WEG (WEGE3), the Brazilian manufacturer known for its electrical equipment, announced its fourth quarter financial results for 2024, reporting a net profit of R$ 1.69 billion. This figure signifies a 2.9% decrease compared to the same quarter last year, which raised some concerns among investors.
Despite the dip, WEG's total profit for the entire year crossed R$ 6 billion, reflecting a modest growth of 5.4% as against 2023. The company's EBITDA, which measures operational efficiency, reached R$ 2.38 billion during Q4, marking an impressive year-on-year increase of 30.5%. This improvement also resulted in the EBITDA margin slightly increasing to 22.1%, up by 0.7 percentage points from Q4 2023.
The operational revenue for the final quarter of the year hit R$ 10.8 billion, demonstrating significant yearly growth of 26.4%. This performance aligns well with estimates from market analysts, who projected the revenue at R$ 10.58 billion. The annual operational revenue totaled R$ 37.99 billion, representing a 16.9% increase from the previous year.
WEG's strong performance stems from its solid domestic market condition, particularly its sales of long-cycle equipment. The company excelled in energy transmission and distribution (T&D) projects, benefiting from substantial contributions to solar generation projects, even as it faced declines expected from wind generation deliveries. The sales of T&D equipment were particularly strong, particularly from deliveries in North America and generation performance across Europe.
Alberto Kuba, who took over as CEO from Harry Schmelzer Jr. earlier this year, has emphasized the continuous demand for WEG's diverse range of products. Under Kuba’s new leadership, the company has actively pursued advantages from its recent acquisitions, including businesses like Marathon, Rotor, Cemp, and Volt Electric Motor. These acquisitions have bolstered WEG's operational capacity and strategic footprint.
While the financial metrics showcased growth, WEG also faced increasing operational costs, with selling, general, and administrative expenses rising by 35.3% year-on-year to R$ 1.26 billion. This increase has been attributed partly to consolidations of recent business acquisitions as well as currency fluctuations impacting costs. When assessed against operational revenue, these expenses represented 11.6%, slightly higher than previous quarters.
Cash generation from operations for WEG amounted to R$ 7.25 billion throughout 2024, underscoring the company’s ability to manage cash flows effectively amid growing capital needs. Notably, the return on invested capital (ROIC) reached 34.2% during Q4, but represented declines of 5 percentage points from the previous year.
Looking forward, WEG announced the distribution of additional dividends amounting to R$ 1.27 billion on February 26, 2025. This distribution will provide shareholders with R$ 0.30 per share, which will be paid out on March 12, 2025, with shares trading ex-dividend from March 5, 2025.
Also noteworthy is WEG's proposal for increasing its capital from R$ 7.5 billion to R$ 12.5 billion, to be presented at the General Assembly on April 29, 2025. This capital increase will be funded through the incorporation of R$ 5 billion from retained earnings, without increasing the number of shares outstanding.
WEG continues to prove itself as not only resilient but also strategically positioned for future growth, as evidenced by its consistent performance across various segments and its recognized value, now the fourth most valuable company on Brazil's B3.