global
Improved global economic activity supporting revenue and ROIC growth
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We report another quarter of good performance in our businesses, marked by continued good demand in the domestic market and by accelerated industrial activity in the main countries where we operate in the external market.
In Brazil, we observed solid demand after the consistent recovery in recent quarters. We highlight the short-cycle businesses growth in areas such as Commercial and Appliance Motors, Industrial Electro-Electronic Equipment, and in particular, the distributed solar generation (GD) business. The maintenance of the long-cycle business, mainly in the GTD area, also made an essential contribution to this result, especially the return of wind generation projects revenue.
In the external market, the recovery of global industrial activity confirmed the signs of improvement reported in the last quarter. We posted significant growth in revenue in the main markets in which we operate, especially in mining, oil & gas, and water & wastewater segments. In addition to the Industrial Electro-Electronic Equipment businesses, we also highlight the good performance of the Commercial and Appliance Motors and Power Transmission and Distribution (T&D) areas, with sales growth and increased share in important markets.
It is worth noting that in this quarter, we recorded tax credits referring to the exclusion of ICMS from the PIS and COFINS calculation basis, according to the material fact disclosed on June 22, 2021. The EBITDA and net income were positively impacted by R$ 300.4 million and R$ 282.8 million, respectively.
We remain confident in our strategy to overcome this challenging period, working to protect and promote the health and safety of all employees and minimize, as much as possible, impacts on our operations.
Highlights
- Net Operating Revenue (NOR) was R$ 5,748.2 million in 2Q21, 41.4% higher than 2Q20, and 13.2% higher than 1Q21;
- EBITDA(1) reached R$ 1,392.7 million, 90.2% higher than 2Q20 and 37.0% higher than 1Q21, while EBITDA margin was 24.2%, 6.2 p.p. higher than 2Q20, and 4.2 p.p. higher than the previous quarter;
- Return on Invested Capital (ROIC) reached 32.2% in 2Q21, up 10.6 p.p. from 2Q20 and up 4.0 p.p. from 1Q21.
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WEG consolidates its business strategy as a global mining player
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WEG business strategy, along its 60 years of business activities, has always been based on offering reliable, safe, technological and high-performance products and solutions. In particular for the mining segment, WEG keeps a close eye on specifications for tough mining environmental conditions to allow customers to have operational safety for existing and future expansions. In addition, to ensure customers having their plants operating efficiently, WEG has been providing customized and optimized solutions with flexibility, prompt service support complying with the requirements and applications of each mining operation.
To turn these principles into practice, WEG has done its best efforts to develop products and solutions that serve companies regardless of the country in which the customer is. This flexibility is supported internally by a vertically integrated policy. In other words, WEG takes care of all the necessary components to speed up the delivery of the project to mining customers. To do that, WEG implemented a global structure with its own operations (commercial and industrial) in all the main mining markets, in addition to a global network of authorized service centers.
The great success WEG has been having in the Brazilian mining segment was fundamental to gain global projects with even more challenging demands, from high altitudes, deserts and at very low temperature environments. Many resources have proven to be efficient to be applied in other large and traditional mining countries such as, Chile, Australia, Canada and South Africa. In addition, all international standards are met, as well as the specific customer requirements in different parts of the world, allowing WEG to become a world player.
Currently, WEG´s portfolio includes the supply of driving solutions for pumps, fans, crushers, mills, flotation cells to renewable power plants (solar, wind and hydropower), primary and secondary substations, E-houses equipped with MCCs, low and medium voltage drives, and a complete set of solutions for remote monitoring of equipment for the benefit of the installation.
The efficiency and availability of the equipment for the entire plant (known as OEE – Overall Equipment Effectiveness) have been fundamental in the mining scenario considering the current ore contents and the lack key resources such as water and electricity. Only products offering high safety and efficiency levels are accepted for this segment. Guided by this requirement, WEG’s strategy is to customize and optimize mining products, in addition to continually adding products to the existing portfolio, resulting in “one stop shop”.
Aware of the specific requirements of each market segment and evaluating the mining segment in different countries, as well as our experience in dealing with other segments, WEG’s focus is to be recognized as an important player in the areas of crushing, transport and comminution processes. They all need reliable power from electric motors, frequency drives and gearboxes.
WEG also keeps its focus on the energy infrastructure of the mine, covering complete electrical solutions, from the high voltage network to the smallest electric motors, substations, transformers, E-houses, distribution panels, MCCs and frequency drives. WEG has built extensive experience in supplying E-houses to the mining industry using state-of-the-art technology for construction, assembly and logistics. WEG also offers specific firmware for MV variable frequency drives which is dedicated and customized for key applications such as Ball/SAG mills and HPGRs.
Technology has become an important part of the offerings from major global mining players in terms of independent products and solutions. The industry today requires much more than just equipment (hardware). Data is essential, connectivity, monitoring and remote-supported repairs are absolutely necessary and the industry must find ways to meet all these requirements.
Recently, WEG launched a powerful software that allows online monitoring of low and medium voltage electric motors and variable frequency drives. In addition to online monitoring, the WEG software is built-in with specialized modules that, through Artificial Intelligence and Machine Learning, determine the most likely causes of some abnormal equipment operating conditions, as well as providing customers with information on potential failures that can occur.
The “WEG Motor Fleet Management” software also counts on modern geolocation features that helps identifying where the equipment is, even in multilevel plants. Serving as support for maintenance managers, the WEG software also has an interface for recording and managing events such as alarms and maintenance tasks, allowing users to generate KPIs and reports on monitored equipment that could be motor, drive, gearbox, etc. WEG Motor Fleet Management also has interchange modules that allow the integration, via API, for analysis of the monitored equipment with other mine management systems.
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