MAHLE Metal Leve S.A. Quarterly Information (ITR) at September 30, 2015 and Report on Review of Quarterly Information

Transcription

1 MAHLE Metal Leve S.A. Quarterly Information (ITR) at September 30, 2015 and Report on Review of Quarterly Information

2 MAHLE REPORTS ADJUSTED * EBITDA OF R$ MILLION IN THE 3Q15; ADJUSTED MARGIN OF 19.1% Mogi Guaçu (SP), November 9, MAHLE Metal Leve S.A. (BM&FBOVESPA: LEVE3), a Brazilian autoparts company that manufactures and sells components for internal combustion engines and automotive filters, announces today its results for the third quarter of The Company s operating and financial information, unless otherwise indicated, is presented on a consolidated basis in BRL according to Brazilian Corporation Law. Conference call and Webcast of Results: Date: November 10, :00 p.m. (Brasília time), 09:00 a.m. (Eastern time) Phone Numbers: Brazil: Brazil: USA: Other: Webcast: 3Q15 HIGHLIGHTS Net Sales Revenue totaled R$ million in the 3Q15, 12.1% above that of the 3Q14. Revenue from Exports and Aftermarket Sales accounted for 73.2% of total sales in the 3Q15. Net income totaled R$ 71.0 million in the 3Q15, with a net margin of 10.6%. The Company s Board of Directors approved the discontinuance of the operations of subsidiary MAHLE Hirschvogel Forjas S.A. MAHLE Metal Leve received the Transparency Award 2015 from Brazil s National Association of Finance, Accounting and Administration Executives (ANEFAC) for the quality of the information in its 2014 financial statements. *Adjustment due to a provision of R$ 9.3 million for discontinuance of the operations of MAHLE Hirschvogel Forjas S.A. MAHLE Metal Leve S.A. 3Q15 Release

3 Management s Comments As anticipated by the Company in its interactions with the market, the second half of 2015 has proved to be equally challenging when compared to the first half of 2015, particularly with respect to domestic sales of Original Equipment due to, among other reasons, an unfavorable macroeconomic scenario, growing political uncertainties, families current debt level which also affects resumption of sales of new vehicles, and also the high vehicle inventory level (52 days of sales ) at the end of September. Concerning production and sales of vehicles in Brazil in the nine-month period of 2015, there has been an interesting increase in the volume of export sales thus surpassing imports a fact that has not occurred since 2008 and that is an important indication of the impact of foreign exchange depreciation and the search for new markets, although sales are mainly focused on Latin America. In spite of the hard scenario described above, MAHLE Metal Leve accounted for in the first nine months of 2015 a drop lower than that compared to the drop in production of vehicles in the domestic market, and such drop was partially offset against the aftermarket performance and mainly by export sales (an increase of 40.4% and 24.5% in the 3Q15 and in the 9M15, respectively), resulting from the positive impact of the foreign exchange because of the high depreciation of the Brazilian Real over This combination of factors enabled us to reach an adjusted Ebitda margin of 19.1% and 17.8% in the 3Q15 and 9M15, respectively. With respect to the opportunities of operational adjustments (which are continuously under analysis by the Company) the Board of Directors authorized discontinuance of operations of subsidiary MAHLE Hirschvogel Forjas S.A. given the phase-out of orders of current customers and lack of perspective for the market of connecting rods within the Company's product portfolio. Accordingly, in the 3Q15 a provision was accrued in the amount of R$ 9.3 million, and the corresponding adjustments were recognized in the provision for product loss of R$ 2.5 million and in the provision for impairment of property, plant and equipment (obsolescence) in the amount of R$ 6.8 million, thus affecting the Cost of Products Sold and Other Operating Expenses, respectively. Such a decision aimed to stay the losses that subsidiary was incurring and therefore will bring positive impacts for the Company in the coming periods. It started also discussions with the shareholder Hirschvogel GmbH for the execution of a capital increase of approximately R$ 20.0 million to cope with the transaction closing costs in existing corporate ratio, fitting MAHLE Metal Leve participation in 51 % this future increase. Finally, for the second consecutive year the Company received the Transparency Award from Brazil s National Association of Finance, Accounting and Administration Executives (ANEFAC). The award highlighted the Company as one of the most transparent companies in the country among the publicly traded corporations with a turnover up to R$ 5 billion, for the quality of the information in its financial statements for About MAHLE Metal Leve We are a Brazilian autoparts company that manufactures and sells components for internal combustion engines and automotive filters. We manufacture products with state-of-the-art technology and the highest quality, and we continuously invest in research and development of new products and production processes. We have been developing activities in Brazil since the 50 s and offer a broad portfolio of products and integrated solutions that in most cases have been customized jointly with our major customers. We operate in the OEM and aftermarket segments, serving automakers and large autoparts distributors and engine overhaul enterprises. MAHLE Metal Leve S.A. 3Q15 Release

4 Our products are manufactured and sold in Brazil and Argentina, and also exported to over 60 countries, among USA, Germany, Mexico, Portugal and Spain, for a diversified portfolio of customers including General Motors/Opel, Volkswagen, Fiat, Ford, Daimler MBB, International, Cummins, Volvo, PSA Peugeot, John Deere, Renault, Scania, Caterpillar, Honda, Hyundai, among others. We own seven industrial plants, six of which are located in Brazil, in the cities of Mogi Guaçu (two units), Indaiatuba and São Bernardo do Campo, all of which are located in the State of São Paulo, and in Itajubá, in the State of Minas Gerais, and Queimados, in the State of Rio de Janeiro. Our seventh plant is located in the city of Rafaela, Argentina. We have two distribution centers: one in the city of Limeira, State of São Paulo, and one in Buenos Aires, Argentina. We have a technology center located in the city of Jundiaí, State of São Paulo, which we believe is one of the largest and most well-equipped technology centers in Latin America for development of components and solution packages for internal combustion engines. This center allows us to add value to our products and meet the requirements of our customers in a customized and efficient manner, by developing innovative technologies for products and processes. We belong to the German autoparts group MAHLE, or MAHLE Group, which was established in 1920 and is one of the world s most traditional groups in the autoparts industry. MAHLE Group, including the Company, currently has more than 170 industrial plants in 35 countries on five continents, 13 research and development centers and approximately 75 thousand employees. As part of the MAHLE Group, which has operations worldwide, we are able to exchange knowledge, have constant access to the latest technology and develop new products together with our customers, which we believe are key factors to the high level of market penetration and customer loyalty that we have achieved. MAHLE Metal Leve S.A. 3Q15 Release

5 Developments of the Brazilian automotive industry Development of the Brazilian market Brazilian vehicle production in the 9M15 fell 20.3%, and sales of the Brazilian automotive industry fell 22.8%, compared to the same period of These drops are due mainly to the scenario of high inflation, low investments by the private sector and deterioration of the Brazilian job market. All such factors, coupled with increased restriction of credit offer to consumers, affected consumers confidence in purchasing durable goods. According to the Brazilian Association of Motor Vehicle Manufacturers (ANFAVEA), vehicle inventory recorded at the end of the 3Q15 totaled thousand units, corresponding to 52 days of sales. At the end of the same period of the previous year, the vehicle inventory was equivalent to 41 days of sales (404.5 thousand units). The graph below shows the changes in the production, sales and total inventory of national vehicles in 2015 compared to MAHLE Metal Leve S.A. 3Q15 Release

6 Performance of the Argentinean automotive industry In the 9M15 period, the Argentinean automotive industry recorded a decrease of 0.6% in sales and 9.5% in production of vehicles compared to the 9M14 period. The table below shows the figures of vehicle production and sales in Brazil and Argentina. This refers to the domestic market in which the Company operates. In the 9M15 period, vehicle production in Europe and NAFTA (Company s major export markets) increased 3.4% compared to the same period of the previous year. MAHLE Metal Leve S.A. 3Q15 Release

7 Economic and Financial Performance Net sales revenue In the 3Q15, net sales revenue increased 12.1% compared to the same quarter of the previous year, reaching R$ million. This result is mainly due to the performance of OEM exports (+39.4%), aftermarket exports (+46.0%), and domestic aftermarket sales (+7.0%), which offset the decrease in the domestic OEM sales (-14.7%). Net sales revenue reported for the first nine-month period of 2015 increased 6.2% compared to the same period of 2014, reaching R$ 1,862.5 million. This is due to the performance of the OEM exports (+23.7%), aftermarket exports (+29.8%), and domestic aftermarket sales (+1.7%), which offset the decrease in the domestic OEM sales (-10.8%). MAHLE Metal Leve S.A. 3Q15 Release

8 Market share by segment Domestic OEM (original equipment manufacturer) sales Domestic OEM sales totaled R$ million in the 3Q15 (R$ million in the 3Q14), representing a drop of 14.7%. Revenues from this market represented 26.8% of total revenues obtained by the Company in the 3Q15 (35.3% in the 3Q14). In the 9M15 period, sales to this market totaled R$ million (R$ million in the 9M14), representing a drop of 10.8% compared to the same period of the previous year. Sales to this market in this period of 2015 represented 29.7% of the Company s revenues (35.3% million in the 9M14). In the 9M15, vehicle production in Brazil drop 20.3%. Domestic aftermarket sales Domestic aftermarket sales in the 3Q15 totaled R$ million (R$ million in the 3Q14), representing a growth of 7.0%. Revenues from this market represented 25.3% of total revenues obtained by the Company in the 3Q15 (26.5% in the 3Q14). For the 9M15, sales to this market totaled R$ million (R$ million in the 9M14), representing an increase of 1.7% compared to the same period of In the first nine-month period of 2015, sales to this market accounted for 24.5% of the Company s revenues (25.6% in the nine-month period of 2014). OEM exports OEM exports in the 3Q15 totaled R$ million (R$ million in the 3Q14), representing an increase of 39.4%. Sales to this market represented 40.7% of total revenues obtained by the Company in the 3Q15 (32.7% in the 3Q14). In the 9M15, sales to this market totaled R$ million (R$ million in the 9M14), an increase of 23.7% compared to the same period of In the 9M15, this market accounted for 39.8% of the Company s revenues (34.2% million in the 9M14). The main reason of such increase in the 3Q15 and in the 9M15 was the exchange variation in the periods. Aftermarket exports In the 3Q15 aftermarket exports totaled R$ 47.9 million (R$ 32.8 million in the 3Q14), representing an increase of 46.0%. Revenues from this market accounted for 7.2% of the Company s total revenues for the 3Q15 (5.5% in the 3Q14). In the 9M15, sales to this market totaled R$ million (R$ 85.8 million in the 9M14), representing a growth of 29.8% compared to the same period of In the 9M15, this market accounted for 6.0% of the Company s revenues (4.9% million in the 9M14). Again, the main reason for such increase was the exchange variation in the periods. MAHLE Metal Leve S.A. 3Q15 Release

9 exports by region The graph below shows the distribution of our sales by geographic region in the first nine months of 2015 and 2014, respectively: Net sales revenue by product In the 3Q15, sales of engine components and filters increased 13.0% and 6.8%, respectively, compared to the same quarter of the previous year. In the 9M15, sales of engine components increased 6.0% and sales of filters increased 7.4% compared to the 9M14. The graph below shows the share of both segments in the sales for the third quarter of 2015 and 2014 and in the first nine-month period of 2015 and The graph below shows the share of both segments in total net sales revenue by product in the 9M15 compared to the 9M14: Gross margin In the 3Q15, gross margin was 28.7% while in the 3Q14 was 28.6%. In the 9M15, gross margin was 27.3% (26.9% in the 9M14). It should be noted that despite the higher price of the electric power in relation to prior years and the increase in the price of other inputs, the Company has kept its profitability through automation of its production processes and rationalization of production means, as well as optimization of costs of indirect areas. MAHLE Metal Leve S.A. 3Q15 Release

10 Selling, general and administrative expenses In the 3Q15, selling expenses accounted for 7.1% of revenues, while in the 3Q14 it accounted for 7.3%. General and administrative expenses in the 3Q15 accounted for 2.9% of revenues (3.0% in the 3Q14). In the 9M15, selling expenses accounted for 7.1% of revenues, while in the 9M14, it accounted for 7.3%. General and administrative expenses accounted for 3.0% and 3.2% of revenues (9M15 and 9M14, respectively). Technology and product development expenses As this is one of its main competitive advantages, the Company believes it is essential to maintain investments in R&D. In the 3Q15, this expense accounted for 3.1% of net sales revenue, while in the 3Q14 it corresponded to 3.2%. In the first nine-month period of 2015, it represented 3.4% of net sales revenue (3.1% in the first nine months of 2014), which is in line with the percentage reported in the past periods. Other operating income (expenses), net In the 3Q15, the Company reported net operating expenses of R$ 13.3 million, while in the 3Q14, it recorded net operating expenses of R$ 10.0 million. For the 9M15, net operating expenses were R$ 16.4 million (net expenses of R$ 10.6 million in the 9M14). The negative variation is mainly due to the recognition of a provision for impairment of property, plant and equipment (obsolescence) in view of discontinuance of operations of MAHLE Hirschvogel Forjas S.A. and the reduction in income from sale of electric surplus, as shown in the table below: Operating income measures by EBITDA In the 3Q15, adjusted EBITDA was R$ million (R$ million in the 3Q14), representing adjusted EBITDA margin of 19.1% (17.9% in the 3Q14). In the 9M15, adjusted EBITDA was R$ million, representing EBITDA margin of 17.8%, while in the 9M14 EBTIDA was R$ million (a margin of 17.3% in the 9M14). MAHLE Metal Leve S.A. 3Q15 Release

11 Such performance (for the 3Q15 and the 9M15 in relation to the same periods of 2014) resulted from the increase in net sales revenue (mainly the increase in exports, of 40.4% and 24.5% in the 3Q15 and in the 9M15, respectively) and management of costs aiming to maintain the margins. Net financial income (expenses) In the 3Q15, the Company reported net financial expenses of R$ 0.3 million, while in the 3Q14 net financial expenses totaled R$ 5.3 million. In the 9M15, net financial expenses totaled R$ 13.7 million, and in the 9M14, they totaled R$ 15.0 million. The positive change in net financial income (expenses) is mainly due to the net exchange variation and the results from derivatives obtained in the periods compared. Income and social contribution taxes Income and social contribution tax expense accrued by the Company as of September 30, 2015 totaled R$ 78.0 million (R$ 63.0 million as of September 30, 2014), consolidated. This amount includes current and deferred income and social contribution taxes; the actual rate as of September 30, 2015 was 42.0% (36.9% as of September 30, 2014). The main factors for the increase in the actual rates were non-recognition of tax credits on losses incurred in the period by subsidiaries MAHLE Metal Leve Miba Sinterizados Ltda., MAHLE Filtroil Indústria e Comercio de Filtros Ltda., MAHLE Industry do Brasil Ltda., and MAHLE Hirschvogel Forjas S.A. Further explanations are available in note 11 to the Quarterly Information Report of September 30, Net income Net income in the 3Q15 totaled R$ 71.0 million (R$ 59.7 million in the 3Q14), representing a growth of 18.9% between the periods compared. The net margin in the 3Q15 was 10.6% and 10.0% in the 3Q14. Net income in the 9M15 totaled R$ million (R$ million in the 9M14), representing a growth of 7.0% in such nine-month period, and net margin of 9.0% (8.9% in the 9M14). Capital expenditures In the nine-month period of 2015, capital expenditures (capex) totaled R$ 89.3 million and were channeled into new buildings, warehousing systems, new products, replacement of machinery and equipment aiming to increase productivity and quality, R&D and IT equipment, among others. Total accumulated depreciation was R$ 81.4 million and includes regular depreciation and amortization (R$ 70.6 million) and depreciation of deemed cost of property, plant and equipment (R$ 10.8 million), relating to adjustment for adoption of the International Financial Reporting Standard (IFRS). Capital expenditures estimated for 2015 totals R$ million. MAHLE Metal Leve S.A. 3Q15 Release

12 Indebtedness At the end of the 9M15, the Company s net indebtedness amounted to R$ million, representing an increase of 7.1% compared to that of the end of 2014 (R$ million). The net debt / EBITDA at the end of 9M15, was 0.73 times, while at the end of 9M14, the indicator was 0.76 times. Dividends and Interest on Capital to Shareholders The Board of Directors meeting held on August 3, 2015 approved distribution of interest on capital (gross) in the amount of R$ 25.3 million relating to the period between April 1, 2015 and July 31, The table below shows the amounts approved by Annual General Meeting and Board of Directors Meeting, paid in MAHLE Metal Leve S.A. 3Q15 Release

13 Investor Relations and Capital Markets In 2015, the Company s Investor Relations team continued with the actions to improve its internal processes and information flow, thus enhancing interaction with the most varied capital market players and stakeholders, seeking to show to the market how the Company operates. Further, the Company continues participating in several meetings, conferences, site visits, teleconferences, and other events focused on the capital market, including contacts by phone and s. Awards and Recognitions For the second consecutive year the Company received the Transparency Award from Brazil s National Association of Finance, Accounting and Administration Executives (ANEFAC). The award highlighted the Company as one of the most transparent companies in the country among the publicly traded corporations with a turnover up to R$ 5 billion, for the quality of the information in its financial statements for Performance of the Company shares and free-float shares The graphs below show the evolution of LEVE3 shares, the Average Daily Trading Volume (ADTV) and the ADTV turnover in relation to the free-float market capitalization in the 9M15: Shareholders profile In the 9M15 and 9M14, shareholders profile in relation to the Company shares, including free-floating shares, was represented as follows: MAHLE Metal Leve S.A. 3Q15 Release

14 Market Maker Change Aiming to increase liquidity and improve the environment to trade its shares (LEVE3), the Company engaged, as from October 19, 2015, Brasil Plural CCTVM S.A. ( Brasil Plural ) to act as Market Maker. Independent auditors In accordance with CVM Instruction No. 381/03, the Company and its subsidiaries adopt the procedure of ensuring that the provision of other services by auditors will not create any conflict of interest or affect the independence and objectivity necessary for independent audit services. During the third quarter of 2015, the Company did not contract the firm PricewaterhouseCoopers Auditores Independentes to perform other services, therefore, no situation arose that could generate conflict of interest under the terms of that CVM Instruction. Representation by the Executive Board In compliance with the provisions of CVM Instruction 480, Management declares that it discussed, reviewed and agreed with the quarterly financial information for the period ended September 30, 2015 and with the opinions expressed in the independent auditor s report. Acknowledgments Company s Management thanks its shareholders, employees, customers and suppliers for the support and trust during the first nine months of Management MAHLE Metal Leve S.A. 3Q15 Release

15 MAHLE Metal Leve S.A. Quarterly information (ITR) at September 30, 2015 Contents Independent auditor's report on financial statements 2-3 Balance sheet 4-5 Statement of income 6-7 Statement of comprehensive income 8 Statement of changes in equity 9-10 Statement of cash flows- indirect method 11 Statement of value added Officer s representation on the financial statements 74 Officer s representation on the independent auditor s report 75

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20 Balance sheet at September 30, 2015 and December 31, 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) Assets Note 9/30/ /31/2014 9/30/ /31/2014 Cash and cash equivalents 6 330, , , ,282 Trade and related-party receivables 7/10 421, , , ,952 Inventories 8 252, , , ,169 Taxes recoverable 9 37,076 55,777 58,879 71,168 Dividends and interest on capital receivable 10 31,909 30, Unrealized gains on derivative financial instruments 31 6,791 3,162 11,196 4,283 Other assets 19,920 10,849 28,588 15,676 Total current assets 1,099, ,987 1,385,621 1,095,530 Taxes recoverable 9 17,389 16,651 31,358 26,906 Loans to related parties 10 24,982 18,784 2,052 17,112 Deferred income tax and social contribution 11.b - - 4,952 7,381 Investments in subsidiaries , ,554 3,128 - Property, plant and equipment , , , ,598 Intangible assets , , , ,973 Other assets 12,497 12,134 12,666 12,329 Total non-current assets 1,453,196 1,426,434 1,453,444 1,450,299 Total assets 2,552,951 2,335,421 2,839,065 2,545,829 The accompanying notes are an integral part of these interim financial statements. 4

21 Balance sheet at September 30, 2015 and December 31, 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) Liabilities 9/30/ /31/2014 9/30/ /31/2014 Dividends and interest on capital payable , ,612 Trade and related-party payables 10/15 84,495 65, ,881 98,759 Taxes and contributions payable 16 31,306 26,378 59,005 43,135 Borrowings , , , ,633 Salaries, vacation pay and social charges 18 86,573 58, ,610 73,309 Sundry provisions 19 17,028 10,224 25,172 16,081 Provisions for warranties 20 12,749 12,028 16,242 15,452 Unrealized losses on derivative financial instruments ,550 20, ,019 20,644 Advances from customers 4,973 5,141 8,724 6,157 Other liabilities 34,940 38,542 40,468 43,736 Total current liabilities 608, , , ,518 Loans to related parties Deferred income tax and social contribution 11.b 69,218 86,823 72,722 88,911 Provision for subsidiary's net capital deficiency 12 7,160 4, Taxes and contributions payable 16 4,819 4,819 5,255 5,255 Borrowings , , , ,672 Provisions for contingencies and judicial deposits linked to judicial proceedings , , , ,770 Other liabilities 2,352 1,421 2,352 1,423 Total non-current liabilities 536, , , ,031 Equity 22 Share capital 966, , , ,255 Revenue reserves 292, , , ,706 Other comprehensive income 27,384 30,284 27,384 30,284 Retained earnings 122, ,267 - Proposed additional dividends - 46,123-46,123 Equity attributable to the owners of the parent 1,407,975 1,326,368 1,407,975 1,326,368 Non-controlling interests - - 2,781 18,912 Total equity 1,407,975 1,326,368 1,410,756 1,345,280 Total liabilities 1,144,976 1,009,053 1,428,309 1,200,549 Total liabilities and equity 2,552,951 2,335,421 2,839,065 2,545,829 The accompanying notes are an integral part of these interim financial statements. 5

22 Statement of income Periods ended September 30, 2015 and 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) Note 3Q2015 9M2015 3Q2014 9M2014 Net revenue ,970 1,474, ,395 1,441,790 Cost of sales 25 (375,263) (1,069,163) (350,397) (1,059,893) Gross profit 154, , , ,897 Selling expenses 26 (33,318) (93,542) (33,646) (99,504) General and administrative expenses 27 (15,501) (44,818) (13,114) (42,432) Technology and product development costs 28 (18,170) (55,352) (17,956) (50,940) Other income 30 15,110 45,702 16,950 51,320 Other expenses 30 (17,633) (47,838) (24,345) (55,715) Equity in the results of investees ,512 9,051 23,393 Profit before finance income (costs) and taxation 86, ,556 74, ,019 Finance income , ,122 26,009 67,603 Finance costs 29 (94,733) (172,543) (25,285) (65,840) Finance income (costs), net 7,635 7, ,763 Profit before taxation 93, ,135 75, ,782 Current income tax and social contribution 11.a (25,937) (59,061) (6,247) (41,004) Deferred income tax and social contribution 11.a 3, (9,715) (12,476) Income tax and social contribution (22,662) (58,873) (15,962) (53,480) Profit for the period 71, ,262 59, ,302 Basic and diluted earnings per share (in reais) The accompanying notes are an integral part of these interim financial statements. 6

23 Statement of income Periods ended September 30, 2015 and 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) Note 3Q2015 9M2015 3Q2014 9M2014 Net revenue ,880 1,862, ,929 1,754,343 Cost of sales 25 (475,964) (1,354,796) (425,669) (1,282,539) Gross profit 191, , , ,804 Selling expenses 26 (47,221) (131,381) (43,322) (128,293) General and administrative expenses 27 (19,486) (55,089) (17,693) (55,456) Technology and product development costs 28 (20,532) (62,958) (19,131) (55,209) Other income 30 14,890 49,668 17,853 55,131 Other expenses 30 (28,245) (66,089) (27,804) (65,695) Profit before finance income (costs) and taxation 91, ,850 80, ,282 Finance income , ,491 32,601 87,674 Finance costs 29 (120,324) (228,186) (37,862) (102,658) Finance income (costs), net (315) (13,695) (5,261) (14,984) Profit before taxation 91, ,155 74, ,298 Current income tax and social contribution 11.a (31,985) (74,405) (9,165) (51,140) Deferred income tax and social contribution 11.a 3,787 (3,590) (9,801) (11,843) Income tax and social contribution (28,198) (77,995) (18,966) (62,983) Profit for the period 62, ,160 55, ,315 Profit attributable to Owners of the parent 71, ,262 59, ,302 Non-controlling interests (8,276) (17,102) (3,764) (11,987) Profit for the period 62, ,160 55, ,315 Basic earnings per share (in reais) The accompanying notes are an integral part of these interim financial statements. 7

24 Statement of comprehensive income Periods ended September 30, 2015 and 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) Q2015 9M2015 3Q2014 9M2014 Profit for the period 71, ,262 59, ,302 Comprehensive income Items that will be reclassified to profit or loss Change in cash flow hedge, net (46,985) (51,226) (14,135) 19,027 Change in subsidiaries' cash flow hedge, net 2,020 2, Income tax and social contribution on cash flow hedge 15,975 17,417 4,806 (6,469) Income tax and social contribution on subsidiaries' cash flow hedge (686) (750) (169) (24) Cumulative translation adjustments 27,575 35,135 4,571 (12,554) Other comprehensive income (2,101) 2,783 (4,429) 51 Total comprehensive income for the period, net of income tax and social contribution 68, ,045 55, ,353 Total comprehensive income 68, ,045 55, ,353 The accompanying notes are an integral part of these interim financial statements. MAHLE Metal Leve S.A. Statement of comprehensive income Periods ended September 30, 2015 and 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) Q2015 9M2015 3Q2014 9M2014 Profit for the period 62, ,160 55, ,315 Comprehensive income Items that will be reclassified to profit or loss Change in cash flow hedge, net (43,619) (47,548) (13,303) 19,147 Income tax and social contribution on cash flow hedge 14,831 16,167 4,522 (6,511) Cumulative translation adjustments 26,696 33,952 4,365 (11,576) Translation adjustments of deferred income tax (subsidiaries located abroad) 879 1, (978) Other comprehensive income (1,213) 3,754 (4,210) 82 Total comprehensive income for the period, net of income tax and social contribution 61, ,914 51, ,397 Comprehensive income attributable to: Owners of the parent 68, ,045 55, ,353 Non-controlling interests (7,388) (16,131) (3,545) (11,956) Total comprehensive income 61, ,914 51, ,397 The accompanying notes are an integral part of these interim financial statements

25 Statement of changes in equity Period ended September 30, 2015 All amounts in thousands of reais (A free translation of the original in Portuguese) Attributable to owners of the parent Revenue reserves Other comprehensive income Note Share capital Legal reserve Reserve for expansion and modernization Proposed additional dividends Total Carrying value adjustments Cumulative translation adjustments Total Retained earnings Equity attributable to owners of the parent Non-controlling interests Total equity At December 31, ,255 99, ,127 46, ,829 42,315 (12,031) 30,284-1,326,368 18,912 1,345,280 Equity transactions with shareholders Interim interest on capital credited (42,515) (42,515) - (42,515) Prescribed dividends and interest on capital Profit for the period , ,262 (17,102) 150,160 Other comprehensive income Cumulative translation adjustments ,135 35,135-35,135-35,135 Financial instrument adjustments (49,019) - (49,019) - (49,019) 1,471 (47,548) Taxes on financial instrument adjustments ,667-16,667-16,667 (500) 16,167 Realization of deemed cost, net (5,683) - (5,683) 5, Internal changes in equity Appropriation to legal reserve - 8, , (8,363) Payment of proposed additional dividends (46,123) (46,123) (46,123) - (46,123) At September 30, , , , ,069 4,280 23,104 27, ,267 1,407,975 2,781 1,410,756 The accompanying notes are an integral part of these interim financial statements. 9

26 Statement of changes in equity Period ended September 30, 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) Attributable to owners of the parent Revenue reserves Other comprehensive income Note Share capital Legal reserve Reserve for expansion and modernization Proposed additional dividends Total Carrying value adjustments Cumulative translation adjustments Total Retained earnings Equity attributable to owners of the parent Non-controlling interests Total equity At December 31, ,255 89, ,127 89, ,923 53,284 (6,794) 46,490-1,375,668 (1,409) 1,374,259 Equity transactions with shareholders Interim interest on capital credited (36,730) (36,730) - (36,730) Prescribed dividends and interest on capital Capital increase of MAHLE Hirschvogel Forjas S.A ,300 34,300 Liabilites assumed by the parent (2,703) (2,703) Profit for the period , ,302 (11,987) 144,315 Other comprehensive income Cumulative translation adjustments (12,554) (12,554) - (12,554) - (12,554) Financial instrument adjustments ,098-19,098-19, ,147 Taxes on financial instrument adjustments (6,493) - (6,493) - (6,493) (18) (6,511) Realization of deemed cost, net (15,835) - (15,835) 15, Internal changes in equity Appropriation to legal reserve - 7, , (7,814) Payment of proposed additional dividends (89,621) (89,621) (89,621) - (89,621) At September 30, ,255 96, , ,116 50,054 (19,348) 30, ,702 1,405,779 18,232 1,424,011 The accompanying notes are an integral part of these interim financial statements. 10

27 Statement of cash flows Periods ended September 30, 2015 and 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) 9M2015 9M2014 9M2015 9M2014 Cash flows from operating activities Note Profit before taxation 226, , , ,298 Adjustments for: Depreciation and amortization 67,313 69,093 80,809 80,942 Equity in the results of investees (12,431) (23,746) - - Recognition (reversal) of provision for impairment of investments 2, Interest and foreign exchange and monetary variations, net 16,865 23,340 91,515 28,074 Unrealized (losses) gains on derivative financial instruments 28,120 2,404 28,914 2,476 Results on disposal of property, plant and equipment (2,352) (362) (2,471) (359) Recognition (reversal) of provision for impairment of trade receivables 3, ,537 (96) Recognition (reversal) of provision for tax and other contingencies 2,494 16,906 4,653 19,739 Recognition (reversal) of provisions for warranties 3,170 5,759 4,465 7,142 Recognition (reversal) of sundry provisions 6,804 (5,635) 9,091 (2,510) Recognition (reversal) of provision for impairment of property, plant and (163) (3,565) 6,610 (3,565) Recognition (reversal) of provision for inventory loss 2,823 1,696 8,454 2,729 (Increase) decrease in assets Trade and related-party receivables (108,698) (23,476) (143,117) (53,921) Inventories (41,208) (35,403) (76,629) (35,571) Taxes recoverable (14,892) (5,042) (30,772) (5,632) Other assets (9,434) 3,545 (13,249) (1,770) Increase (decrease) in liabilities Trade and related-party payables 19,398 16,286 26,121 22,111 Salaries, vacation pay and social charges 27,813 22,622 34,301 22,900 Taxes and contributions payable 1,993 8,287 7,544 8,521 Advances from customers (168) (6,220) 2,567 (5,216) Other liabilities (14,530) (19,422) (17,608) (20,858) Cash from operations 205, , , ,434 Income tax and social contribution paid (23,266) (11,940) (27,466) (14,482) Net cash provided by operating activities 181, , , ,952 Cash flows from investing activities Dividends and interest on capital received from subsidiary 29,864 20, Loans granted to subsidiaries (39,924) (38,197) - - Loan repayments received from subsidiaries 35,755 50, Additions to property, plant and equipment (51,581) (54,435) (70,552) (71,292) Additions to intangible assets (18,754) (8,542) (18,787) (8,739) Capital increase of subsidiary (10) - (10) - Proceeds from sale of property, plant and equipment 2,989 21,614 3,234 21,988 Net cash (used in) provided by investing activities (41,661) (8,600) (86,115) (58,043) Cash flows from financing activities Proceeds from borrowings 52,035 31, , ,534 Repayment of principal of borrowings (47,794) (4,347) (326,355) (287,283) Repayment of interest on borrowings (22,708) (15,909) (27,867) (24,946) Capital increase of subsidiary ,300 Dividends and interest on capital paid (93,165) (126,241) (93,165) (126,242) Net cash provided by (used in) financing activities (111,632) (115,199) (106,225) (73,637) Increase (reduction) in cash and cash equivalents, net 28, ,870 34, ,272 Cash and cash equivalents at January 1st 279, , , ,893 Effect of foreign exchange variation on cash and cash equivalents 22, ,709 (10) Cash and cash equivalents at the end of the period 6 330, , , ,155 The accompanying notes are an integral part of these interim financial statements. 11

28 MAHLE Metal Leve S.A. Statement of value added Periods ended September 30, 2015 and 2014 All amounts in thousands of reais (A free translation of the original in Portuguese) 9M2015 9M2014 9M2015 9M2014 Gross revenue 1,812,593 1,816,836 2,231,909 2,168,164 Sales of goods, products and services 1,813,108 1,816,563 2,232,440 2,167,039 Other revenue 1, ,882 1,096 Provision for impairment of trade receivables (2,065) (324) (2,413) 29 Inputs acquired from third parties (1,073,518) (1,052,834) (1,334,244) (1,256,682) (Includes amounts of taxes: ICMS, IPI, PIS and COFINS) Cost of sales and services (591,134) (573,584) (759,490) (704,726) Materials, energy, outsourced services and other (481,523) (484,068) (564,642) (553,335) Impairment/recovery of assets (861) 4,818 (10,112) 1,379 Gross value added 739, , , ,482 Depreciation and amortization (67,313) (69,093) (80,809) (80,942) Net value added generated by the company 671, , , ,540 Value added received through transfer 189,634 90, ,491 87,674 Equity in the results of investees 9,512 23, Finance income 180,122 67, ,491 87,674 Total value added to distribute 861, ,905 1,031, ,214 Distribution of value added 861, ,905 1,031, ,214 Personnel 268, , , ,619 Taxes and contributions 253, , , ,878 Capital providers 172,343 65, , ,402 Interest 22,343 16,303 42,920 33,880 Rentals - - 1, Foreign exchange, monetary and other variations 150,000 49, ,126 66,849 Shareholders 167, , , ,315 Dividends and interest on capital 42,515 36,730 42,515 36,730 Retained earnings 124, , , ,572 Share of non-controlling interests of retained earnings - - (17,102) (11,987) The accompanying notes are an integral part of these interim financial statements. 12

29 MAHLE Metal Leve S.A. 1 Operations MAHLE Metal Leve S.A. (the Company ) is a publicly-held corporation headquartered in the city of Mogi Guaçu, State of São Paulo. The Company's main activities are research, development, manufacturing and marketing, in Brazil and abroad, of parts and accessories for internal combustion engines for various industries and lines of activity, such as manufacturers of automobiles, trucks and tractors, etc., the spare parts market and the industry for aviation, stationary and other engines. 2 Entities of the Group (Subsidiaries) Subsidiaries Ownership percentage (% ) 9/30/ /31/2014 Country Direct Indirect Direct Indirect MAHLE Metal Leve Miba Sinterizados Ltda. Brazil MAHLE Argentina S.A. Argentina MAHLE Filtroil Ind. e Com. de Filtros Ltda. Brazil MAHLE Metal Leve GmbH Austria MAHLE Industry do Brasil Ltda. Brazil MAHLE Hirschvogel Forjas S.A. Brazil Related companies Innoferm Tecnologia Ltda. Brazil Basis of preparation a. Preparation and presentation of interim financial statements The parent company and consolidated interim financial statements have been prepared in accordance with accounting practices adopted in Brazil (BRGAAP) and ratified by the Brazilian Securities Commission (CVM). In addition, the quarterly information includes the minimum requirements for disclosure established by CPC 21 (R1), Interim Financial Reporting, issued by the Brazilian Accounting Pronouncements Committee (CPC), as well as other relevant information. This information does not include all annual financial statement requirements and, therefore, it should be read together with the parent company and consolidated financial statements of MAHLE Metal Leve S.A. at December 31, 2014, 13

30 which have been prepared in accordance with accounting practices adopted in Brazil and the International Financial Reporting Standards (IFRS). This quarterly financial information for the period ended September 30, 2015 was not subject to full disclosure as the relevant information had already been presented in the annual financial statements, as provided in Circular Letter/CVM/SNC/SEP 003/2011. The preparation of quarterly information requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company s accounting policies. There have been no changes in assumptions and judgments made by management relating to the use of estimates to prepare this quarterly information in relation to those applied in the financial statements at December 31, 2014 as disclosed on March 16, The issue of these parent company and consolidated interim financial statements was authorized by the Company s Board of Directors on November 5, Summary of significant accounting policies These parent company and consolidated interim financial statements have been prepared under the same accounting practices as described and disclosed in Note 4 to the financial statements for the year ended December 31, Segment reporting 1) Operating segments The Company has determined the operating segments based on the reports used to make strategic operating decisions. The Company has two segments: engine components and filters. The information presented is measured in a manner consistent with that in the statement of income. There was no change in the segment structure presented in the financial statements at December 31,

31 3rd quarter months 2015 Engine Engine Statement of income components Filters components Filters Gross operating revenue 707, , ,583 1,962, ,297 2,339,255 Deductions from sales (132,053) (38,650) (170,703) (364,655) (112,105) (476,760) Net operating revenue 575,389 92, ,880 1,598, ,192 1,862,495 Cost of sales (401,739) (74,225) (475,964) (1,148,506) (206,290) (1,354,796) Gross profit 173,650 18, , ,797 57, ,699 Selling expenses (40,034) (7,187) (47,221) (109,329) (22,052) (131,381) Administrative expenses (16,252) (3,234) (19,486) (45,961) (9,128) (55,089) Technology research costs (16,946) (3,586) (20,532) (51,858) (11,100) (62,958) Other operating income (expenses) (13,484) 129 (13,355) (16,479) 58 (16,421) Finance income 114,257 5, , ,137 14, ,491 Finance costs (113,261) (7,063) (120,324) (212,222) (15,964) (228,186) Profit before income tax and social contribution 87,930 3,077 91, ,085 14, ,155 3rd quarter months 2014 Engine Engine Statement of income components Filters components Filters Gross operating revenue 640, , ,916 1,886, ,751 2,236,758 Deductions from sales (131,023) (35,964) (166,987) (377,712) (104,703) (482,415) Net operating revenue 509,331 86, ,929 1,508, ,048 1,754,343 Cost of sales (359,920) (65,749) (425,669) (1,086,146) (196,393) (1,282,539) Gross profit 149,411 20, , ,149 49, ,804 Selling expenses (35,917) (7,405) (43,322) (107,242) (21,051) (128,293) Administrative expenses (14,703) (2,990) (17,693) (46,656) (8,800) (55,456) Technology research costs (16,122) (3,009) (19,131) (46,637) (8,572) (55,209) Other operating income (expenses) (10,253) 302 (9,951) (11,168) 604 (10,564) Impairment Finance income 30,541 2,060 32,601 81,410 6,264 87,674 Finance costs (35,141) (2,721) (37,862) (95,838) (6,820) (102,658) Profit before income tax and social contribution 67,816 7,085 74, ,018 11, ,298 9/30/ /31/2014 Engine Engine Balance sheet accounts components Filters components Filters Total assets 2,651, ,233 2,839,065 2,372, ,234 2,545,829 Inventories 350,891 45, , ,828 42, ,169 Property, plant and equipment 2,396, ,956 2,521,052 2,325, ,463 2,446,088 Depreciation and amortization (1,685,910) (70,097) (1,756,007) (1,613,540) (64,950) (1,678,490) Intangible assets 35,936 2,412 38,348 21,654 3,098 24,752 Goodwill 595, , , ,221 Investment - Innoferm Tecnologia Ltda. 3,128-3, Other 955,796 84,840 1,040, ,807 72, ,089 15

32 2) Geographic distribution The Group does not have any customer which accounts for more than 10% of total consolidated net revenue. The consolidated net operating revenue at September 30, 2015 was R$ 1,862,495 (R$ 1,754,343 at September 30, 2014), the portion of which relating to foreign countries amounting to R$ 852,458 (R$ 684,933 at September 30, 2014) is distributed as follows: Sales per country 3Q2015 % 9M2015 % 3Q2014 % 9M2014 % Domestic market (Brazil and Argentina) 348, % 1,010, % 368, % 1,069, % Europe 146, % 389, % 104, % 322, % Central and North America 126, % 343, % 88, % 255, % South America 24, % 60, % 19, % 56, % Africa, Asia, Oceania and Middle East 21, % 59, % 15, % 51, % Foreign countries 319, % 852, % 227, % 684, % Total 667, % 1,862, % 595, % 1,754, % 6 Cash and cash equivalents 9/30/ /31/2014 9/30/ /31/2014 Cash and demand deposits (*) 63,512 17,096 66,017 21,606 Financial investments 264, , , ,770 Cash in transit 2,392-8,576 2, , , , ,282 (*) Opening cash and demand deposits 9/30/ /31/2014 9/30/ /31/2014 BRL 1,796 3,300 3,834 7,349 USD (expressed in BRL) 36,072 7,573 36,397 7,754 EUR (expressed in BRL) 25,644 6,223 25,787 6,503 Total 63,512 17,096 66,017 21,606 The Company holds checking accounts at major banks in Brazil and abroad. 16

33 Financial investments were made as follows: - Bank Deposit Certificates (CDBs) and Repurchase Agreements (85%), which yield an average interest rate of 100.6% of the Interbank Deposit Certificate (CDI), held exclusively at first-tier banks in Brazil; - Certificate Deposits and Time Deposits are short-term, highly liquid investments with original maturities of three months or less and subject to an insignificant risk of change in value. - They are recorded at updated value up to the end of the period. Their values reflect the redemption amount that would be realized if the investments were redeemed on that date. Yields on these transactions are recognized as finance income. Cash in transit refers to deposits in foreign currency relating to funds received from customers abroad, available for redemption from the banks with which the Group operates. 7 Trade and related-party receivables 9/30/ /31/2014 9/30/ /31/2014 Market Domestic 208, , , ,550 Foreign 122,206 73, , , , , , ,108 Provision for impairment of trade receivables (6,574) (3,520) (8,672) (4,135) 324, , , ,973 Related parties (Note 10) 97,192 53,892 84,813 40, , , , ,952 The Group's exposure to credit and currency risks relating to trade receivables is disclosed in Note 31. At September 30, 2015, trade receivables of the parent company in the amount of R$ 28,375 (December 31, R$ 18,773) and consolidated trade receivables of R$ 41,257 (December 31, R$ 27,065) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. 17

34 The amounts and the aging analysis of trade receivables are as follows: 9/30/ /30/ /31/2014 Not yet due 295, , , ,908 Past due: Up to 7 days 10,824 4,087 19,408 7,428 From 8 to 30 days 9,681 8,886 11,777 12,789 From 31 to 60 days 4,070 2,465 5,654 2,868 From 61 to 90 days 1,267 1,670 1,917 2,227 From 91 to 120 days 2,741 1,522 3,322 1,832 From 121 to 180 days 3, , From 181 to 360 days 954 1,244 1,451 1,310 Over 360 days 1,753 1,951 1,942 2,123 (-) Provision for impairment of trade receivables (6,574) (3,520) (8,672) (4,135) Total past due 28,375 18,773 41,257 27, , , , ,973 In the table above, where the provision for impairment of trade receivables over 120 days past due is presented, the amounts of goods returned and advances from customers are excluded. No provision is recorded for impairment of receivables from related parties. Changes in the provision for impairment of trade receivables are as follows: At December 31, 2014 (3,520) (4,135) Receivables provided for in the period (4,902) (6,990) Receivables reversed in the period 2,613 3,246 Receivables written off definitively Foreign exchange variation (990) (1,092) At September 30, 2015 (6,574) (8,672) 18