By Brazil Stock Guide – WEG S.A. (B3: WEGE3) opened Brazil’s third-quarter earnings season reporting net income of R$1.65 billion, up 4.5% from a year earlier. Net operating revenue reached R$10.27 billion, a 4.2% increase, while EBITDA rose 2.3% to R$2.28 billion, keeping a 22.2% margin. The return on invested capital (ROIC) slipped to 32.4%, down 4.7 percentage points from 3Q24, as higher working capital and more expensive raw materials—especially copper—pressured returns.
The results came broadly in line with analysts’ expectations, confirming a quarter of steady but slower growth. Brokerages including Itaú BBA, XP, and BTG Pactual had forecast modest earnings expansion, reflecting a cooling industrial cycle and the effect of a stronger Brazilian real (–1.6% vs USD) on exports. The new U.S. import tariffs also weighed on sentiment.
Growth was driven by the Industrial Electro-Electronic Equipment (EEI) and Commercial and Appliance Motors (MCA) divisions, which grew 13% and 15% respectively in Brazil, supported by demand from oil & gas, mining, HVAC and compressor markets. The Energy Generation, Transmission and Distribution (GTD) unit declined 6.8% domestically and was slightly lower abroad, due to a lack of new wind projects and the completion of large solar contracts. External sales accounted for 61% of total revenue, rising 4.9% in reais and 6.8% in U.S. dollars, with strong performances in Europe (+14%) and South America (+26%) offsetting softer results in Asia-Pacific.
The gross margin slipped to 33.6% from 34.5% a year earlier, reflecting higher input costs and a less favorable product mix. SG&A expenses rose 5.2% to R$1.19 billion, equivalent to 11.6% of revenue. Management emphasized efficiency gains and productivity initiatives that helped cushion the impact. “Even in an environment marked by geopolitical uncertainties and trade volatility, we delivered another quarter of healthy operating margins,” WEG’s management said in its statement.
Headquartered in Jaraguá do Sul, Brazil, WEG is one of Latin America’s largest industrial manufacturers, producing electric motors, transformers, automation systems and renewable-energy equipment in more than 130 countries. The company invested R$672.6 million in CAPEX during the quarter—52% in Brazil and 48% abroad, mainly in Mexico and China—and generated R$4.24 billion in operating cash flow, ending with net cash of R$3.44 billion and a debt duration of 15.8 months. WEG also acquired 54% of Tupinambá Energia, a São Paulo-based EV-charging-network software company, strengthening its push into electric mobility and energy infrastructure.
WEGE3 shares closed Tuesday at R$40.15, down about 30% year-to-date, reflecting the global slowdown in industrial orders and investor caution on margins. Despite the pullback, WEG remains one of the most profitable and well-capitalized industrial companies in Latin America, with diversified operations that help offset regional headwinds. Analysts expect demand for electrification, automation and grid equipment in Europe and North America to sustain medium-term growth, even as raw-material volatility and currency effects remain challenges.
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