WEG (WEGE3) Q1 2025 earnings summary

Executive summary

• Net operating revenue reached R$10,078.6 million in 1Q25, up 25.5% year-over-year, with strong growth in both domestic (14.0%) and external (36.3%) markets, driven by demand in long-cycle businesses and recent acquisitions.

• EBITDA was R$2,173.0 million, 22.8% higher than 1Q24, with an EBITDA margin of 21.6%.

• Net income attributable to shareholders was R$1,546.0 million, up 16.4% year-over-year, with a net margin of 15.3%.

• ROIC was 33.2%, down 570 bps year-over-year, mainly due to increased capital employed from acquisitions and CAPEX.

• Growth was supported by strong demand in energy generation, transmission, and distribution (GTD), industrial segments, and the integration of acquired businesses (Marathon, Rotor, Cemp, Volt, REIVAX).

Financial highlights

• Consolidated gross margin was 32.9%, slightly down from 33.2% in 1Q24, reflecting product mix and higher raw material costs.

• SG&A expenses rose 36.6% year-over-year, mainly due to consolidation of acquired businesses and higher freight costs.

• Cash flow from operations was R$540.5 million, with R$701.8 million spent on investments and R$2,003.0 million consumed in financing activities.

• CAPEX totaled R$621.2 million, focused on modernization and expansion in Brazil and abroad.

• Net cash position at quarter-end was R$2,454.0 million, with cash and equivalents of R$4,989.2 million.

Outlook and guidance

• Management expects continued revenue growth, supported by favorable energy transition trends, global presence, and product diversification.

• Two-digit growth is anticipated for the year, though the consolidation effect from acquisitions will diminish after April.

• Solar revenue is expected to decelerate in the second half of 2025 as current project deliveries are completed.

• Focus remains on operational efficiency and industrial strategy to sustain margins and returns.

• Ongoing monitoring of macroeconomic and geopolitical risks, with no immediate slowdown in long-cycle equipment demand.