop concept Mass customization Production in low
cost emerging markets Low financial leverage Focus on M&A
enabling continuous future growth 7BM&F Bovespa: WEGE3 / OTC:
WEGZY Clear competitive advantages Unique business model creates
important and stable advantages WEG Business Model 9. 30 41 58 98
82 125 176 220 308 403 375 503 575 560 549 519 587 656 84310,9%
12,6% 18,5% 13,1% 15,7% 16,5% 17,2% 18,2% 18,3% 14,9% 16,7% 15,3%
12,4% 13,0% 11,8% 11,3% 10,6% 12,4% 59 67 96 119 133 188 256 293
381 475 462 617 839 1.021 812 789 851 1.017 1.230 18,1% 20,7% 22,5%
21,2% 23,5% 24,1% 22,8% 22,5% 21,5% 18,4% 20,5% 22,4% 22,7% 19,3%
18,0% 16,4% 16,5% 18,0% CAGR 17.9% Revenues (R$ million) 8BM&F
Bovespa: WEGE3 / OTC: WEGZY CAGR 18.4% EBITDA and EBITDA Margin (R$
million) CAGR 20.4% Net Income and Net Margin (R$ million) ROIC
Solid growth track record Business model allows to find and explore
growth opportunities even under unfavorable macroeconomic
conditions 353 372 466 527 628 800 1.066 1.282 1.694 2.204 2.515
3.009 3.749 4.502 4.211 4.392 5.189 6.174 6.829 10,4% 13,5% 14,7%
15,9% 12,1% 10,0% 10,3% 11,8% 14,3% 10. 9BM&F Bovespa: WEGE3 /
OTC: WEGZY Growth rate 15,0% 3,6% 1,7% 4,1% 7,9% 3,1% 3,4% 3,7%
WEG's Revenue GDP Brazil Industrial Production Brazil Capital Goods
Industrial Production Brazil CAGR 10 years (2004-2013) CAGR 5 years
(2009-2013) 11. More and Better maintain our competitive position
in those markets where we enjoy market leadership and / or strong
brand recognition, making sure we are able to keep up with the
markets organic growth; International Expansion penetrate new
geographic markets and use our strong position / recognized brand
in some products to synergistically expand the product line; New
Businesses expand the product line into business / products that
complement the offering 10BM&F Bovespa: WEGE3 / OTC: WEGZY 1 2
3 Growth drivers 12. 4.392 5.189 6.174 6.829 20.000 18% 19% 11%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 11BM&F
Bovespa: WEGE3 / OTC: WEGZY 1/3 Non Organic 2/3 Organic WEG
Strategic Plan 2020 Corporate aspiration of R$ 20 billion by 2020.
Growth comes from diverse base, with a disciplined approach to
organic and non-organic expansion 13. Technology MarketAccess 2010
2010 2010 2010 2011 20112011 2011 2012 2012 2012 12BM&F
Bovespa: WEGE3 / OTC: WEGZY Portfolio Strategy Clear vision of
attractiveness of opportunities March 2014 February 2014 September
2013 14. 13BM&F Bovespa: WEGE3 / OTC: WEGZY 2008 Revenue
profile 2013 61,2% 21,8% 10,6% 6,4% Industrial Equipment GT&D
Equipment Domestic Use Paints & Varnishes R$ 6.8 billion 55,3%
27,2% 12,3% 5,2% R$ 4.5 billion 15. 14BM&F Bovespa: WEGE3 /
OTC: WEGZY Revenue profile 2013 2008 16. 15BM&F Bovespa: WEGE3
/ OTC: WEGZY Produced and sold in Brazil Produced in Brazil and
exported Produced and sold abroad CHINA MEXICO PORTUGAL ARGENTINA
INDIA AUSTRIA UNITED STATES SOUTH AFRICA BRAZIL Global production
platform Production outside Brazil is expanding and will exceed 20%
of total over medium term 70% 30% 2000 50% 35% 15% 2013 17. (% of
Net Revenues) 16BM&F Bovespa: WEGE3 / OTC: WEGZY Working
capital needs 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 1Q06 1Q07 1Q08
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 Working Capital Inventories Clients
Suppliers Advances 18. Capex (R$ million) 17BM&F Bovespa: WEGE3
/ OTC: WEGZY Research & Development (R$ million) Net Earnings
and Dividends (R$ million) Use of cash 42 38 49 73 83 126 206 146
111 305 457 226 233 188 238 244 8,0% 6,1%6,1% 6,8% 6,5% 7,4% 9,3%
5,8% 3,7% 8,1% 10,2% 5,4% 5,3% 3,6% 3,9% 3,6% % of Net Revenues 16
18 18 21 30 34 63 73 86 89 83 101 131 148 183 2,5% 2,3% 1,7% 1,6%
1,8% 1,5% 2,5% 2,4% 2,3% 2,0% 2,0% 2,3% 2,5% 2,4% 2,7% % of Net
Revenues 19. Issuer Ticker Number of Shares Share price Market
value WEG S.A. WEGE3 (BM&Fbovespa) / WEGZY (OTC ADR Level 1).
Listing Segment Novo Mercado (since 2007) Issued: 807,176,538 In
treasury: 615,564 Ex-treasury: 806,560,974 On Dec 30, 2013: R$
23.97 On Apr 23, 2014 : R$ 26.54 On Dec 30, 2013: R$ 19,347 million
On Apr 23, 2014 : R$ 21,422 million Liquidity (average daily
volume) In 2013: R$ 15,193 thousand / day In 2014: R$ 15,465
thousand / day Composition of Free Float 56% - Foreign institutions
03% - Brazilian institutions 41% - Others (individuals, etc.)
18BM&F Bovespa: WEGE3 / OTC: WEGZY Key information Capital
market 20. 35%50%14% WEG S.A.WEG S.A. Voigt 33.3% Voigt 33.3% Silva
33.3% Silva 33.3% Werninghaus 33.3% Werninghaus 33.3% Treasury
Shares and Management Treasury Shares and Management WPA
Participaes e Servios S/A WPA Participaes e Servios S/A Founders
Families (directly) Founders Families (directly) Free FloatFree
Float 1% 19BM&F Bovespa: WEGE3 / OTC: WEGZY Shareholding
structure 21. 6,00 8,00 10,00 12,00 14,00 16,00 18,00 20,00 22,00
24,00 26,00 28,00 WEGE3shareprices(R$) 2020BM&F Bovespa: WEGE3
/ OTC: WEGZY Inclusion MSCI Brazil Inclusion Ibrx-100 Selected for
ISE 2013 Selected for ISE 2014 WEGE3 performance WEGs shares
achieved important indexes 22. Average Daily Traded Volume (R$ th)
Average Daily Trades 2121BM&F Bovespa: WEGE3 / OTC: WEGZY
Liquidity WEGE3 9.833 7.697 6.062 6.750 7.442 10.343 15.193 15.465
373 452 465 599 796 1.076 2.165 2.100 23. 22BM&F Bovespa: WEGE3
/ OTC: WEGZY Highlights Yearly Figures 2013 2012 % 2011 % Net
Operating Revenue 6.828.896 6.173.878 10,6% 5.189.409 19,0%
Domestic Market 3.432.040 3.016.662 13,8% 2.902.958 3,9% External
Markets 3.396.856 3.157.216 7,6% 2.286.451 38,1% External Markets
in US$ 1.569.891 1.610.330 -2,5% 1.361.689 18,3% Gross Operating
Profit 2.236.766 1.880.856 18,9% 1.556.051 20,9% Gross Margin 32,8%
30,5% 30,0% Quarterly Net Income 843.467 655.979 28,6% 586.936
11,8% Net Margin 12,4% 10,6% 11,3% EBITDA 1.230.032 1.016.748 21,0%
851.155 19,5% EBITDA Margin 18,0% 16,5% 16,4% EPS 1,35950 1,05730
28,6% 0,94605 11,8% Figures in R$ Thousands 24. 23BM&F Bovespa:
WEGE3 / OTC: WEGZY Highlights Quarterly Figures Q1 2014 Q4 2013 %
Q1 2013 % Net Operating Revenue 1.783.543 1.893.299 -5,8% 1.477.577
20,7% Domestic Market 895.446 913.388 -2,0% 772.935 15,9% External
Markets 888.097 979.911 -9,4% 704.642 26,0% External Markets in US$
375.677 428.229 -12,3% 353.077 6,4% Gross Operating Profit 570.421
615.847 -7,4% 463.604 23,0% Gross Margin 32,0% 32,5% 31,4% Net
Income 204.887 237.439 -13,7% 172.299 18,9% Net Margin 11,5% 12,5%
11,7% EBITDA 299.643 341.653 -12,3% 248.898 20,4% EBITDA Margin
16,8% 18,0% 16,8% EPS 0,33023 0,38270 -13,7% 0,27772 18,9% Figures
in R$ Thousand 25. 24BM&F Bovespa: WEGE3 / OTC: WEGZY
Highlights Balance sheet Assets (R$ thousands) R$ % R$ % R$ %
CURRENT ASSETS 6.851.787 68% 5.710.017 64% 5.867.061 64% Cash &
cash equivalents 3.373.799 33% 2.563.500 29% 2.931.615 32%
Receivables 1.658.806 16% 1.472.839 17% 1.307.692 14% Inventories
1.445.927 14% 1.306.273 15% 1.362.314 15% Other current assets
373.255 4% 367.405 4% 265.440 3% LONG TERM ASSETS 123.866 1% 88.833
1% 432.469 5% Long term securities 2.230 0% 2.032 0% 280.635 3%
Deferred taxes 60.376 1% 36.891 0% 111.488 1% Other non-current
assets 61.260 1% 49.910 1% 40.346 0% FIXED ASSETS 3.165.640 31%
3.074.700 35% 2.806.331 31% Investment in Subs 7.264 0% 7.622 0%
349 0% Property, Plant & Equipment 2.614.556 26% 2.537.094 29%
2.445.760 27% Intangibles 543.820 5% 529.984 6% 360.222 4% TOTAL
ASSETS 10.141.293 100% 8.873.550 100% 9.105.861 100% December 2011
(C) December 2013 (A) December 2012 (B) 26. 25BM&F Bovespa:
WEGE3 / OTC: WEGZY Highlights Balance sheet Liabilities (R$
thousands) R$ % R$ % R$ % CURRENT LIABILITIES 2.578.048 25%
3.012.824 34% 2.752.960 30% Social and Labor Liabilities 216.553 2%
168.831 2% 161.436 2% Suppliers 420.250 4% 331.037 4% 298.195 3%
Fiscal and Tax Liabilities 139.570 1% 126.655 1% 88.473 1% Short
Term Debt 912.796 9% 1.645.772 19% 1.701.435 19% Dividends Payable
87.723 1% 79.381 1% 2.804 0% Advances from Clients 459.130 5%
358.124 4% 285.843 3% Profit Sharring 34.191 0% 33.559 0% 26.314 0%
Other Short Term Liabilities 307.835 3% 269.465 3% 188.459 2% LONG
TERM LIABILITIES 2.920.978 29% 1.709.100 19% 2.446.312 27% Long
Term Debt 2.296.208 23% 1.044.068 12% 1.756.293 19% Other Long Term
Liabilities 95.031 1% 137.916 2% 122.485 1% Deferred Taxes 294.405
3% 320.503 4% 421.918 5% Contingencies Provisions 235.334 2%
206.613 2% 145.616 2% MINORITIES 84.495 1% 91.277 1% 106.477 1%
STOCKHOLDERS' EQUITY 4.557.772 45% 4.060.349 46% 3.800.112 42%
TOTAL LIABILITIES 10.141.293 100% 8.873.550 100% 9.105.861 100%
December 2011 (C) December 2013 (A) December 2012 (B) 27.
26BM&F Bovespa: WEGE3 / OTC: WEGZY Highlights Balance sheet
Cash flow (R$ thousands) 3 Months 3 Months 2014 2013 Operating
Activities Net Earnings before Taxes 269.317 221.413 Depreciation
and Amortization 58.805 52.136 Provisions: 88.495 67.655 Changes in
Assets & Liabilities (12.641) (6.294) (Increase) / Reduction of
Accounts Receivable 118.511 91.360 Increase / (Reduction) of
Accounts Payable 50.259 46.754 (Increase) / Reduction of
Investories (10.915) (10.480) Income Tax and Social Contribution on
Net Earnings (81.448) (71.190) Profit Sharing Paid (89.048)
(62.738) Cash Flow from Operating Activities 403.976 334.910
Investment Activities Fixed Assets (64.284) (56.759) Intagible
Assets (3.208) (811) Results of sales of fixed assets 490 903
Accumulated Conversion Adjustment (53.618) (25.135) Long term
securities bought 132 (4.497) Goodwill in Capital Transactions
(2.699) (5.169) Acquisition of Stakes of non-controlling
shareholders (5.947) (6.268) Aquisition of Subsidiaries (13.229) -
Cash Flow From Investment Activities (142.363) (97.736) Financing
Activities Working Capital Financing 16.382 827.186 Long Term
Financing (112.601) (136.811) Interest paid on loans and financing
(43.588) (11.277) Treasury Shares - - Dividends & Intesrest on
Stockholders Equity Paid (248.230) (204.724) Cash Flow From
Financing Activities (388.037) 474.374 Change in Cash Position
(126.424) 711.548 Cash & Cash Equivalents Beginning of Period
3.373.799 2.302.256 End of Period 3.247.375 3.013.804 28.
27BM&F Bovespa: WEGE3 / OTC: WEGZY Highlights Balance sheet
Debt and cash position (R$ thousands) Cash & Financial
instruments 3.376.029 2.565.532 3.212.250 - Current 3.373.799
2.563.500 2.931.615 - Long Term 2.230 2.032 280.635 Debt 3.209.004
100% 2.689.840 100% 3.457.728 100% - Current 912.796 28% 1.645.772
61% 1.701.435 49% - In Brazilian Reais 462.336 14% 1.067.683 40%
585.687 17% - In other currencies 450.460 14% 578.089 21% 1.115.748
32% - Long Term 2.296.208 72% 1.044.068 39% 1.756.293 51% - In
Brazilian Reais 2.048.766 64% 824.910 31% 1.560.712 45% - In other
currencies 247.442 8% 219.158 8% 195.581 6% Net Cash (Debt) 167.025
(124.308) (245.478) December 2013 December 2012 December 2011
