Performance regarding to the third quarter of 2013 of MAHLE Metal Leve S.A.

Transcription

1 Performance regarding to the third quarter of 2013 of MAHLE Metal Leve S.A. Mogi Guaçu, SP, November 8, MAHLE Metal Leve S.A. (BM&FBOVESPA: LEVE3), a leading manufacturer of engine components in Brazil, announces today its results for the third quarter of The Company s operating and financial information, except where otherwise indicated, is presented on a consolidated basis in BRL, according to Brazilian Corporation Law. Performance Net Sales Revenue was R$ million in the third quarter of 2013 (R$ million in the third quarter of 2012), up 9.7% from the third quarter of There was an increase of 5.1% in net sales revenue when comparing January-September 2013 and the same period of Adjusted EBITDA (*) was R$ million in the third quarter of 2013 (R$ million in the third quarter of 2012), representing an adjusted EBITDA margin of 22.3% (20.2% in the same quarter of the prior year). Net income for the third quarter of 2013 was R$ 78.7 million (R$ 55.0 million in the third quarter of 2012), representing a net margin of 12.3% (9.4% in the third quarter of 2012) Share Price October 15, 2013 LEVE3 R$/share US$/share Shares Outstanding 2013 Total Shares 128,308,500 Free Float 30% Market Capitalization October 15, 2013 R$ 3,550.3 Million US$ 1,627.2 Million Shareholder benefits in 2013 R$/share US$/share Key drivers Tecnology and innovation Market mix Payout and Dividend yield Investor Relations Caio Gonçalves de Moraes caio.moraes@br.mahle.com João Antônio Passos Carvalho joao.carvalho@br.mahle.com Ana Paula Nogueira de Oliveira ana.nogueira@br.mahle.com Tel.: (55-11) (55-11) Fax.: (55-11) relacoes.investidores@br.mahle.com The 3Q2013 earnings release conference call will be held on November 12, 2013 at 12:00 p.m. (with simultaneous translation) Brazil local time. (Please visit the Investor Relations website at (*) calculation which had been utilized by the Company until financial statements regarding third quarter 2012, prior to Brazilian SEC Instruction 527/2012 effective in 2013, and which includes the provision for impairment of property, plant and equipment and intangible assets.

2 Management report for the third quarter of Macroeconomic Scenario Evolution of the Brazilian automotive industry Evolution of the Argentinean automotive industry Evolution Summary of automotive industry in the MERCOSUR and evolution of the main markets in which the Company operates Excellence and technological innovation Economic and financial performance of the company Net Sales revenue Summary of statements of income Financial management Net income Capital expenditures Investor Relations and Capital Market Human resources Independent auditors Outlook... 16

3 1. Macroeconomic Scenario In the third quarter of 2013 economic activity continued to expand at a moderate pace. A significant increase in the consumer price level over the past 12 months has contributed to the persistent inflation. According to the Brazilian Institute of Geography and Statistics (IBGE), the annualized rate of industrial production for the last 12 months showed a growth of 0.7% in August 2013, continued its upward trend started in December last year, and reached the most positive result since October 2011 (+1.4%). The variation in the Extended Consumer Price Index (IPCA) in the period from January to September 2013 was 3.79% (3.77% in the same period of 2012). Considering the last 12 months (October, 2012 to September, 2013), the index reached 5.86%, down from 6.09% for the 12 months of 2012 (October, 2011 to September 2012), within the tolerance interval established by the National Monetary Council (CMN). In July, the Brazilian Monetary Policy Committee (Copom) unanimously decided to raise Selic rate to 8.50% per year, going ahead with the process of adjusting monetary conditions aiming at controlling inflationary pressures. In August and October, Copom approved two consecutive increases of 0.50% per year, and Selic is at present at 9.50% per year. From January to September 2013, Brazil s trade balance reported a deficit of US$ 1.6 billion, reversing the surplus of US$ 15.7 billion in the same period last year. This result came from exports of US$ billion and imports of US$ billion, with changes of -1.6% and +8.7%, respectively, compared to the same period of the previous year. The table below shows average exchange rates for the U.S. dollar and the euro (using the PTAX exchange offer rate published by the Central Bank of Brazil - Bacen). Currency Exchange rate variations for the USD (US$) and EUR ( ) Year Average exchange rate in the quarter Exchange rate on R$/US$ R$/ Source: Bacen. 1Q 2Q 3Q 4Q 15-Oct Evolution of the Brazilian automotive industry A noteworthy event in the third quarter of 2013 was the publication of the regulation for investment in research and development under the Inovar-Auto program (Rule 772 of the 3

4 Ministry of Science, Technology and Innovation and the Ministry of Development, Industry and Foreign Trade). The regulation provides guidance from the first step of the research to the implementation of the projects, including the qualification of the labor force needed. The rule that established the Follow-up System for the Technological Innovation Incentive program was also published. This system is called traceability (Rule 280 of the Ministry of Development, Industry and Foreign Trade). The Ministry of Finance decided to extend until 2014 the Investment Support Program ( Finame BNDES PSI ), which is currently the main financing instrument for trucks, buses and agricultural machinery. However, new conditions for the program will be announced in the future. The table below shows the performance of the Brazilian automotive industry in the period from January to September 2013 in relation to the same period of the previous year. 4

5 Brazilian automotive industry Jan - Sep Jan - Sep Vehicle Sales B/A (locally-manufactured and imported) Passenger Cars B 2,041,169 A 2,100, % Light Commercials 600, , % Total of Light vehicle 2,641,254 2,666, % Trucks 115, , % Buses 24,034 21, % Total Trucks and Bus 139, , % Agricultural 63,864 51, % Total of medium and heavy vehicle 202, , % Total vehicle sales 2,844,249 2,840, % Export LV 403, , % Export Trucks 18,223 18, % Export Buses 6,803 6, % Export Trucks + Buses 25,026 25, % Export Agricultural 11,523 12, % Export MH 36,549 37, % Total Export 439, , % Import LV 516, , % Import MH 2,556 3, % Total Imports 519, , % Automotive trade balance LV (113,735) (293,071) -61.2% Automotive trade balance MH 15,770 14, % Automotive trade balance Total (79,742) (296,707) -73.1% Vehicle inventory variation in the period (*) 152,980 (22,891) % Total vehicle production 2,917,487 2,557, % Production of Light vehicle 2,660,794 2,370, % Production Trucks 149,142 98, % Production Buses 31,667 25, % Production Trucks and Buses 180, , % Agricultural 75,884 63, % Production of medium and heavy vehicle 256, , % (*) Vehicle inventory variation = production -(sales + exports - imports). Source: Anfavea Part of the difference in the growth rates of production and sales is due to the improvement of the trade balance and the restocking of inventory that was at a low level at the end of In addition, please note that the calculation of the total vehicle production comprises some new models of vehicle manufacturers that are not yet producing engines in Brazil. Considering only vehicles with engines manufactured in Brazil, the increase in vehicle production would be approximately 8.0%. 5

6 Total vehicle Sales (locally-manufactured and imported) to the domestic market The table below presents the month-by-month sales performance for domestic and imported vehicles in the period from January to September 2013 and in relation to the previous two years. In the period from January to September 2013, the Brazilian automotive industry sales posted a slight growth of 0.1% (+4.0% when comparing the same period in 2012 with 2011), including the agricultural machinery segment. The share of imported vehicles in sales fell from 23.6% in 2011 to 18.7% in the period from January to September 2013, due to the new automotive regime and the Inovar Auto program announced in April and October 2012, respectively. In addition to the high comparison basis set in the same period last year, certain factors contributed to stabilizing sales, such as a resilient domestic demand and a positive foreign exchange effect. Truck sales grew by 13.6% in the period from January to September 2013 compared to the same period in the prior year mainly as a result of a 41.6% increase in sales of heavy-duty trucks compared to the same period of the prior year. Vehicle production The table below presents the month-by-month performance of vehicle production in the period from January to September 2013 and in relation to the previous two years. 6

7 In the period from January to September 2013 the Brazilian vehicle production grew 14.1% compared to the same period of the prior year (-5.7% when compared to the same period in 2012 with 2011), with a new record high for vehicle production in the nine-month period. The increase in vehicle production during the period can be attributed to two factors: replacement of imported vehicles by domestic vehicles in sales to the domestic market and increase in vehicle exports. The performance of the truck segment was one of the highlights for the period. Truck production from January to September 2013 grew 50.9% compared to the same period of the prior year, affected by the switchover from Euro 3 to Euro 5 standards that occurred in January Evolution of the Argentinean automotive industry In the period from January to September 2013 the Argentinean automotive industry posted an increase of 19.0% in sales and of 10.9% in vehicle production compared to the same period last year, as shown in the table below. These figures show an upward trend seen since the beginning of At this pace, it is very likely that the Argentinean market will hit a new record high in sales this year, exceeding the current record of 858 thousand units sold in As Argentina imports from Brazil most of the internal combustion engines, the Company as an auto parts company that manufactures engine components for internal combustion engines in Brazil also benefits from this performance. 7

8 Argentinian automotive industry Jan - Sep Jan - Sep Vehicle Sales B/A (locally-manufactured and imported) B A Passenger Cars 513, , % Light Commercials 179, , % Total of Light vehicle 693, , % Trucks 20,476 15, % Buses 4,725 4, % Total of medium and heavy vehicle 25,201 19, % Total vehicle sales 718, , % Exports 332, , % Imports 448, , % Automotive trade balance (115,761) (73,728) 57.0% Vehicle inventory variation in the period (*) (6,736) 7, % Total vehicle production 595, , % Production of Light vehicle 588, , % Production Trucks 4,511 3, % Production Buses 2,627 2, % Production of medium and heavy vehicle 7,138 5, % (*) Vehicle inventory variation = production -(sales + exports - imports). Source: Adefa 1.3 Evolution Summary of automotive industry in the MERCOSUR and evolution of the main markets in which the Company operates The table below consolidates the figures of vehicle production in the Common Southern Market (MERCOSUR), considering Brazil and Argentina only. This region corresponds to the domestic market in which the Company operates. Vehicle production in MERCOSUR (*) Jan - Sep Jan - Sep Vehicle production in MERCOSUR (*) B/A B A Production of Light vehicle 3,249,477 2,901, % Production Trucks 153, , % Production Buses 34,294 27, % Production Trucks and Buses 187, , % Production Agricultural 75,884 63, % Production of medium and heavy vehicle 263, , % Total Vehicle Production 3,513,308 3,095, % (*) Considering Brazil and Argentina. Source: Anfavea and Adefa The table below shows data of vehicle production in the Company s major export markets in the period from January to September 2013 compared to the same period of the previous year. 8

9 Vehicle Production in the main exports market Jan - Sep Jan - Sep B/A Segment B A Production of Light vehicle 26,466,029 26,241,498 1% Europe 14,275,749 14,623,891-2% North America 12,190,280 11,617,607 5% Production of medium and heavy vehicle 813, ,318-4% Europe 448, ,735-3% North America 364, ,583-5% Total Vehicle Production 27,279,812 27,090,816 1% There has been an increase of 1% in total vehicle production in the period from January to September The increase in the production of light vehicles in the North America offset the fall in the vehicle production of other segments and regions. 2. Excellence and technological innovation Due to the publication of Rule 772 of the Ministry of Science, Technology and Innovation jointly with the Ministry of Development, Industry and Foreign Trade mentioned above, in the third quarter of 2013 the compliance with the requirements of the Inovar-Auto program was the central point of discussions with several customers. In addition to the discussion about the direct contribution of Company s products to reduce fuel consumption, many issues focus on other themes such as engine technologies and durability. MAHLE Powertrain, a division of technical and scientific services of the Company, is participating in these discussions with customers, seeking partnership and business opportunities. In the period from January to September 2013, the Company launched 6 new products: 4 in the engine components and 2 in the filtration systems. Twenty-three new patent applications have been filed for products under development. The major development projects are in general concentrated in the following: increased energy efficiency of engines and increased durability of components operating under severe conditions. Patent applications have been filed for an important energy project that can represent a new business outside the automotive industry. In the third quarter, the Company has participated in symposiums and conferences of the automotive industry. In addition to an innovation-focused event in the Tech Center located in the city of Jundiaí, the Company was awarded honorable mention at the International Symposium on Automotive Engineering (SIMEA) for the development of a fuel consumption test protocol designed to enable accurate monitoring of the engine performance and thus provide support for the development of new products. 3. Economic and financial performance of the company Among the main factors that influenced the economic and financial performance in the third quarter of 2013 should be highlighted positively, in general terms: vehicle production in Brazil, 9

10 especially the performance of the truck segment; vehicle production and sales in Argentina; recovery in vehicle production in the main international markets over the year coupled with a foreign exchange effect. In addition to these factors the highlights are payroll tax relief, maintenance of the Reintegra program and lower rates of IPI. As already mentioned in prior quarterly management reports, since the beginning of 2013 subsidiary MAHLE Hirschvogel Forjas S.A. began to be 100% consolidated (previously 51%), according to pronouncement CPC 36 issued by the Brazilian Accounting Pronouncements Committee. The figures disclosed in the previous comparative period have been adjusted to this same base. 3.1 Net Sales revenue In the third quarter of 2013 sales grew 9.7% compared to the same quarter of the prior year, due to the recovery of the export original equipment market (+15.3%), coupled with a positive foreign exchange effect in the period, and an increase in the domestic aftermarket (+8.8%). There was also an increase of 7% in sales of domestic original equipment market. The table below shows the variations of the Company s net sales revenue for the domestic (Brazil and Argentina) and export markets of original equipment and aftermarket. Performance of the net sales revenue (R$ million) 3Q13 % Share by 3Q12 % Share by % market market Accum. January- September 2013 Accum. January- September 2012 (a) (b) (a/b) (c) (d) (c/d) Domestic market.original equipment % % 7.0% % % 11.7%.Aftermarket % % 8.8% % % 3.3% Total % % 7.7% 1, % 1, % 8.4% Export market.original equipment % % 15.3% % % -1.1%.Aftermarket % % 2.6% % % 3.0% Total % % 13.6% % % -0.6% Total % % 9.7% 1, % 1, % 5.1% Sales to domestic market original equipment manufacturer % Share by market % Share by market There has been a positive variation in sales to this market in both compared periods due to new businesses (air intake manifolds, air filters, camshafts), the growth of the Brazilian and Argentinean vehicle production and the recovery of the medium and heavy-duty vehicle segments compared to the same quarter and nine-month period of the prior year. Sales to domestic market - aftermarket There has been a sales recovery compared to the third quarter of 2012 due to a reduction in stock of the auto parts distributors network compared with the prior quarters over the year. Sales to export market original equipment manufacturer There has been an increase in net sales revenue compared to the same quarter last year because of a positive foreign exchange effect and the recovery of the European market, especially the medium and heavy-duty vehicle segments. % 10

11 Sales to export market - aftermarket This result was primarily due to a positive foreign exchange effect on sales. Consolidated exports by region The graph below shows the distribution of sales by geographic region in the period from January to September % 8.3% Europe North and Central America 39.2% 44.3% South America Africa, Asia, Oceania and Middle East Net Sales revenue by product The graph below shows total sales by product in the period from January to September % 6.0% 8.0% 12.0% Pistons / Kits 26.2% Rings Bearings 13.0% 13.1% Valve Train Liners / Ring Inserts Other engine components Filters The main change in the share of products on the Company s net sales revenue was in the filtration systems. At the end of 2012, the filtration systems had a share of 9.1% on the Company s net sales revenue and in the period from January to September 2013, 12.0%. 11

12 3.2 Summary of statements of income Accum. Accum. January- January- Summary P&L (R$ million) 3Q13 3Q12 % % September September Operational Performance (a/b) (c) (d) (c/d) Net sales revenue % 1, , % Cost of goods sold (439.8) (412.8) 6.5% (1,301.1) (1,289.6) 0.9% Gross income % % Selling expenses (40.8) (38.8) 5.4% (125.0) (114.0) 9.7% General and administrative expenses (25.0) (25.3) -1.1% (75.9) (79.3) -4.3% Tech and product development expenses (17.0) (16.8) 1.5% (51.7) (49.0) 5.5% Other operating income (expenses) (2.5) (1.0) 143.8% (0.9) (7.0) -86.7% Financial income (expenses), net (5.6) (11.3) -50.2% (27.6) (18.2) 51.7% Operating income % % Net income % % EBITDA (according to the SEC Instruction 527/2012) % Adjusted EBITDA % % Margins: (a-b) (c-d) Gross margin 31.4% 29.3% 2,1 p.p. 28.6% 25.7% 2,9 p.p. Operating margin 17.1% 13.3% 3,8 p.p. 13.2% 10.3% 2,9 p.p. Net margin 12.3% 9.4% 2,9 p.p. 9.3% 7.3% 2 p.p. EBITDA margin (according to the SEC Instruction 527/2012) 22.3% 20.2% 2,1 p.p. 19.3% 16.3% 3 p.p. Adjusted EBITDA margin 22.3% 20.2% 2,1 p.p. 19.3% 16.5% 2,8 p.p. SG&A expenses to Net sales revenue 10.3% 11.0% -0,7 p.p. 11.0% 11.1% -0,1 p.p. Gross income and Gross margin In the third quarter of 2013, gross margin increased by 2.1 percentage points compared to the same quarter last year and 2.9 percentage points compared to the same nine-month period of the prior year. This improvement in gross margin compared to the same quarter last year is due to an increase in net sales revenue (including a positive foreign exchange effect), payroll tax relief on cost of goods sold, and operating improvements. Selling, general and administrative expenses Selling expenses represented 6.4% of the net sales revenue in the third quarter of In the period from January to September 2013, selling expenses represented 6.9% of the net sales revenue, an increase of 0.3 percentage points compared to the same period last year mainly due to an increase in personnel expenses, as well as freight expenses due to a sales increase. General and administrative expenses, which include basically costs of administrative staff, represented 3.9% of the net sales revenue in the third quarter of In the period from January to September 2013, general and administrative expenses represented 4.2% of the net sales revenue, a decrease of 0.4 percentage points in relation to the same period of the prior year. 24.4% 12

13 Technology and product development expenses Technology and product development expenses, which include principally costs of development staff, represented 2.8% of the net sales revenue in the period from January to September 2013 and remained at the same levels as in the comparative periods of the prior year. Other operating income (expenses), net In the period from January to September 2013 there has been a positive variation of R$ 6.0 million, mainly due to a provision for impairment of intangible assets in the amount of R$ 4.5 million in June For further information, see Note 32 to the quarterly information. Operating income measured by EBITDA Adjusted EBITDA for the third quarter of 2013 totaled R$ million, representing a margin of 22.3%. The EBITDA margin increased by 2.1 percentage points compared to the same quarter of 2012 because of a higher operating income. Adjusted EBITDA in the period from January to September 2013 was R$ million, representing a margin of 19.3%, with an increase of 2.8 percentage points in relation to the comparative period due to the same factor. The calculation of adjusted EBITDA considers an impairment of property, plant and equipment and intangible assets. However, in the third quarter of 2013 no provision for impairment of property, plant and equipment and intangible assets was recorded. Such provision was recorded in the second quarter of the prior year as described above. 3.3 Financial management Net financial income (expenses) Net financial result (R$ million) 3Q13 3Q12 Var. Accum. January- September 2013 Accum. January- September 2012 Interests, net (6.4) (7.7) 1.3 (21.8) (18.6) (3.2) Net monetary variation (5.4) (4.3) (1.1) (14.4) (12.6) (1.8) Net exchange variation Result with derivatives (11.2) (4.0) (7.2) Other (1.1) (1.1) (0.0) (3.6) (4.0) 0.4 Financial income (expenses), net (5.6) (11.3) 5.7 (27.6) (18.2) (9.4) The net financial result in the third quarter 2013 recorded a positive variation of R$ 5.7 million compared to the same quarter of the prior year primarily due to a net foreign exchange variation and the Company s debt structure with more long-term debt started in the first quarter of When the period from January to September 2013 is compared with the same period last year, the net financial result posted a negative variation of R$ 9.4 million primarily due to the results with derivative financial instruments occurred in the first half-year 2013 used to decrease exchange volatility. Var. 13

14 Indebtedness In relation to December 31, 2012, the Company has changed significantly the debt structure, increasing long-term debt from 41% to 80%. In addition, there was a reduction in net indebtedness by R$ million, basically due to financings obtained during the year (R$ 36.4 million) and a substantial increase in assets (R$ million). As a result, the Company s net indebtedness was reduced by 31%, from R$ million to R$ million. The table below shows the Company s debt rescheduling: Net indebtedness R$ million Liabilities % % Sep.30/2013 Dec.31/2012 Financings: short term % %.long term % % Assets: Cash / banks / cash investments/ Loans - related parties * (281.5) (137.1) Net indebtedness * Includes a related-party balance that is described in Note 12 to the quarterly information. More information on Cash and Cash Equivalents and Loans and Financing is shown in Notes 8 and 19, respectively, to the quarterly information. 3.4 Net income The net income of R$ million in the period from January to September 2013 (R$ million in the same period of 2012) represents a net margin of 9.3% in the period, with an increase of 2.0 percentage points in relation to the same period of the previous year. The basis for calculating dividends or interest on equity in the period from January to September 2013 (excluding depreciation of deemed cost net of deferred taxes of R$ 9.4 million, and legal reserve of R$ 8.5 million), is R$ million, of which R$ 26.5 million was effectively paid in the form of interest on equity on May 2 and August 30, Capital expenditures Actual capital expenditures (capex) in the period from January to September 2013 were R$ 66.5 million. Estimated capex in updated budget for fiscal year 2013 is at R$ million. Total accumulated depreciation from January to September 2013 was R$ 80.6 million, and includes normal depreciation (R$ 62.2 million) and depreciation of deemed cost of property, plant and equipment (R$ 18.4 million), relating to the adjustment for adoption of the International Financial Reporting Standards (IFRS). 14

15 4. Investor Relations and Capital Market Investor Relations In the third quarter the investor relations team continued to develop activities focused on improvements regarding the relationship with investors and analysts. During the period, more new contacts were made with asset management firms interested in the Company s investment thesis, and the number of one-on-one meetings has increased, as well as a lot of foreign investors interest. Investor Relations department shall be restructured and shall be merged into Corporate Finance department. IR shall move to the Tech Center in the city of Jundiai (Anhanguera highway, Km 79.7, ZIP code , Jundiai, Sao Paulo state). IR activities shall begin in Tech Center from November 13, 2013 on the new phone numbers: +55 (11) and Stock performance The tables below show the quotes, the Average Daily Trading Volume (ADTV) and the ADTV turnover in relation to the free-float market capitalization for the third quarter of 2013 and the previous three quarters. Average Daily Trading Volume (ADTV) and ADTV turnover to Free-Float Mkt Cap Period 3Q12 4Q12 1Q13 2Q13 3Q13 Trading Volume (R$ mio) Turnover (%) 0.71% 0.58% 0.63% 0.69% 0.48% 15

16 The third quarter was a period of low market activity and stagnant positions in equities, which is confirmed by the lower average daily trading volume in the period (R$ 4.8 million/day) and lower ADTV turnover (0.48%). Shareholders profile On October 15, 2013, shareholders profile in relation to the number of Company shares was represented as follows: 16.5% 11.4% 2.1% Controlling shareholder Institutional investors Foreign investors 70.0% Individual investors 5. Human resources The Company s labor headcount had 10,209 employees on September 30, 2013 (10,403 employees at December 31, 2012). The adjustment of the Company s labor headcount to its current levels of production represented a workforce reduction of 194 employees as of September 30, Independent auditors In accordance with Brazilian SEC Instruction 381/03, the Company and its subsidiaries perform procedures to ensure that the provision of non-audit services by independent auditors does not create a conflict of interest and impair the independence and objectivity necessary for independent audit services. During the third quarter of 2013 the Company did not engage PricewaterhouseCoopers Auditores Independentes to provide non-audit services and, accordingly, there is no situation that creates a conflict of interest under the terms of the aforementioned Instruction. 7. Outlook Macroeconomic scenario For the fourth quarter of 2013, there is a perspective of stability in the extension of consumer and corporate loans, according to the Brazilian Central Bank s consumer credit indicators. Uncertainties in the global economy still remain, with the slow recovery of developed economies and postponement regarding U.S. fiscal impasse. 16

17 Automotive industry During the third quarter, the Brazilian Association of Motor Vehicle Manufacturers (Anfavea) released new forecasts for These forecasts predict growth of 1% to 2% in total vehicle sales to the domestic market, representing sales of 3,840 million to 3,880 million vehicles, and growth of 11.9% in vehicle production, amounting to 3,790 million vehicles. In spite of concerns over high inventory levels, there are positive factors to consider, such as the truck fleet renewal plan organized by Anfavea, in addition to ongoing discussions about Inovar- Auto. Company In view of this scenario, the Company s Management maintains its expectations of net sales revenue above prior-year levels, with a positive bias in margins, despite uncertainties regarding inventory adjustments by vehicle manufacturers. Acknowledgments Management thanks the Company s shareholders, customers, suppliers and employees for the support and trust during the third quarter of Company s Management. 17

18 BALANCE SHEETS (CONSOLIDATED) (In thousands of BRL) As of Sep/30/2013 As of Dec/31/2012 ASSETS 2, ,370.8 Current assets 1, Cash and cash equivalents Financial investments Trade accounts receivable Inventories Recoverable taxes Other assets Noncurrent assets 1, ,428.3 Deferred taxes Accounts receivable from related parties Other assets Invesments in subsidiaries and subs. joined Property, plant and equipment Intangible assets LIABILITIES 2, ,370.8 Current liabilities Salaries, accrual for vacation and social charges Trade accounts payable Tax obligations Financings Other liabilities Provisions Non current liabilities Financings Other liabilities Diferred taxes Provisions Consolidated shareholder's equity 1, ,352.4 Stock capital Income reserves Accumulated profit/losses Proposed dividends Other comprehensive income Accumulated conversion adjustments (5.4) (5.0) Minority

19 INCOME STATEMENT (CONSOLIDATED) 30-Sep Sep-12 Var. Net sales revenue 1, , % Cost of goods sold and services rendered (1,301.1) (1,289.6) 0.9% Gross income % Operating income (expenses) (253.5) (249.3) 1.7% Selling expenses (125.0) (114.0) 9.7% General and administrative expenses (75.9) (79.3) -4.3% Tech and product development expenses (51.7) (49.0) 5.5% Other operating income % Other operating expenses (61.6) (41.2) 49.6% Results before financial revenues and expenses % Financial revenues % Financial expenses (115.7) (97.5) 18.6% Income and social contribution taxes % Current (53.3) (34.2) 55.6% Deferred (20.2) (20.0) 1.4% Net income for the period % For the ownership of controlling shareholders % For the ownership of non-controlling shareholders (2.5) (3.3) -22.6% Basic and diluted earnings per share issued in BRL % 19

20 STATEMENT OF CASH FLOW (CONSOLIDATED) 30-Sep Sep-12 Net Cash from Operating Activities Cash Flow from operating activities Net income for the fiscal year Depreciation and amortization Interest and monetary and exchange variations, net Losses on derivative financial instruments (4.2) (5.4) Result on property, plant and equipment sold Deferred income and social contribution taxes Allowance for doubtful accounts (0.3) 0.5 Provision for contingencies and legal obligations (7.8) 1.9 Provision for guarantees Other provisions Provision for losses with property, plant and equipment, and intangibles (0.1) 4.1 Provision for losses on inventories Minorities on dividends and interest on equity (0.1) - Decrease (increase) in assets (35.3) (40.2) Trade accounts receivable and related parties (71.6) (64.0) Inventories (18.4) 15.9 Recoverable taxes Other accounts receivable (11.0) (6.0) Income tax and Social contribution on net income paid (19.8) (3.4) Trade accounts payable and related parties 28.3 (19.1) Salaries, accrual for vacation and social charges Taxes and contributions payable (7.1) 2.4 Accounts payable to related companies (0.3) (4.9) Provision for guarantees (4.1) (4.4) Advances from customers (2.0) (3.0) Net Cash from Investment Activities (66.0) (78.6) Additions to property, plant and equipment (65.2) (78.9) Additions to intangible assets (1.2) (1.2) Proceeds from sales of property, plant and equipment Net Cash from Financing Activities (68.5) (201.9) Inflow of funding Amortization of financing-principal amounts (561.6) (402.5) Amortization of financing interest (29.4) (32.1) Dividends and interest on equity paid (82.4) (63.8) Increase (Decrease) in cash and cash equivalent, net (28.6) Cash and cash equiv. at the beginning of the period Effects of the exchange rates variation on cash and cash equivalents Cash and cash equiv. at the end of the period