Q2 2026 WEG SA Earnings Call Transcript
Key Points
- Weg SA (WEGZY) reported continued growth in revenues abroad, particularly in North America and Europe, driven by strong demand in the oil and gas, ventilation, and refrigeration systems segments.
- The company's EBITDA margin remained healthy at 21.8%, supported by a favorable product mix despite challenges such as rising raw material costs and import tariffs.
- Investments in expanding production capacity are ongoing, with significant progress in transformer factories in Colombia and the United States, as well as in China.
- The company's ROIC showed growth of 0.7 percentage points, ending the quarter at 3.6%, indicating effective capital allocation and investment quality.
- Positive industrial activity in Brazil contributed to growth in demand for short-cycle equipment, such as low-voltage electric motors and gearbox reducers, across various sectors.
- Revenue in the domestic market was negatively impacted by the absence of centralized solar generation deliveries, which were significant in the previous year.
- Exchange rate fluctuations reduced the growth of BRL, affecting the conversion of revenues despite good growth in local currencies.
- The solar generation business in the GTD area saw a decline due to the lack of centralized generation projects in 2026.
- The company faced challenges from rising costs of raw materials and import tariffs in the United States, impacting profitability.
- There was a decrease in EBITDA by 2.1% compared to the second quarter of 2025, reflecting some operational challenges.
(spoken in foreign language) -- in the first quarter of 2026 to present this quarter. We have managed to virtualize virtual nurses impact with the continued growth of revenues abroad. And speaking of those effects, the first effect on Brazil, relates to the fact that we already had a significant order book for centralized solar generation deliveries in the second quarter of 2025.
When compared to the absence of these deliveries in the second quarter of 2026, this had a negative impact on revenue in the domestic market. Despite this, other businesses contributed positively the quarter's results. with continued deliveries of transmission and distribution projects, coupled with improved industrial activities.
The second effect was related to the impact of exchange rate fluctuations during the period, which for conversion purposes, reduced the growth of BRL despite another quarter of good growth in local currencies in the main regions. Industrial activities remained positive in our main markets, particularly in segments such as oil and gas and ventilation and refrigeration systems.
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