WEG S.A., the renowned Brazilian electric motor manufacturer, has announced its financial results for the fourth quarter of 2024 and a significant dividend distribution, showcasing the company's commitment to shareholder returns.
On February 26, 2025, WEG (WEGE3) reported a net income of R$ 6.04 billion for the year, marking a 5.4% increase from the previous year. For the last quarter of 2024, the company posted net earnings of R$ 1.69 billion, reflecting a 2.9% decrease compared to the same period in 2023, but up 7.3% sequentially from the third quarter.
One of the notable highlights of the financial report is the significant EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of R$ 2.39 billion for Q4 2024, which shows a substantial gain of 30.5% year-over-year. For the entire year, WEG reported EBITDA of R$ 8.5 billion, up 19.9% compared to 2023, showcasing the company's resilience and operational efficiency.
Along with the stellar financial results, WEG announced its plans to distribute R$ 1.27 billion in supplemental dividends, translating to R$ 0.30 per share. Investors must own WEG shares by the close of trading on February 28 to receive the dividend payout, which is set to be paid on March 12, 2025. From March 5, shares will trade on an "ex-dividend" basis, meaning they will not include the entitlement to this dividend payment.
Notably, WEG also proposed to increase its capital from R$ 7.5 billion to R$ 12.5 billion through the incorporation of profits reserves. This move, which does not involve issuing new shares, is viewed as strategic for strengthening the company’s position for future investments and growth opportunities. The proposal will be presented for approval at the General Assembly scheduled for April 29, 2025.
Despite the strong revenue and operational results, WEG's shares faced downward pressure following the earnings announcement. Analysts reported a 7.19% drop, bringing the share price to R$ 48.68 shortly after trading began on February 26. Market analysts had projected a net income of R$ 1.6 billion for the quarter, and results came quite close to expectations. Still, the slight dip below projected margins raised concerns.
According to Itaú BBA, the results were viewed as slightly negative, citing EBITDA margins falling short of estimates at 22.1%, compared to the consensus of 22.6%. The bank emphasized the importance of achieving perfect quarterly results for WEG, which has consistently been one of the most coveted stocks on the B3, Brazil's main stock exchange. Despite the market's immediate negative reaction, many analysts still see this as an opportunity to purchase shares of this high-quality company.
“While the financial results showed solid growth, the disappointing profitability figures are drawing the market's focus,” stated analysts at BTG Pactual. They acknowledged the strong revenue from the quarter but noted the need for improved margins to meet heightened market expectations.
Positive signs highlighted by analysts included significant growth of 26% year-over-year within the operational revenue for Q4, which stood at R$ 10.82 billion. The quarter also demonstrated continued international market strength, particularly with revenues from outside Brazil increasing by 43%. This exemplifies WEG's diversified market reach and sound business strategies.
Further reflecting on the earnings call, WEG's management underscored the overall demand for their products and services across various sectors, which underpinned the quarterly results. The company noted, "We presented another quarter of positive results, maintaining revenue growth and strong operational performance, due to the continuing demand for our products and services across diverse segments."
The rollercoaster nature of WEG’s stock performance following this earnings report demonstrates the volatility inherent in equity markets, especially for companies with high investor expectations. Analysts continue to assess WEG’s long-term growth potential against its immediate earnings performance. After the initial drop, some view the current dip as an opportune moment for potential investors to enter the stock.
WEG's comprehensive approach—balancing immediate shareholder returns through dividends and strategic long-term growth initiatives—positions the company favorably for the future. With supportive market fundamentals, investors will be watching closely as the upcoming General Assembly approaches, which will reveal the fate of the proposed capital increase and its expected impacts on WEG's market position.