MAHLE-Metal Leve SA (BSP:LEVE3) Q1 2025 Earnings Call Highlights: Strong Revenue Growth Amidst ...

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16-05-2025

Net Operating Revenue: BRL1.3 billion.
Gross Margin: 28%.
Net Margin: 12.5%.
EBITDA Margin: 16%.
Cash Generation: BRL62 million.
Net Indebtedness: BRL640 million.
Leverage: 0.69 times.
Domestic Original Equipment Revenue Growth: 84-85% increase, 22% increase excluding acquisitions.
OEM Exports Revenue Change: 7% drop.
Domestic Aftermarket Revenue: BRL399 million, 10% increase, 5.4% increase excluding acquisitions.
Aftermarket Exports Revenue Change: 5.2% drop.
Total Aftermarket Revenue: BRL473 million, 7.3% growth.
Total Revenue Growth: 24.1% growth, 5.5% increase excluding acquisitions.
EBITDA: BRL237 million, 18.7% margin.
Interest Paid: BRL1.1 million.
Interest Received: BRL6.5 million.
CapEx Investments: BRL35 million.
Warning! GuruFocus has detected 9 Warning Signs with NZSE:MNW.
Release Date: May 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
MAHLE-Metal Leve SA (BSP:LEVE3) reported a net operating revenue of BRL 1.3 billion for the first quarter of 2025, reflecting a 24.1% growth compared to the previous year.
The company achieved a gross margin of 28% and a net margin of 12.5%, indicating strong profitability.
The acquisition of compressors and other operations in September 2024 contributed significantly to the revenue growth.
The company has been approved for the Brazilian government's Mover program, which supports green mobility and provides resources for innovation and localization projects.
MAHLE-Metal Leve SA is actively pursuing new business opportunities in electrification and agribusiness, aligning with its strategic goals for diversification.
The company faced challenges due to hyperinflation in Argentina, which impacted financial results and required adjustments.
A 25% tariff on vehicles and auto parts from Brazil to the United States is expected to impact sales, although the company is working on mitigating strategies.
There was a 7% drop in OEM export revenue, primarily due to a decline in the light vehicles market.
The Argentinian operations faced profitability challenges due to high inflation and controlled exchange rates, affecting the Rafaela site's performance.
The aftermarket segment in Argentina experienced a drop in revenue due to increased competition and market changes.
Q: Could you explain the rationale behind the 60% payout of net profit for 2024, which is lower than historical payouts? Is this related to anticipated payments or higher leverage? What should we expect for the 2025 payout? A: The 60% payout was approved to create a reserve for the company's health, considering potential future uncertainties. This decision is not directly related to the super dividend payment of 2023. The reserve aims to ensure financial stability and reduce the need for loans. The 2025 payout will depend on the company's financial health and strategic decisions. (Daniel Alves, Marketing and Corporate Communication Manager; Claudio Braga, CFO)
Q: How is the company addressing the potential competition from Chinese aftermarket products due to the tariff war? A: Chinese parts are already present in the aftermarket, and the tariff war presents both challenges and opportunities. The company is focusing on resilient markets like agribusiness and diesel vehicles to offset potential impacts. Additionally, efforts are being made to align import taxes for hybrid and electric vehicles with combustion vehicles to maintain competitiveness. (Daniel Alves, Marketing and Corporate Communication Manager)
Q: Can you provide insights into the negotiations with North American customers regarding tariffs and the expected impact on the company's revenue? A: The tariffs impact about 4% of the company's revenue. Negotiations are ongoing with customers to offset the tariff impact, with some agreements already in place. The company is working to minimize the impact through strategic negotiations, and more clarity is expected in the next quarter. (Claudio Braga, CFO)
Q: What is the outlook for the recovery of operations in Argentina, considering the adjusted pricing strategy? A: The Rafaela site, which exports 90% of its production, is expected to benefit from a potential devaluation of the Argentine peso, improving sales attractiveness. Internal improvements and cost reductions are underway, with a full recovery anticipated in about two quarters. The aftermarket operations are expected to remain stable, with profitability aligned with regional benchmarks. (Claudio Braga, CFO; Daniel Alves, Marketing and Corporate Communication Manager)
Q: How do the margins for engine components compare to thermal systems, and what is the strategic direction for these segments? A: Margins for engine components are higher than those for thermal systems. The strategic direction involves a shift towards thermal products, which are not exclusive to combustion engines, aligning with future market trends. While margins are lower, the business is growing, and the strategy is seen as positive for long-term growth. (Claudio Braga, CFO; Daniel Alves, Marketing and Corporate Communication Manager)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.