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 fourth quarter of 2018 (4Q18)
Highlights:
Net Operating Revenues were R$ 3,124.7 million in 4Q18, 16.9% higher than 4Q17 and 3.5% lower than 3Q18. Ajusted for the consolidation effects of the TGM acquisition, net revenues would have shown a 15.1% increase vs. 4Q17.
EBITDA reached R$ 489.8 million, 30.2% higher than 4Q17 and 0.2% higher than 3Q18, while EBITDA margin was 15.7%, 1.6 p.p. higher than 4Q17 and 0.6 p.p. higher than 3Q18.
Returno on Invested Capital (ROIC) reached 17.6% in 4Q18, up 1.0 p.p. from 4Q17 and up 0.4 p.p. from 3Q18.
We observed in this quarter evolution in the recovery process of the Brazilian industrial sector. In addition to the investments in short cycle equipments which are performing at normal levels, we began to observe the resumption of long cycle projects quotes, still concentrated in specific industries such as pulp & paper and oil & gas. 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. In GTD (Energy Generation, Transmission and Distribution) business area, the lower participation of wind generation projects combined with the volatility in transmission and distribution delivery, normally present during government transition periods, contributed to the reduction of 4Q18 revenues in Brazil.
In the external markets, growth remains consistent in short cycle equipments sales and new opportunities in projects requiring long cycle equipments continue to appear, mainly for the oil & gas, pulp & paper and mining segments.
The ROIC expansion was highlighted again this quarter, proving right the strategy of investing in new businesses with attractive returns. Volatility over operating margins, especially in GTD in Brazil and abroad, was more than offset by gains in scale and efficiency in capital allocation.
