Iochpe-Maxion Reports 2Q23 Earnings
- Net operating revenue of R$ 3,801.2 million in 2Q23, a decrease of 9.3%1
- 5.8% growth in net operating revenue in Europe¹
- Gross margin of 11.2% in 2Q23, 2.5 percentage points above the gross margins presented in the previous 3 quarters
- Net leverage2 of 2.72x in 2Q23, compared to 2.21x in 2Q22 and 2.77x in 1Q23
- Reduction of R$ 370.9 million (9.5%) in net debt in 2Q23 compared to the end of 2022 and R$ 538.9 million (13.2%) compared to 1Q23
- Total liquidity of R$ 2,958.6 million3 in 2Q23 compared to R$ 1,892.9 million in 2Q22. Liquidity ratio (total liquidity divided by short-term debt) of 1.63x, compared to 1.48x in 2Q22
- Reduction in the intensity of CO2 emission by 19.7% in the last year compared to the 2019 baseline4
SÃO PAULO, Brazil, August 9, 2023 - The second quarter of 2023 was still characterized by a scenario of global economic and geopolitical uncertainties. Despite being above historical levels, inflation maintains a trend of declining and stabilization in several countries. In Brazil, truck production volume continues to be negatively impacted by the transition from Euro 5 to Euro 6, with a lower performance than in 1Q23, and by the high level of interest rates impacting the demand for vehicles in general. On the other hand, regions such as Europe and North America continue to show production levels above the initially projected for the period, promoting the benefit of the geographic diversification of our business model.
Global production of light vehicles, excluding China, according to the IHS consulting, increased by 13.6% in 2Q23 compared to 2Q22. The commercial vehicle segment showed growth in global production, excluding China, of 2.2% in 2Q23 compared to 2Q22, according to the LMC consulting.
The Company's net operating revenue decreased by 9.3% in 2Q23 compared to 2Q22, reaching R$ 3.8 billion. The reduction is due to the lower cost of raw materials reflected in sales prices and the lower production volume of commercial vehicles in Brazil. The commercial vehicle segment had its share in the Company's net operating revenue reduced from 47.9% in 2Q22 to 42.3% in 2Q23.
Despite the significant drop in commercial vehicle production in Brazil, which impacted operational efficiency, the Company presented a gross margin in 2Q23 2.5 percentage points above the gross margins presented in the previous 3 quarters. The improvement is related to the higher global vehicle production volume and the reduction of negative temporal factors observed since 3Q22.
EBITDA was R$ 363.4 million in 2Q23, a decrease of 32.0% compared to 2Q22. Excluding non-recurring events in both periods, we had an EBITDA reduction of 27.2% in 2Q23, with a recurring margin of 9.5% in 2Q23 compared to 11.8% in 2Q22 and 7.1% in 1Q23.
Our financial leverage, measured by the ratio of net debt to EBITDA in the last 12 months, was 2.72x in 2Q23, compared to 2.77x in 1Q23 and 2.21x in 2Q22. The main impact of this increase compared to 2Q22 was the reduction in accumulated EBITDA in the last 12 months. Net debt reached R$ 3,546.1 million in 2Q23, a reduction of R$ 370.9 million or 9.5% compared to net debt at the end of 2022.
The cash position at the end of 2Q23 was R$ 2,458.6 million compared to R$ 1,392.9 million at the end of 2Q22. Additionally, we have an undrawn committed credit line (Revolver Credit Facility) of R$ 500.0 million. The liquidity ratio, measured by total liquidity divided by short-term debt, ended the quarter at 1.63x, compared to 1.54x in 1Q23 and 1.48x in 2Q22.
Regarding the Company's ESG initiatives, we announced in our sustainability report a 19.7% reduction in intensity of CO2 emission in 2022 compared to our 2019 baseline. We maintain our goal of achieving carbon neutrality by 2040, with key reduction targets in 2025 and 2030.
After the success of our "lightweighting technology" aluminum wheel with several premium vehicle manufacturers, we are now taking this technology to be used at Ferrari. This new achievement reinforces our feeling that we are on the right track to offer innovative solutions for the automotive industry and in reducing CO2 emission.
We were recognized again by OEMs in 2Q23, which proves our commitment to quality, technology, competitiveness, delivery and overall customer satisfaction. At the wheel plants in Brazil, we received the “Quality Achievement” award from DAF/Paccar and the “Supply Security” award from Volkswagen. At factories in Asia and Europe, we received the “2022 Appreciation Award” from Hyundai India, the “Award of Quality Control” from Hino Japan and the “Supplier Performance Management” award from DAF Germany.
Attentive to market changes, inflationary pressures and variations in our customers' production volumes, we quickly adapted our operations in Brazil to the current demand for commercial vehicles in order to mitigate impacts on the profitability of operations. We remain focused on gains in productivity and operational efficiency, launching new products, developing our advanced engineering, digitalization and innovation and strengthening our balance sheet, so that we can continue to generate value in a sustainable way over time.
"We remain focused on gains in productivity and operational efficiency, launching new products, developing our advanced engineering, digitalization and innovation and strengthening our balance sheet, so that we can continue to generate value in a sustainable way over time."
1 Compared to the same period of the previous year
2 Net debt/ EBITDA of the last 12 months
3 Cash + revolving credit facilities
4 Baseline 2019 referring to the emission reduction targets defined in the 1st issuance of Sustainability Linked Bonds in 2021
Iochpe-Maxion is a world leader in the production of automotive wheels and a leading producer of automotive structural components in the Americas.
The Company has 33 manufacturing plants located in 14 countries and approximately 17,000 employees, operating its business through two divisions: Maxion Wheels and Maxion Structural Components.