WEG (WEGE3) Q1 2026 earnings summary

Executive summary

• Net operating revenue was R$9,468.3 million in 1Q26, down 6.1% year-over-year and 7.6% sequentially, mainly due to lower demand in Brazil, reduced solar generation deliveries, and currency impacts on external markets.

• EBITDA reached R$2,102.8 million, 3.2% lower year-over-year, with a margin of 22.2%, up 60 bps from 1Q25; ROIC remained strong at 33.1%, down 10 bps year-over-year but up 60 bps sequentially.

• External market revenue grew in local currencies, offsetting domestic weakness, with strong performance in North America and Europe, especially in power generation, T&D, oil & gas, and data center segments.

• Management remains confident in the business model, supported by diversification, operational efficiency, and ongoing industrial expansion.

• Non-recurring events, including profit-sharing reversals and restructuring gains, impacted margins; staff cost increases and raw material price volatility also affected results.

Financial highlights

• EBITDA margin was 22.2%, up 60 bps year-over-year, reflecting a favorable product mix and lower operating expenses.

• Net income was R$1,457.2 million, a decrease of 5.7% year-over-year, with a net margin of 15.4%.

• Gross margin was 31.6%, down 130 bps year-over-year, impacted by higher raw material costs and lower cost dilution.

• Cash from operating activities was R$1,262.4 million, up from R$540.5 million in 1Q25.

• Net cash position at quarter-end was R$3,322.1 million.

Outlook and guidance

• Management expects continued positive order intake and backlog, especially in long-cycle power generation, transmission, and distribution businesses.

• Ongoing investments in production capacity and operational efficiency are expected to sustain above-industry margins and ROIC.

• Margin normalization is expected in the second half as new capacity comes online and revenue growth resumes, particularly for solar generation.

• Price increases implemented to offset raw material costs; further adjustments will depend on market conditions.

• Forward-looking statements are subject to market, economic, and geopolitical uncertainties.