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Iochpe-Maxion - First Quarter 2006 Full Presentation

This document provides an overview of Iochpe-Maxion S.A., a Brazilian manufacturer of automotive components and railway equipment. It discusses Iochpe-Maxion's business structure, markets, customers, strategies, financial performance, and outlook for key industries in Brazil. The presentation contains forward-looking statements and disclaims any duty to update the information provided.

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May, 2006 1
DISCLAIMER 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. 2
BUSINESS STRUCTURE Iochpe-Maxion S.A. Iochpe- 50% 100% Amsted-Maxion Fundição e Amsted- Maxion Sistemas Automotivos Equipamentos Ferroviários S.A. Ltda. Wheels and Frames Automotive Railway Equipment Division Components Division Auto parts for light vehicles: 6%1 Railway freight cars: 28%1 Frames: 32%1 Railway casting and wheel: Wheels: 21%1 13%1 1 % of consolidated net revenues in the first quarter of 2006 3
MARKET SHARE – BRAZIL (1Q06) Commercial Vehicle Railway Freight Railway Frames Wheels Cars Castings Maxion Maxion Maxion 85% 80% 71% Maxion 58% 39% 28% 1% 3% Borlem 15% 20% Dana OEM Others Others Cruzaço Maxion 69% 65% 80% 80% 1Q05 Source: Maxion estimate 4
AMSTED MAXION JOINT VENTURE Amsted Industries is the leading manufacturer of railway castings in North America Strategic alliance with Amsted Industries Benefits from the partnership with Amsted Industries: General characteristics of Amsted-Industries: Access to state of the art technologies 85% of sales are derived from the North American market Access to the largest markets of railway 47 plants located in 11 countries castings worldwide 9,200 employees Revenues in 2005: US$2.5bn Important costumer of Amsted-Maxion exports + = Brand widely recognized worldwide Leadership in the Brazilian market and Sucessful partnership competitiveness in the international market 5
INDUSTRIAL PARK Iochpe-Maxion’s production plants localization Iochpe- Maxion’s Costs of goods sold (% of total - 2005) 2005) Salaries Raw 16% materials and inputs D& A and 78% maintence expenses Hortolândia (SP) 6% Rayway Equipments MG Iochpe-Maxion’s gross margin vs. steel price1 (US$/ton) Iochpe- Contagem (MG) Osasco (SP) SP Iochpe’s gross margin International steel price Auto parts division 25.0% Rayway Equipments 2002 2003 2004 2005 20.0% 21,1% 20,2% 20,7% 19,3% Cruzeiro (SP) Cruzeiro (SP) 15.0% 800 (1 8 ,3 % %) Rayway Equipments Wheel and Frames 9 0 ,9 Divison 600 6,5% 4 4 , 2% Utilization rate 400 92% 200 75% 0 Jan-02 Jun-02 Dec-02 Jun-03 Dec-03 May-04 Nov-04 May-05 Oct-05 Rayway Equipments Wheel and frame 1Weekly spot price of US imports of hot rolled coil Division Source: Bloomberg 6
CUSTOMERS AND QUALITY Products and processes certified in Brazil and abroad by leading independent institutions Distribution of consolidated net revenues by client (1Q06) (1Q06) Exclusive supplier Exclusivity in the supply of (among others): Others 36% Frames of S10’ platform for General Motors Frames for Volkswagen Caminhões (trucks) Exports 19% Frames for Ford Cargo (8-ton trucks) Brasil Frames for Scania’s buses Ferrovias 10% Side members for Daimler Chrysler CVRD/FCA Daimler 12% Highway wheels for (i) Volkswagen Caminhões (trucks); (ii) VW Chrysler Scania; (iii) Volvo; (iv) AGCO; (v) Valtra 12% 11% Castings for industrial machinery for Caterpillar Distribution of net revenues by client in each of Iochpe Maxion’s major businesses (1Q06) 1Q06) Wheels Frames Amsted-Maxion Others Daimler Others Exports CVRD/FCA Others 23% Chrysler 12% 27% 29% 31% 31% MRS 5% Ford 7% Brasil Scania Tractors GM Ferrov. 11% VW 19% 13% VW 25% Exports 12% 26% 29% 7
STRATEGIC VIEW Our strategies have focused on the maintenance of our leadership position in the markets in which we operate Expand our production Enlarge our industrial park and increase production capacity in Brazil so as to enable the capacity Company to meet the growing demand in the national and international markets Consolidate our presence in the segment of spare wheels for commercial vehicles Increase our Increase exports of railway freight cars to countries with no local production share in Increase exports of railway castings through the partnership with Amsted Industries international markets Increase share in the U.S. market of large steel castings for industrial machinery Manufacture of some of our products in Asia Strengthen services rendered to railway operators (maintenance of railway cars and New business supply of spare parts) and products Increase number of products and services having synergies with our current activities Selected acquisitions in our industry 8
NET OPERATING REVENUE (R$ million) % 36 41% 4= = 5-0 – 05 ∆0 01 GR CA 1,494 1,099 ∆ 1Q06 – 05 = (4 %) 676 374 411 353 340 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q 9
GROSS PROFIT R$ MM % net sales 350 50% 300 40% 250 30% 200 21% 289 150 21% 21% 19% 20% 20% 20% 19% 228 100 137 10% 50 87 80 72 64 0 0% 00 1 00 2 00 3 00 4 00 5 05 06 2 2 2 2 2 1Q 1Q 10
NET EARNINGS R$ MM % net sales 80 20% 60 15% 40 10% 51 72 7% 20 5% 5% 5% 4% 4% 25 15 15 0 0% -1% 00 1 00 2 (24) 00 3 (5) 00 4 00 5 05 06 2 2 2 2 2 1Q 1Q (20) -5% -6% (40) -10% 11
EBITDA (*) R$ MM % net sales 250 20% 17% 200 16% 15% 14% 14% 14% 13% 13% 150 10% 100 205 156 5% 50 89 69 58 48 45 0 0% 00 1 00 2 00 3 00 4 00 5 05 06 2 2 2 2 2 1Q 1Q (*) 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. 12
NET BANK DEBT R$ MM x EBITDA (*) 200 2.0 175 150 1.5 1.5 1.3 125 1.1 100 1.0 0.9 158 75 151 0.7 0.6 1250.6 115 106 50 0.5 102 65 25 0 0.0 00 1 00 2 00 3 00 4 00 5 05 06 2 2 2 2 2 1Q 1Q (*) 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. 13
LIGHT COMMERCIALS – BRAZIL (‘000 units) Production % = 14 Export – 05 R 01 % C AG = 29 – 05 R 01 C AG 366 % 05 = 13 318 ∆ 1Q06 - % – 05 = 8 ∆ 1Q06 216 216 180 156 114 72 80 90 56 40 32 35 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 14
TRUCKS – BRAZIL (‘000 units) Production Export 1% 5=1 R0 1–0 % C AG = 54 – 05 R 01 C AG ∆ 1Q 06 – 05 = (12% ) 116 107 05 = 5 % 77 79 ∆ 1Q06 – 69 13 37 7 5 25 28 7 24 7.4 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 15
BUSES – BRAZIL (‘000 units) Production 1% 5=1 Export R0 1–0 C AG 29% – 05 = R 01 C AG = 6% ∆ 1Q06 – 05 35 29 ∆ 1Q 27 06 – 24 05 = 23 ( 8% ) 19 13 9 8.2 8.6 7 7 4 3.6 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 16
AGRICULTURAL MACHINERY – BRAZIL (‘000 units) Production % –0 5=4 Export R 01 C AG 9% –0 5=3 R 01 C AG 69 ∆ 1Q 06 – 59 05 = 53 ∆ 1Q (18% 52 06 – ) 44 05 = (35% ) 31 31 21 5 10 14 11 8 8 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 17
PASSENGER CARS – BRAZIL (‘000 units) Production = 7% 0 1 – 05 C A GR Export = 17 % 01 – 05 C AG R 05 = 8% 1,931 ∆ 1Q06 – 1,757 % 05 = 5 1,496 1,521 1,505 ∆1 Q06 – 606 440 497 470 148 509 155 319 363 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 18
RAILWAY FREIGHT CARS – BRAZIL (units) Sale % = 77 – 05 01 GR CA 7,270 5,642 ∆1Q06 – 05 = (5%) 2,459 294 1,375 1,309 748 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Amsted Maxion estimate 19
RAILWAY CASTINGS – BRAZIL (metric tons) Sale 10% 05 = 01 – C AGR 5,100 3,500 3,386 ∆ 1 Q0 6 – 05 = (30% 2,230 2,288 ) 1,046 733 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Amsted Maxion estimate Does not include castings used in the assembly of railway freight cars 20
RAILWAY WHEELS – BRAZIL ( ‘000 units) Sale 4% 01 – 05 = CAGR 50 50 48 42 42 % 6–0 5 = 19 ∆ 1Q0 9 11 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Amsted Maxion estimate Does not include wheels used in the assembly of railway freight cars 21
SHAREHOLDER COMPOSITION : MAR ´06 Iochpe Family BNDES Participações Other Voting 74.6% Voting 21.8% Voting 3.6% Non-Voting Non- 0.4% Non-Voting Non- 27.6% Non-Voting Non- 72.0% Total 26.1% Total 25.6% Total 48.3% Issued Shares (*) Common 18,428,597 34.62% Preferred 34,803,707 65.38% Total 53,232,304 100.00% 22
NET OPERATING REVENUE – 1Q06 R$ 340 million Segment (%) Customer (%) Automotive Comp. Daimler Division Chrysler Volks- wagen 6% 11% Brasil 12% Ferrovias 10% CVRD/ 12% General 41% FCA 6% Motors 53% 4% Scania 4% 19% 3% Tractors Exports Amsted Ford Maxion (*) Wheels and 19% Chassis Division Other (*) Consolidation considers 50% of Amsted Maxion’s net operating revenue 23
EXPORTS – 1Q06 US$29 million R$63 million Segment (%) Destination (%) Canada/ Mexico 8% 63% Railway Equip. USA 50% 26% South America 30% Commercial Vehicle 7% 6% 10% Wheels Chassis Africa/ Europe Middle East 24
EXPORTS (USD million) % = 48 1% 05 =6 01 – 5 -04 R ∆0 C AG 96 % 6–0 5 = 29 ∆ 1Q0 47 33 29 24 24 23 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q 25
CAPEX (R$ million) 84 80 73 54 41 13 14 0 2 0 3 0 4 0 5 6 E 05 06 20 20 20 20 00 1 Q 1 Q 2 26
INCOME STATEMENT (R$ thousand) First Quarter 2,006 % N.O.R. 2,005 % N.O.R. Var% Net operating revenue 340,321 100.0% 352,579 100.0% -3.5% (-) Cost of goods sold (276,483) -81.2% (281,082) -79.7% -1.6% Gross profit 63,838 18.8% 71,497 20.3% -10.7% Operating expenses Sales (14,708) -4.3% (17,238) -4.9% -14.7% General and Administrative (11,505) -3.4% (12,202) -3.5% -5.7% Other operating expenses 58 0.0% (807) -0.2% -107.2% (26,155) -7.7% (30,247) -8.6% -13.5% Earnings before interest and taxes - EBIT 37,683 11.1% 41,250 11.7% -8.6% Net financial expenses (6,162) -1.8% (8,700) -2.5% -29.2% Earnings after financial expenses 31,521 9.3% 32,550 9.2% -3.2% Non-operating result (5,106) -1.5% (5,284) -1.5% -3.4% Earnings before taxes 26,415 7.8% 27,266 7.7% -3.1% Income taxes (11,511) -3.4% (12,151) -3.4% -5.3% Net income 14,904 4.4% 15,115 4.3% -1.4% EBITDA (*) 44,666 13.1% 47,724 13.5% -6.4% (*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating 27 result, plus net financial expenses, plus depreciation and amortization, plus goodwill amortization.
INCOME STATEMENT (R$ thousand) 2005 % net sales 2004 % net sales Var. 05/04 Net operating revenue 1,494,029 100.0% 1,098,597 100.0% 36.0% (-) Cost of goods sold (1,205,374) -80.7% (871,084) -79.3% 38.4% Gross profit 288,655 19.3% 227,513 20.7% 26.9% Operating expenses Sales (65,452) -4.4% (55,339) -5.0% 18.3% General and administrative (43,241) -2.9% (38,874) -3.5% 11.2% Other operating expenses (2,357) -0.2% (6,586) -0.6% -64.2% (111,050) -7.4% (100,799) -9.2% 10.2% Earnings before interest and taxes - EBIT 177,605 11.9% 126,714 11.5% 40.2% Net financial expenses (37,118) -2.5% (32,578) -3.0% 13.9% Earnings after financial expenses 140,487 9.4% 94,136 8.6% 49.2% Non-operating result (20,272) -1.4% (20,570) -1.9% -1.4% Income taxes and minority interest (48,084) -3.2% (22,740) -2.1% 111.5% Net income 72,131 4.8% 50,826 4.6% 41.9% EBITDA(*) 204,724 13.7% 155,478 14.2% 31.7% (*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating 28 result, plus net financial expenses, plus depreciation and amortization, plus goodwill amortization.
BALANCE SHEET (R$ thousand) ASSETS Mar ´06 Mar ´05 LIABILITES AND EQUITY Mar ´06 Mar ´05 CURRENT CURRENT Cash and marketable securities 22,639 30,287 Loans 113,814 144,965 Receivables 186,422 180,713 Payables 64,501 73,969 Inventories 131,822 160,479 Costumers advances 51,984 69,558 Recoverable taxes 18,895 26,648 Wages and charges 29,507 25,403 Other 28,077 18,833 Taxes 9,360 23,601 387,855 416,960 Provisions 7,869 15,067 Other 12,648 36,820 289,683 389,383 LONG TERM LONG TERM Receivables 2,832 4,533 Loans 59,625 42,148 Deferred income taxes 28,945 40,090 Provisions 62,601 36,918 Other 13,762 29,872 Other 14,865 4,246 45,539 74,495 137,091 83,312 MINORITY INTEREST 195 176 PERMANENT EQUITY Investments 369 265 Paid-up capital 161,463 161,463 Plant, property and equipment 235,540 178,763 Profit reserves 68,468 24,770 Deferred items 2,501 3,736 Retained earnings 14,904 15,115 238,410 182,764 244,835 201,348 671,804 674,219 671,804 674,219 29
BALANCE SHEET (R$ thousand) ASSET Dec ´05 Dec ´04 LIABILITIES Dec ´05 Dec ´04 CURRENT CURRENT Cash and cash equivalents 51,962 73,926 Loans, financing and debenture 79,195 116,846 Trade accounts receivable 151,733 122,538 Accounts payable to suppliers 66,557 68,305 Inventories 142,494 149,353 Salaries and related charges 30,672 25,931 Taxes recoverable 6,130 18,779 Taxes payable 3,891 13,268 Other 22,842 23,060 Provisions 13,360 13,759 375,161 387,656 Other 89,997 106,789 283,672 344,898 NON CURRENT ASSETS NON CURRENT LIABILITIES Trade accounts receivable 3,890 5,220 Loans, financing and debenture 97,694 58,983 Taxes recoverable 21,361 12,945 Provisions 46,866 38,032 Deferred income and social contribution taxes 32,353 40,090 Other 16,586 2,899 Other 9,810 9,053 161,146 99,914 67,414 67,308 MINORITY INTEREST 182 167 PERMANENT ASSETS SHAREHOLDERS' EQUITY Investments 369 509 Property, plant and equipment 229,123 171,568 Capital 161,463 161,463 Deferred charges 2,864 4,171 Profit reserves 68,468 24,770 232,356 176,248 229,931 186,233 674,931 631,212 674,931 631,212 30
NET DEBT BREAKDOWN – MAR ‘06 (R$ million) Lines Short Term Long Term Total Trade Finance / Export 27.9 15.0 42.9 Equipment financing 82.6 44.6 127.2 Other lines in R$ 3.3 3.3 113.8 59.6 173.4 (-) Cash and Cash equivalents 22.6 22.6 Net Debt 91.2 59.6 150.8 31
DEBT INDEXATION – MAR ‘06 (%) TJLP (BNDES Average Cost (1Q06) rate) 71% In R$ 71% CDI In US$ 7.8% p.a. 2% 25% 2% Dollar IGPM Interbank (whosale rate inflation index) 32
FREIGHT CARS – FIRM ORDERS FOR DELIVERY IN 2006 CVRD / FCA 1,276 units Brasil Ferrovias 720 units MRC (Mitsui / Bunge / ALL) (Mitsui 300 units Revenue Approx. MRS 280 units R$510 million CVG Ferrominera Orinoco 50 units Itaú Leasing (Inlogs / ALL) Itaú (Inlogs 69 units Total 2,695 units 33
STOCK PERFORMANCE R$ THOUS. R$ / SHARE (*) 5,000 24.0 DAILY VOLUME / MONTHLY AVERAGE PRICE IOCHPE-MAXION PN (MYPK4) 4,500 21.1 20.0 4,000 16.8 18.8 16.2 16.2 18.0 3,500 16.3 16.0 15.9 15.5 3,225 16.0 14.114.2 14.2 14.4 3,000 13.6 12.4 PRICE 2,388 2,500 12.0 9.6 2,000 8.7 8.5 VOLUME 6.8 8.0 1,500 1,385 5.5 1,366 4.9 4.7 4.0 4.0 1,004 966 1,000 4.0 3.9 4.1 849 4.0 556 500 401 354 253 381 262 296 289 333 303 384 171 205 183 144 156 43 151 190 123 139 - - Ju 4 Ju 5 Fe 04 Au 04 Se 04 Fe 05 Au 05 Se 05 Fe 06 Ja 03 M 05 M 04 M 04 Ju 04 O 04 D 04 Ja 04 M 05 M 06 Ju 05 O 05 D 05 Ja 05 Ap 04 N 04 Ap 05 6 N 05 0 0 -0 n- n- n- l- n- l- n- - b- g- b- g- b- - r- - p- - - r- - p- - - - - - ay ov ay ov ec ar ec ar ec ar ct ct D (*) after reverse split 34
Logistics Segment Overview 35
BRAZILIAN RAILWAY TRANSPORTATION Million of tons Goods - 2005 Others .9% % 14.5 500 R %=5 ∆% = 15% CAG 402 400 351 331 302 301 289 300 260 260 Grain 254 8% 200 100 Steel Ore 8% 69% 0 97 98 99 00 01 02 03 04 05 Source: ANTF / Revista Ferroviária Source: ANTF 36
BRAZILIAN RAILWAY TRANSPORTATION Cargo Transportation Matrix % Railway Cargo Transportation % by type - 2003 30% Railway Road Waterway 25% 24% 24% Russia 81% 08% 11% 21% 20% India 50% 50% 00% Canada 46% 43% 11% 10% Australia 43% 53% 04% USA 43% 32% 25% 0% Brazil 24% 62% 14% 1997 2003 2004 2005 Source: ANTF 37
BRAZILIAN RAILWAY TRANSPORTATION Announced expansion projects in the railway network Expansion of transported volume by Estrada de Ferro Carajás from 70 million tons to 100 million tons and, later, to 180 million tons; Extension of Ferrovia Norte-Sul; New routes for Companhia Ferroviária Nordeste – CFN; Expansion of transported volume by MRS from 110 million tons in 2005 to 180 million tons in 2009 Expansion of CSN’s Casa de Pedra mine from 16 million tons to 40 million tons; Change of control and extension of Brasil Ferrovias; Change of control of Ferrovia Novoeste; and Construction of metropolitan “ring” railways (São Paulo, Belo Horizonte, Rio de Janeiro and Curitiba) Source: Newsrun 38
BRAZILIAN COMMERCIAL VEHICLE FLEET Fleet Size Average Fleet Age (in thousand units) (in years) Pickups 3,088 Pickups 8.6 Trucks 1,169 Trucks 12.0 Buses 258 Buses 9.9 Source: Sindipeças 39
May, 2006 40

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Iochpe-Maxion - First Quarter 2006 Full Presentation

  • 1.
  • 2.
    DISCLAIMER The material containedin 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. 2
  • 3.
    BUSINESS STRUCTURE Iochpe-Maxion S.A. Iochpe- 50% 100% Amsted-Maxion Fundição e Amsted- Maxion Sistemas Automotivos Equipamentos Ferroviários S.A. Ltda. Wheels and Frames Automotive Railway Equipment Division Components Division Auto parts for light vehicles: 6%1 Railway freight cars: 28%1 Frames: 32%1 Railway casting and wheel: Wheels: 21%1 13%1 1 % of consolidated net revenues in the first quarter of 2006 3
  • 4.
    MARKET SHARE –BRAZIL (1Q06) Commercial Vehicle Railway Freight Railway Frames Wheels Cars Castings Maxion Maxion Maxion 85% 80% 71% Maxion 58% 39% 28% 1% 3% Borlem 15% 20% Dana OEM Others Others Cruzaço Maxion 69% 65% 80% 80% 1Q05 Source: Maxion estimate 4
  • 5.
    AMSTED MAXION JOINTVENTURE Amsted Industries is the leading manufacturer of railway castings in North America Strategic alliance with Amsted Industries Benefits from the partnership with Amsted Industries: General characteristics of Amsted-Industries: Access to state of the art technologies 85% of sales are derived from the North American market Access to the largest markets of railway 47 plants located in 11 countries castings worldwide 9,200 employees Revenues in 2005: US$2.5bn Important costumer of Amsted-Maxion exports + = Brand widely recognized worldwide Leadership in the Brazilian market and Sucessful partnership competitiveness in the international market 5
  • 6.
    INDUSTRIAL PARK Iochpe-Maxion’sproduction plants localization Iochpe- Maxion’s Costs of goods sold (% of total - 2005) 2005) Salaries Raw 16% materials and inputs D& A and 78% maintence expenses Hortolândia (SP) 6% Rayway Equipments MG Iochpe-Maxion’s gross margin vs. steel price1 (US$/ton) Iochpe- Contagem (MG) Osasco (SP) SP Iochpe’s gross margin International steel price Auto parts division 25.0% Rayway Equipments 2002 2003 2004 2005 20.0% 21,1% 20,2% 20,7% 19,3% Cruzeiro (SP) Cruzeiro (SP) 15.0% 800 (1 8 ,3 % %) Rayway Equipments Wheel and Frames 9 0 ,9 Divison 600 6,5% 4 4 , 2% Utilization rate 400 92% 200 75% 0 Jan-02 Jun-02 Dec-02 Jun-03 Dec-03 May-04 Nov-04 May-05 Oct-05 Rayway Equipments Wheel and frame 1Weekly spot price of US imports of hot rolled coil Division Source: Bloomberg 6
  • 7.
    CUSTOMERS AND QUALITY Products and processes certified in Brazil and abroad by leading independent institutions Distribution of consolidated net revenues by client (1Q06) (1Q06) Exclusive supplier Exclusivity in the supply of (among others): Others 36% Frames of S10’ platform for General Motors Frames for Volkswagen Caminhões (trucks) Exports 19% Frames for Ford Cargo (8-ton trucks) Brasil Frames for Scania’s buses Ferrovias 10% Side members for Daimler Chrysler CVRD/FCA Daimler 12% Highway wheels for (i) Volkswagen Caminhões (trucks); (ii) VW Chrysler Scania; (iii) Volvo; (iv) AGCO; (v) Valtra 12% 11% Castings for industrial machinery for Caterpillar Distribution of net revenues by client in each of Iochpe Maxion’s major businesses (1Q06) 1Q06) Wheels Frames Amsted-Maxion Others Daimler Others Exports CVRD/FCA Others 23% Chrysler 12% 27% 29% 31% 31% MRS 5% Ford 7% Brasil Scania Tractors GM Ferrov. 11% VW 19% 13% VW 25% Exports 12% 26% 29% 7
  • 8.
    STRATEGIC VIEW Ourstrategies have focused on the maintenance of our leadership position in the markets in which we operate Expand our production Enlarge our industrial park and increase production capacity in Brazil so as to enable the capacity Company to meet the growing demand in the national and international markets Consolidate our presence in the segment of spare wheels for commercial vehicles Increase our Increase exports of railway freight cars to countries with no local production share in Increase exports of railway castings through the partnership with Amsted Industries international markets Increase share in the U.S. market of large steel castings for industrial machinery Manufacture of some of our products in Asia Strengthen services rendered to railway operators (maintenance of railway cars and New business supply of spare parts) and products Increase number of products and services having synergies with our current activities Selected acquisitions in our industry 8
  • 9.
    NET OPERATING REVENUE(R$ million) % 36 41% 4= = 5-0 – 05 ∆0 01 GR CA 1,494 1,099 ∆ 1Q06 – 05 = (4 %) 676 374 411 353 340 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q 9
  • 10.
    GROSS PROFIT R$ MM % net sales 350 50% 300 40% 250 30% 200 21% 289 150 21% 21% 19% 20% 20% 20% 19% 228 100 137 10% 50 87 80 72 64 0 0% 00 1 00 2 00 3 00 4 00 5 05 06 2 2 2 2 2 1Q 1Q 10
  • 11.
    NET EARNINGS R$ MM % net sales 80 20% 60 15% 40 10% 51 72 7% 20 5% 5% 5% 4% 4% 25 15 15 0 0% -1% 00 1 00 2 (24) 00 3 (5) 00 4 00 5 05 06 2 2 2 2 2 1Q 1Q (20) -5% -6% (40) -10% 11
  • 12.
    EBITDA (*) R$ MM % net sales 250 20% 17% 200 16% 15% 14% 14% 14% 13% 13% 150 10% 100 205 156 5% 50 89 69 58 48 45 0 0% 00 1 00 2 00 3 00 4 00 5 05 06 2 2 2 2 2 1Q 1Q (*) 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. 12
  • 13.
    NET BANK DEBT R$ MM x EBITDA (*) 200 2.0 175 150 1.5 1.5 1.3 125 1.1 100 1.0 0.9 158 75 151 0.7 0.6 1250.6 115 106 50 0.5 102 65 25 0 0.0 00 1 00 2 00 3 00 4 00 5 05 06 2 2 2 2 2 1Q 1Q (*) 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. 13
  • 14.
    LIGHT COMMERCIALS –BRAZIL (‘000 units) Production % = 14 Export – 05 R 01 % C AG = 29 – 05 R 01 C AG 366 % 05 = 13 318 ∆ 1Q06 - % – 05 = 8 ∆ 1Q06 216 216 180 156 114 72 80 90 56 40 32 35 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 14
  • 15.
    TRUCKS – BRAZIL(‘000 units) Production Export 1% 5=1 R0 1–0 % C AG = 54 – 05 R 01 C AG ∆ 1Q 06 – 05 = (12% ) 116 107 05 = 5 % 77 79 ∆ 1Q06 – 69 13 37 7 5 25 28 7 24 7.4 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 15
  • 16.
    BUSES – BRAZIL(‘000 units) Production 1% 5=1 Export R0 1–0 C AG 29% – 05 = R 01 C AG = 6% ∆ 1Q06 – 05 35 29 ∆ 1Q 27 06 – 24 05 = 23 ( 8% ) 19 13 9 8.2 8.6 7 7 4 3.6 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 16
  • 17.
    AGRICULTURAL MACHINERY –BRAZIL (‘000 units) Production % –0 5=4 Export R 01 C AG 9% –0 5=3 R 01 C AG 69 ∆ 1Q 06 – 59 05 = 53 ∆ 1Q (18% 52 06 – ) 44 05 = (35% ) 31 31 21 5 10 14 11 8 8 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 17
  • 18.
    PASSENGER CARS –BRAZIL (‘000 units) Production = 7% 0 1 – 05 C A GR Export = 17 % 01 – 05 C AG R 05 = 8% 1,931 ∆ 1Q06 – 1,757 % 05 = 5 1,496 1,521 1,505 ∆1 Q06 – 606 440 497 470 148 509 155 319 363 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Anfavea 18
  • 19.
    RAILWAY FREIGHT CARS– BRAZIL (units) Sale % = 77 – 05 01 GR CA 7,270 5,642 ∆1Q06 – 05 = (5%) 2,459 294 1,375 1,309 748 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Amsted Maxion estimate 19
  • 20.
    RAILWAY CASTINGS –BRAZIL (metric tons) Sale 10% 05 = 01 – C AGR 5,100 3,500 3,386 ∆ 1 Q0 6 – 05 = (30% 2,230 2,288 ) 1,046 733 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Amsted Maxion estimate Does not include castings used in the assembly of railway freight cars 20
  • 21.
    RAILWAY WHEELS –BRAZIL ( ‘000 units) Sale 4% 01 – 05 = CAGR 50 50 48 42 42 % 6–0 5 = 19 ∆ 1Q0 9 11 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q Source: Amsted Maxion estimate Does not include wheels used in the assembly of railway freight cars 21
  • 22.
    SHAREHOLDER COMPOSITION :MAR ´06 Iochpe Family BNDES Participações Other Voting 74.6% Voting 21.8% Voting 3.6% Non-Voting Non- 0.4% Non-Voting Non- 27.6% Non-Voting Non- 72.0% Total 26.1% Total 25.6% Total 48.3% Issued Shares (*) Common 18,428,597 34.62% Preferred 34,803,707 65.38% Total 53,232,304 100.00% 22
  • 23.
    NET OPERATING REVENUE– 1Q06 R$ 340 million Segment (%) Customer (%) Automotive Comp. Daimler Division Chrysler Volks- wagen 6% 11% Brasil 12% Ferrovias 10% CVRD/ 12% General 41% FCA 6% Motors 53% 4% Scania 4% 19% 3% Tractors Exports Amsted Ford Maxion (*) Wheels and 19% Chassis Division Other (*) Consolidation considers 50% of Amsted Maxion’s net operating revenue 23
  • 24.
    EXPORTS – 1Q06 US$29 million R$63 million Segment (%) Destination (%) Canada/ Mexico 8% 63% Railway Equip. USA 50% 26% South America 30% Commercial Vehicle 7% 6% 10% Wheels Chassis Africa/ Europe Middle East 24
  • 25.
    EXPORTS (USD million) % = 48 1% 05 =6 01 – 5 -04 R ∆0 C AG 96 % 6–0 5 = 29 ∆ 1Q0 47 33 29 24 24 23 0 1 0 2 0 3 0 4 0 5 05 06 20 20 20 20 20 1 Q 1 Q 25
  • 26.
    CAPEX (R$ million) 84 80 73 54 41 13 14 0 2 0 3 0 4 0 5 6 E 05 06 20 20 20 20 00 1 Q 1 Q 2 26
  • 27.
    INCOME STATEMENT (R$thousand) First Quarter 2,006 % N.O.R. 2,005 % N.O.R. Var% Net operating revenue 340,321 100.0% 352,579 100.0% -3.5% (-) Cost of goods sold (276,483) -81.2% (281,082) -79.7% -1.6% Gross profit 63,838 18.8% 71,497 20.3% -10.7% Operating expenses Sales (14,708) -4.3% (17,238) -4.9% -14.7% General and Administrative (11,505) -3.4% (12,202) -3.5% -5.7% Other operating expenses 58 0.0% (807) -0.2% -107.2% (26,155) -7.7% (30,247) -8.6% -13.5% Earnings before interest and taxes - EBIT 37,683 11.1% 41,250 11.7% -8.6% Net financial expenses (6,162) -1.8% (8,700) -2.5% -29.2% Earnings after financial expenses 31,521 9.3% 32,550 9.2% -3.2% Non-operating result (5,106) -1.5% (5,284) -1.5% -3.4% Earnings before taxes 26,415 7.8% 27,266 7.7% -3.1% Income taxes (11,511) -3.4% (12,151) -3.4% -5.3% Net income 14,904 4.4% 15,115 4.3% -1.4% EBITDA (*) 44,666 13.1% 47,724 13.5% -6.4% (*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating 27 result, plus net financial expenses, plus depreciation and amortization, plus goodwill amortization.
  • 28.
    INCOME STATEMENT (R$thousand) 2005 % net sales 2004 % net sales Var. 05/04 Net operating revenue 1,494,029 100.0% 1,098,597 100.0% 36.0% (-) Cost of goods sold (1,205,374) -80.7% (871,084) -79.3% 38.4% Gross profit 288,655 19.3% 227,513 20.7% 26.9% Operating expenses Sales (65,452) -4.4% (55,339) -5.0% 18.3% General and administrative (43,241) -2.9% (38,874) -3.5% 11.2% Other operating expenses (2,357) -0.2% (6,586) -0.6% -64.2% (111,050) -7.4% (100,799) -9.2% 10.2% Earnings before interest and taxes - EBIT 177,605 11.9% 126,714 11.5% 40.2% Net financial expenses (37,118) -2.5% (32,578) -3.0% 13.9% Earnings after financial expenses 140,487 9.4% 94,136 8.6% 49.2% Non-operating result (20,272) -1.4% (20,570) -1.9% -1.4% Income taxes and minority interest (48,084) -3.2% (22,740) -2.1% 111.5% Net income 72,131 4.8% 50,826 4.6% 41.9% EBITDA(*) 204,724 13.7% 155,478 14.2% 31.7% (*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating 28 result, plus net financial expenses, plus depreciation and amortization, plus goodwill amortization.
  • 29.
    BALANCE SHEET (R$thousand) ASSETS Mar ´06 Mar ´05 LIABILITES AND EQUITY Mar ´06 Mar ´05 CURRENT CURRENT Cash and marketable securities 22,639 30,287 Loans 113,814 144,965 Receivables 186,422 180,713 Payables 64,501 73,969 Inventories 131,822 160,479 Costumers advances 51,984 69,558 Recoverable taxes 18,895 26,648 Wages and charges 29,507 25,403 Other 28,077 18,833 Taxes 9,360 23,601 387,855 416,960 Provisions 7,869 15,067 Other 12,648 36,820 289,683 389,383 LONG TERM LONG TERM Receivables 2,832 4,533 Loans 59,625 42,148 Deferred income taxes 28,945 40,090 Provisions 62,601 36,918 Other 13,762 29,872 Other 14,865 4,246 45,539 74,495 137,091 83,312 MINORITY INTEREST 195 176 PERMANENT EQUITY Investments 369 265 Paid-up capital 161,463 161,463 Plant, property and equipment 235,540 178,763 Profit reserves 68,468 24,770 Deferred items 2,501 3,736 Retained earnings 14,904 15,115 238,410 182,764 244,835 201,348 671,804 674,219 671,804 674,219 29
  • 30.
    BALANCE SHEET (R$thousand) ASSET Dec ´05 Dec ´04 LIABILITIES Dec ´05 Dec ´04 CURRENT CURRENT Cash and cash equivalents 51,962 73,926 Loans, financing and debenture 79,195 116,846 Trade accounts receivable 151,733 122,538 Accounts payable to suppliers 66,557 68,305 Inventories 142,494 149,353 Salaries and related charges 30,672 25,931 Taxes recoverable 6,130 18,779 Taxes payable 3,891 13,268 Other 22,842 23,060 Provisions 13,360 13,759 375,161 387,656 Other 89,997 106,789 283,672 344,898 NON CURRENT ASSETS NON CURRENT LIABILITIES Trade accounts receivable 3,890 5,220 Loans, financing and debenture 97,694 58,983 Taxes recoverable 21,361 12,945 Provisions 46,866 38,032 Deferred income and social contribution taxes 32,353 40,090 Other 16,586 2,899 Other 9,810 9,053 161,146 99,914 67,414 67,308 MINORITY INTEREST 182 167 PERMANENT ASSETS SHAREHOLDERS' EQUITY Investments 369 509 Property, plant and equipment 229,123 171,568 Capital 161,463 161,463 Deferred charges 2,864 4,171 Profit reserves 68,468 24,770 232,356 176,248 229,931 186,233 674,931 631,212 674,931 631,212 30
  • 31.
    NET DEBT BREAKDOWN– MAR ‘06 (R$ million) Lines Short Term Long Term Total Trade Finance / Export 27.9 15.0 42.9 Equipment financing 82.6 44.6 127.2 Other lines in R$ 3.3 3.3 113.8 59.6 173.4 (-) Cash and Cash equivalents 22.6 22.6 Net Debt 91.2 59.6 150.8 31
  • 32.
    DEBT INDEXATION –MAR ‘06 (%) TJLP (BNDES Average Cost (1Q06) rate) 71% In R$ 71% CDI In US$ 7.8% p.a. 2% 25% 2% Dollar IGPM Interbank (whosale rate inflation index) 32
  • 33.
    FREIGHT CARS –FIRM ORDERS FOR DELIVERY IN 2006 CVRD / FCA 1,276 units Brasil Ferrovias 720 units MRC (Mitsui / Bunge / ALL) (Mitsui 300 units Revenue Approx. MRS 280 units R$510 million CVG Ferrominera Orinoco 50 units Itaú Leasing (Inlogs / ALL) Itaú (Inlogs 69 units Total 2,695 units 33
  • 34.
    STOCK PERFORMANCE R$ THOUS. R$ / SHARE (*) 5,000 24.0 DAILY VOLUME / MONTHLY AVERAGE PRICE IOCHPE-MAXION PN (MYPK4) 4,500 21.1 20.0 4,000 16.8 18.8 16.2 16.2 18.0 3,500 16.3 16.0 15.9 15.5 3,225 16.0 14.114.2 14.2 14.4 3,000 13.6 12.4 PRICE 2,388 2,500 12.0 9.6 2,000 8.7 8.5 VOLUME 6.8 8.0 1,500 1,385 5.5 1,366 4.9 4.7 4.0 4.0 1,004 966 1,000 4.0 3.9 4.1 849 4.0 556 500 401 354 253 381 262 296 289 333 303 384 171 205 183 144 156 43 151 190 123 139 - - Ju 4 Ju 5 Fe 04 Au 04 Se 04 Fe 05 Au 05 Se 05 Fe 06 Ja 03 M 05 M 04 M 04 Ju 04 O 04 D 04 Ja 04 M 05 M 06 Ju 05 O 05 D 05 Ja 05 Ap 04 N 04 Ap 05 6 N 05 0 0 -0 n- n- n- l- n- l- n- - b- g- b- g- b- - r- - p- - - r- - p- - - - - - ay ov ay ov ec ar ec ar ec ar ct ct D (*) after reverse split 34
  • 35.
  • 36.
    BRAZILIAN RAILWAY TRANSPORTATION Million of tons Goods - 2005 Others .9% % 14.5 500 R %=5 ∆% = 15% CAG 402 400 351 331 302 301 289 300 260 260 Grain 254 8% 200 100 Steel Ore 8% 69% 0 97 98 99 00 01 02 03 04 05 Source: ANTF / Revista Ferroviária Source: ANTF 36
  • 37.
    BRAZILIAN RAILWAY TRANSPORTATION Cargo Transportation Matrix % Railway Cargo Transportation % by type - 2003 30% Railway Road Waterway 25% 24% 24% Russia 81% 08% 11% 21% 20% India 50% 50% 00% Canada 46% 43% 11% 10% Australia 43% 53% 04% USA 43% 32% 25% 0% Brazil 24% 62% 14% 1997 2003 2004 2005 Source: ANTF 37
  • 38.
    BRAZILIAN RAILWAY TRANSPORTATION Announced expansion projects in the railway network Expansion of transported volume by Estrada de Ferro Carajás from 70 million tons to 100 million tons and, later, to 180 million tons; Extension of Ferrovia Norte-Sul; New routes for Companhia Ferroviária Nordeste – CFN; Expansion of transported volume by MRS from 110 million tons in 2005 to 180 million tons in 2009 Expansion of CSN’s Casa de Pedra mine from 16 million tons to 40 million tons; Change of control and extension of Brasil Ferrovias; Change of control of Ferrovia Novoeste; and Construction of metropolitan “ring” railways (São Paulo, Belo Horizonte, Rio de Janeiro and Curitiba) Source: Newsrun 38
  • 39.
    BRAZILIAN COMMERCIAL VEHICLEFLEET Fleet Size Average Fleet Age (in thousand units) (in years) Pickups 3,088 Pickups 8.6 Trucks 1,169 Trucks 12.0 Buses 258 Buses 9.9 Source: Sindipeças 39
  • 40.