iochpe-maxion - 4q07 presentation
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Earnings Release – 4Q07 / 2007Earnings Release – 4Q07 / 2007
February, 2008
4Q07/2007February, 2008
2
The material contained in this presentation is general background information about Iochpe-Maxion S.A. (Iochpe) as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the information presented herein.
This presentation contains statements that are forward-looking within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Iochpe and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements.
Although Iochpe believes that the expectations and assumptions reflected in the forward-looking statements are reasonably based on information currently available to Iochpe management, Iochpe cannot guarantee future results or events. Iochpe expressly disclaims a duty to update any of the forward-looking statement.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.
DISCLAIMERDISCLAIMER
4Q07/2007February, 2008
3
50% 100%
IochpeIochpe--Maxion S.A.Maxion S.A.
AmstedAmsted--Maxion Fundição e Maxion Fundição e Equipamentos Ferroviários S.A.Equipamentos Ferroviários S.A.
Maxion Sistemas Automotivos Maxion Sistemas Automotivos Ltda.Ltda.
Railway EquipmentsRailway Equipments
Railway freight cars: R$ 47.0 million1 (14%)
Castings: R$ 27.4 million1 (8%) and wheels: R$ 5.1 million1 (2%)
Wheels and Chassis DivisionWheels and Chassis DivisionAutomotive Components Automotive Components
DivisionDivision
Wheels: R$ 88.8 million1 (27%)
Chassis: R$ 131.5 million1 (40%)
Autoparts: R$ 28.7 milhões1 (9%)
1 Consolidated net revenue in the fourth quarter of 2007
R$ 79.5 million1 (24%)
R$ 220.3 million1 (67%)
SIMPLIFIED CORPORATE STRUCTURESIMPLIFIED CORPORATE STRUCTURE
4Q07/2007February, 2008
4
� Consolidated net operating revenue of R$ 328.5 million in 4Q07 and R$ 1,289.2 in 2007, an increase of 23.9% and 3.3% respectively, over the same period of last year
� EBITDA(*) of R$ 35.2 million in 4Q07 and R$ 164.5 million in 2007, an increase of 47.8% and 1.1% respectively, over the same period of last year
� Net income of R$ 17.0 million in 4Q07 and R$ 72.4 in 2007, an increase of 1,129.0% and 25.1% respectively, over the same period of last year
� Net debt bank of R$ 128.3 million (R$ 132.3 million in Dec/06), or 0.8x EBITDA LTM(*)
(0.8x in Dec/06)
HIGHLIGHTSHIGHLIGHTS
(*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating result, plus net financial expenses, plus depreciation and amortization, plus goodwill amortization.
4Q07/2007February, 2008
5
4Q07 – MAIN DRIVERS4Q07 – MAIN DRIVERS
� Growth of the Brazilian production of vehicles and agricultural machinery
� Recovery of domestic demand for railway freight cars
� Impact of the real appreciation (1.7665 – 4Q07 x 2.1499 – 4Q06) on net revenue of
exports (reduction R$ 10.0 million)
Industry Performance
4Q07/2007February, 2008
7
180
216
318
366379
408
94112
40
72
114
156 153144
37 35
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Production Export
CAGR 02 – 07 = 18%
CAGR 02 – 07 = 29%∆ 07 - 06 = 8%
∆ 07 – 06 = (6%)
∆ 4Q07 – 06 = 20%
∆ 4Q07 – 06 = (7%)
LIGHT COMMERCIALS – BRAZIL (‘000 units)LIGHT COMMERCIALS – BRAZIL (‘000 units)
Source: Anfavea
4Q07/2007February, 2008
8
69
79
107
117
106
137
27
37
5
13
25
38 39 41
10 11
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Production Export
CAGR 02 – 07 = 15%
CAGR 02 – 07 = 52%
∆ 07 – 06 = 29%
∆ 07 – 06 = 8%
∆ 4Q07 – 06 = 37%
∆ 4Q07 – 06 = 12%
TRUCKS – BRAZIL (‘000 units)TRUCKS – BRAZIL (‘000 units)
Source: Anfavea
4Q07/2007February, 2008
9
23
27
29
3534
39
6
9
7
9
13
19
1615
45
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Production Export
CAGR 02 – 07 = 11%
CAGR 02 – 07 = 25%
∆ 07 – 06 = 6%
∆ 07 – 06 = 15%
∆ 4Q07 – 06 = 29%
∆ 4Q07 – 06 = 54%
BUSES – BRAZL (‘000 units)BUSES – BRAZL (‘000 units)
Source: Anfavea
4Q07/2007February, 2008
10
52
59
69
53
46
65
11
17
10
21
31 31
22
27
58
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Production Export
CAGR 02 – 07 = 5%
CAGR 02 – 07 = 22%
∆ 07 – 06 = 24%
∆ 07 – 06 = 41%
∆ 4Q07 – 06 = 39%
∆ 4Q07 – 06 = 63%
AGRICULTURAL MACHINERY – BRAZIL (‘000 units)AGRICULTURAL MACHINERY – BRAZIL (‘000 units)
Source: Anfavea
4Q07/2007February, 2008
11
1,521 1,505
1,757
2,0092,092
2,389
513633
363440
497
684 635 586
147 144
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Production Export
CAGR 02 – 07 = 9%
CAGR 02 – 07 = 10%
∆ 07 – 06 = (8%)
∆ 07 – 06 = 14%
∆ 4Q07 – 06 = 24%
∆ 4Q07 – 06 = (2%)
PASSENGER CARS – BRAZIL (‘000 units)PASSENGER CARS – BRAZIL (‘000 units)
Source: Anfavea
4Q07/2007February, 2008
12
294
2,459
5,642
7,270
3,668
1,249
314
729
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Production
CAGR 02 – 07 = 34%
∆ 07 – 06 = (66%)
∆ 4Q07 – 06 = 132%
RAILWAY FREIGHT CARS – BRAZIL (units)RAILWAY FREIGHT CARS – BRAZIL (units)
Source: Amsted Maxion estimate
4Q07/2007February, 2008
13
MARKET SHARE – BRAZIL (2007)MARKET SHARE – BRAZIL (2007)
67%
21%
12%
Maxion
Dana
OEM
61%
33%
6%
Maxion
Borlem
Others
Maxion
Others
80%
20%
Maxion
Cruzaço
ChassisChassis
MaxionMaxion
2006200666%66% 57%57% 81%81% 80%80%
89%
11%
Commercial Vehicles Commercial Vehicles WheelsWheels
Railway Freight Railway Freight CarsCars
Railway Railway
CastingsCastings
Source: Maxion Estimate
Financial and Operating Performance
4Q07/2007February, 2008
15
1,099
1,494
1,248
265329
1,289
411
676
2002 2003 2004 2005 2006 2007 4Q06 4Q07
CAGR 02 – 07 = 26%
∆ 4Q07 – 06 = 24%
∆ 07 – 06 = 3%
NET OPERATING REVENUE (R$ million)NET OPERATING REVENUE (R$ million)
4Q07/2007February, 2008
16
991 1,056
233257
2006 2007
Domestic Export
1,248 1,289
427279
896
90 115
730
2006 2007
Railway Wheels and Chassis Automotive Comp.
Customer - 2007 (%)
Daimler – 13.6%
Scania – 5.7%
Volvo – 2.0%
Volkswagen – 16.8%
GMB – 5.8%
Ford – 3.9%Fiat – 4.5%
Export – 18.1%
Tractors – 6.9%
CVRD – 3.0%
MRS – 4.4%
ALL – 0,7%
Caterpillar – 1.5%
Others – 13.1%
1,248 1,289
NET OPERATING REVENUE (R$ million)NET OPERATING REVENUE (R$ million)
4Q07/2007February, 2008
17
24
96
119 120
3226
47
33
2002 2003 2004 2005 2006 2007 4Q06 4Q07
CAGR 02 –07 = 38%
∆ 4Q07 – 06 = (19)%
∆ 07 – 06 = 1%
EXPORTS (USD million)EXPORTS (USD million)
4Q07/2007February, 2008
18
Segment
63 64
56
0 1
56
2006 2007
Railway Wheels and Chassis Automotive Comp.
1411
14
0
0
18
4Q06 4Q07
Railway Wheels and Chassis Automotive Comp.
119 120
32
26
Destination - 2007 (%)
USA – 49.7%
Latin America – 23.1%
Africa & Middle East – 16.2%
Canada / Mexico – 4.7%
Europe – 9.4%
� Exports 2007 – R$ 232.8 million (US$ 120.2 million)
� Exports 4Q07 – R$ 45.8 million (US$ 26.0 million)
EXPORTS (USD million)EXPORTS (USD million)
4Q07/2007February, 2008
19
87
137
228
3452
236289
219
16%
13%
18%21%20%21%
19%18%
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Gross Profit % Net Sales
GROSS PROFIT (R$ million)GROSS PROFIT (R$ million)
4Q07/2007February, 2008
20
36
58
127
178
136 135
1727
6%
8%
10%11%
12%12%
9%9%
2002 2003 2004 2005 2006 2007 4Q06 4Q07
EBIT % Net Sales
OPERATING INCOME – EBIT (R$ million)OPERATING INCOME – EBIT (R$ million)
4Q07/2007February, 2008
21
6989
156
205
163 165
2435
17%
13%
9%
11%
13%13%14%14%
2002 2003 2004 2005 2006 2007 4Q06 4Q07
EBITDA % Net Sales
EBITDA* (R$ million) EBITDA* (R$ million)
(*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating result, plus net
financial expenses, plus depreciation and amortization, plus goodwill amortization.
4Q07/2007February, 2008
22
38
54
-1
10
21
33
5
37
0%
2%
1%2%
2%3%
6%
13%
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Financial Exp. % Net Sales
NET FINANCIAL EXPENSES (R$ million)NET FINANCIAL EXPENSES (R$ million)
4Q07/2007February, 2008
23
17
(24)
1
58
7272
51
(5)-6%
-1%
5%
1%
6%5%5%5%
2002 2003 2004 2005 2006 2007 4Q06 4Q07
Net Income % Net Sales
NET INCOME (R$ million)NET INCOME (R$ million)
4Q07/2007February, 2008
24
106132115
102 125128
1.3
1.5
0.80.8
0.60.6
2002 2003 2004 2005 2006 2007
Net Debt x EBITDA
NET BANK DEBT (R$ million)NET BANK DEBT (R$ million)
(*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating result, plus net
financial expenses, plus depreciation and amortization, plus goodwill amortization.
4Q07/2007February, 2008
25
INDEBTEDNESS – Dec/07 (R$ million)INDEBTEDNESS – Dec/07 (R$ million)
Debt Indexation
79%
18%3%
TJLP Dollar IGP-M
Average Cost (Dec/07)Average Cost (Dec/07)
8.1% per year8.1% per year
80% CDI80% CDIIndex by TJLP, CDI e IGPM Index by TJLP, CDI e IGPM
in R$in R$
Index by DollarIndex by Dollar
in US$in US$
� At the end of Dec 07, the company had contracted US$ 45.8 million of non-deliverable forward contracts at R$ 1.9852 average FX rate, for the period of Jan to Dec 08
� Forward positive impact to expire is not accounted, only the positive impact expired
� According to Brazilian GAAP, if at any end of a month a negative future impact is foreseen on the contracts, the full negative impact must be provisioned
LINESSHORT
TERM
LONG
TERMTOTAL
Trade Finance / Export 31.2 32.9 64.0
Equipment Finance / EXIM 100.6 115.2 215.8
131.8 148.0 279.9
(-) Cash & Marketable Securities 151.5 0.0 151.5
Net Debt (19.7) 148.0 128.3
4Q07/2007February, 2008
26
41
73
84
6868
22 20
54
2002 2003 2004 2005 2006 2007 4Q06 4Q07
CAPEX (R$ million)CAPEX (R$ million)
Capital Market
4Q07/2007February, 2008
28
� Capital structure composed by common shares only
� Board of Directors composed by at least 20% of independent members
� 100% Tag Along in case of transfer of control
� A special shareholders meeting for holders of the Company`s preferred shares held on January 17, 2008 approved the conversion of
Iochpe-Maxion's preferred shares into common shares at a conversion rate of 1.2 preferred shares for each common share
� An extraordinary general meeting of shareholders held on the same day approved the share conversion; it also approved a proposed
amendment to the Company’s bylaws, as well as the Company’s migration to the Novo Mercado listings and the election of new
members to the Company’s board of directors
� After the deadline of the shareholder´s right of withdrawal (02/20/08), will begin the process of the conversion of the preferred shares
into common shares
New Iochpe-Maxion
STOCKHOLDING RESTRUCTURING - SUBSEQUENT FACTSTOCKHOLDING RESTRUCTURING - SUBSEQUENT FACT
4Q07/2007February, 2008
29
Iochpe-Maxion – Shareholders Structure on 12/31/2007
Iochpe-Maxion – Expected Shareholders Structure After the Conversion
SHAREHOLDERS STRUCTURESHAREHOLDERS STRUCTURE
Shareholder Common % % of Total Preferred % % of Total Total %
Ioschpe Family 13,924,267 75.56% 26.16% 143,942 0.41% 0.27% 14,068,209 26.43%
BNDESPAR 4,012,050 21.77% 7.54% 9,612,777 27.62% 18.06% 13,624,827 25.60%
Controlling Shareholders 17,936,317 97.33% 33.69% 9,756,719 28.03% 18.33% 27,693,036 52.02%
Other 492,280 2.67% 0.92% 25,046,988 71.97% 47.05% 25,539,268 47.98%
Total 18,428,597 100.00% 34.62% 34,803,707 100.00% 65.38% 53,232,304 100.00%
Shareholder Common % % of Total Preferred % % of Total Total %
Ioschpe Family 14,044,219 29.61% 29.61% - 0.00% 0.00% 14,044,219 29.61%
BNDESPAR 12,022,698 25.35% 25.35% - 0.00% 0.00% 12,022,698 25.35%
Controlling Shareholders 26,066,917 54.96% 54.96% - 0.00% 0.00% 26,066,917 54.96%
Other 21,364,770 45.04% 45.04% - 0.00% 0.00% 21,364,770 45.04%
Total 47,431,687 100.00% 100.00% - 0.00% 0.00% 47,431,687 100.00%
4Q07/2007February, 2008
30
Price - LTM*
24.80
30.85
37.4035.5036.40
29.0030.1029.89
22.3021.9120.80
17.00
24.0022.70
23.99
16.11
26.49
30.00
33.01 32.9935.00
37.00 37.00
43.00
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07
MYPK4 MYPK3
Average Daily Trade Volume - R$ mil
4,114
2,857
8,354
2,7473,466
2,948
7,048 7,738
3,723 5,577
2,598 2,952
5556
110
89
86
182
84
99
69
70
86 91
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07
Volume Trades
Shares Performance - 2007
111.42%
43.65% 47.83%
31.55%40.33%
MYPK4 Ibovespa IBX-100 IGC ISE
MYPK4 Ibovespa IBX-100 IGC ISE
* Closing price of the last business day of each month
SHARES PERFORMANCESHARES PERFORMANCE
4Q07/2007February, 2008
31
OUTLOOK OUTLOOK
� Strong domestic demand for trucks and agriculture machinery
� Recovery of domestic railway freight car market from the end of 2007, onwards
� Implementation of commercial vehicle wheels plant in China
Additional Information
4Q07/2007February, 2008
33
INCOME STATEMENT (R$ thousand)INCOME STATEMENT (R$ thousand)
(*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating result, plus net financial expenses, plus depreciation and amortization, plus goodwill amortization.
Consolidated Income Statement R$
thousand2007 N.O.R 2006 N.O.R 4Q07 N.O.R 4Q06 N.O.R
Net Operating Revenue 1,289,282 100.0% 1,247,574 100.0% 328,459 100.0% 265,088 100.0%
Cost of Goods Sold (1,053,576) 81.7% (1,028,339) 82.4% (276,866) 84.3% (231,273) 87.2%
Gross Profit 235,706 18.3% 219,235 17.6% 51,593 15.7% 33,815 12.8%
Operating Expenses
General and Administrative (47,041) 3.6% (41,755) 3.3% (12,108) 3.7% (7,307) 2.8%
Commercial (5,805) 0.5% (5,733) 0.5% (1,597) 0.5% (1,374) 0.5%
Others (48,210) 3.7% (35,352) 2.8% (10,644) 3.2% (8,078) 3.0%
(101,057) 7.8% (82,840) 6.6% (24,348) 7.4% (16,759) 6.3%
Operating Income (EBIT) 134,649 10.4% 136,396 10.9% 27,245 8.3% 17,057 6.4%
Financial Results
Financial Revenue 6,233 0.5% 5,402 0.4% 1,685 0.5% 1,577 0.6%
Financial Expenses (15,839) 1.2% (26,794) 2.1% (966) 0.3% (7,056) 2.7%
(9,606) 0.7% (21,392) 1.7% 719 -0.2% (5,479) 2.1%
Earnings After Financial Income 125,043 9.7% 115,003 9.2% 27,964 8.5% 11,577 4.4%
Non Operating Results (8,628) 0.7% (22,158) 1.8% (925) 0.3% (4,963) 1.9%
Earnings Before Taxes 116,415 9.0% 92,845 7.4% 27,039 8.2% 6,615 2.5%
Income Taxes (44,024) 3.4% (35,001) 2.8% (10,010) 3.0% (5,229) 2.0%
Net Income 72,391 5.6% 57,844 4.6% 17,029 5.2% 1,386 0.5%
EBITDA 164,527 12.8% 162,688 13.0% 35,200 10.7% 23,817 9.0%
4Q07/2007February, 2008
34
BALANCE SHEET (R$ thousand)BALANCE SHEET (R$ thousand)
ASSETS LIABILITIES
Dec-07 Dec-06 Dec-07 Dec-06
CURRENT CURRENT
Cash 151,519 88,197 Loans 131,820 125,455
Receivables 144,051 221,763 Payables 62,093 46,600
Inventory 167,806 116,346 Customers Advance 50,033 13,339
Recoverable Taxes 18,911 22,609 Wage and Charges 35,543 22,907
Others 13,030 (79,488) Taxes 3,063 537
495,317 369,428 Provisions 6,250 3,581
Others 20,177 46,052
308,979 258,471
LONG TERM LONG TERM
Receivable 1,694 7,980 Loans 148,045 95,060
Deferred Income Taxes 28,881 39,067 Provisions 65,099 67,027
Others 31,052 10,960 Others 7,578 15,360
61,627 58,008 220,722 177,447
MINORITY - 34
PERMANENT EQUITY
Investments 125 125 Capital 161,463 161,463
Plants, Property and Equipment 309,614 271,445 Capital Reserves 103,472 103,471
Deferred Items 345 1,879 Retained Earnings 72,391 -
310,083 273,449 337,326 264,934
TOTAL ASSETS 867,027 700,886 TOTAL LIABILITIES 867,027 700,886
Earnings Release – 4Q07 / 2007Earnings Release – 4Q07 / 2007
February, 2008
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