WEG S.A. (B3(NM): WEGE3, OTC: WEGZY), one of the world’s largest manufacturers of electric-electronic equipments, announced today its results for the first quarter of 2019 (1Q19).
Highlights:
Net Operating Revenues were R$ 2,932.4 million in 1Q19, 14.9% higher than 1Q18 and 6.2% lower than 4Q18. Adjusted for the consolidation effects of the TGM acquisition, net revenues would have shown a 13.3% increase vs. 1Q18.
EBITDA reached R$ 461.8 million, 21.6% higher than 1Q18 and 5.7% lower than 4Q18, while EBITDA margin was 15.7%, 0.8 p.p. higher than 1Q18 and the same level compared to the previous quarter.
Return on Invested Capital (ROIC) reached 18.0% in 1Q19, up 1.5 p.p. from 1Q18 and up 0.4 p.p. from 4Q18.
We observed another positive quarter for the recovery process of Brazilian business environment. In the industrial area, in addition to the investments in short cycle equipment which are still consistent, we have noticed the resumption of some long cycle projects quotes, still concentrated in specific industries such as pulp & paper, oil & gas and mining. It is worth mentioning that this recovery should happen gradually, depending also on the confirmation in economic scenario improvement and the increase of the Brazilian industry confidence, which, according to recent indicators, showed a slight decrease compared to the beginning of the year. In GTD area (Generation, Transmission and Distribution) we have shown revenue growth, despite the lower participation of wind generation projects, already expected for this quarter, mainly due to the good performance of solar generation projects and the sales growth of transformers and substations.
In the external markets, we highlight the revenue growth in local currencies that remained consistent, mainly in short cycle equipment sales. New opportunities in projects requiring long cycle equipment continue to appear, specifically in the oil & gas, pulp & paper, infrastructure and mining segments.
ROIC presented another expansion quarter, proving right the strategy of investing in new businesses with favaroble returns. Factors such as the improvement in operating margins coupled with gains in scale and efficiency in capital allocation have supported the growth seen in recent quarters.
