Iochpe-Maxion S.A. (MYPK3) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the video conference regarding earnings release for the fourth quarter 2023 of Iochpe-Maxion. I'm Rodrigo Caraça, Investor Relations Manager of the company, and we will be conducting today's video conference. Present at the video conference and available for Q&A session are Mr. Marcos Oliveira, CEO from the company; Mr. Renato Salum, CFO; and Mr. Luis Fernando, Director of Investor Relations and Strategy. We inform that this video conference is being recorded, and will be made available in the company's Investor Relations site, where the presentation is available. I highlight that if you need simultaneous interpretation, we have that tool available in the icon of the globe that says interpretation in the bottom of your Zoom screen. Select or choose your preferred language, Portuguese or English. And for those listening to English, there is an option of muting original audio. [Operator Instructions] If you want to -- before we move on, I'd like to disclaim that eventual declarations that might be made during the video conference related to the perspectives of business projections and operational and financial goals are beliefs and assumptions of Iochpe-Maxion based on information currently available to the company. Future considerations are not performance assurance, involving risks, uncertainties and assumptions regarding future events and might not occur. We would like to pass the floor to Mr. Marcos de Oliveira, CEO of Iochpe-Maxion.

Good morning, and welcome to the earnings release video conference for the fourth quarter 2023 of Iochpe-Maxion. 2023 was marked by a scenario of economic and geopolitical uncertainties globally. Despite this uncertainty, the production of the main automotive markets presented a growth due to the consistent improvement in the global supply chain. The segment of commercial vehicles on Brazil presented a significantly lower production because of the transition of Euro 5 to Euro 6 impacting negatively the mix and profitability of the company. On the other hand, other regions, we observed a growth aligned with market performance, promoting the benefit of the geographic diversity present in our business model. We highlight a growth of 13.3% in the gross profit of the fourth quarter 2023, with a margin of 10.9% and a growth of 3.1% when compared to the same period of last year. The improvement is related to the stabilization of raw material prices compared to inventory costs, improvement of operational efficiency in the company and transfer of cost increases. For our long-term agenda, we continue with the ramp-up of volumes in our aluminum wheels factories in China. We are advancing in the building of our forged aluminum wheels factory for commercial vehicles in Europe, and we have gained new businesses in the segment of electric vehicles in both divisions of the business all in line with discipline in capital allocation, strategic priorities of the company seeking to reduce net debt. Following with the slides, in Slide #2, we can observe the projections of IHS and LMC Auto for global production of vehicles. For light vehicles, we can observe a growth of 10% in the production of light vehicles in 2023 when compared to the year 2022. For the year 2024, the projection indicates stability in global production at a very healthy level of 90 million vehicles in 2024. In the segment of commercial vehicles, after growing 12% in the year 2023. We observed a projection of 2% growth in the production of -- global production of commercial vehicles with a total of 3.4 million units. In Slide #3, we can observe the main highlights for the fourth quarter 2023. We have obtained a net revenue of BRL 3.5 billion in the fourth quarter in 2023, a reduction of 16.3% compared to the fourth quarter of '22. We had a gross profit of BRL 380.2 million with a gross margin of 10.9% in the fourth quarter, an increase of 17.3% and 3.21% compared to the same period of 2022. Our EBITDA had a growth of 9.9% with a recurring EBITDA of 8.3%, an increase of 2 percentage points. Financial leverage, measured by the division of net debt over EBITDA, we have reached 2.93x in the fourth quarter of '23 compared to 2.26x in the fourth quarter of '22. We had a reduction of net debt of BRL 242.1 million in the fourth quarter of '23. Total liquidity of approximately BRL 3.675 billion in the fourth quarter of '23 compared to BRL 3.917 billion in the fourth quarter of '22, a liquidity index of 2.12x. In Slide #4, we can see the consolidated net operating revenue for 2023 of BRL 3.484 billion, a reduction of 16.3% when compared to the fourth quarter of 2022. Through the whole year of 2023, we had consolidated net operating revenue of BRL 14.955 billion or a reduction of 11.8% when compared to 2022. The lower volume of production of commercial vehicles in Brazil, the reduction of costs and raw materials reflected in the sales prices and the negative exchange rate variation of BRL 92.6 million in the fourth quarter of '23 and of BRL 312.9 million in 2023, had a negative impact in the company's net operating revenue. On Slide #5, looking at revenues for product. We can see the contribution of aluminum wheels for light vehicles that represented 30% of the company's revenues in the fourth quarter of '23, very consistent with 31% throughout the whole year of 2023. The segment of steel wheels for commercial vehicles represented 21% in the fourth quarter of '23 and 22% for the whole year of '23. Steel wheels for light vehicles represented 25% of the company's revenue in the fourth quarter and 24% for the whole year of 2023. In the segment of structural components for commercial vehicles represented 21% in the fourth quarter and 21% throughout the year 2023. We can see an increase of light vehicle share throughout the year of 2023 and a decrease in the revenue share from structural components impacted by the drop in the production of commercial vehicles in Brazil. In Slide #6, in the revenue per client, we can see the growth in the share the production of light vehicles and a decrease in the share of commercial vehicles reflecting the variations in the market, variations in the price of raw materials and the impact of the drop in the production of commercial vehicles in Brazil in 2023. In Slide #7, the operational performance of the company in South America, we see a reduction in net operational revenues of 28.5% with revenues of BRL 901 million. South America represented 30.3% in the fourth quarter of 2022 now represents 25.9% in the fourth quarter of '23. Revenues for South America were negatively impacted by the decrease in production of wells, chassis and site members for commercial vehicles due to the change in engine regulation from Euro 5 to Euro 6 and had a positive impact, thanks to the increase of the production of aluminum wheels for light vehicles. In terms of the Brazilian macro performance, we can see a decrease in the production of light vehicles of 3.6% and of 36.1% in the production of commercial vehicles in the fourth quarter of 2023 when compared to the same period of 2022. In Slide #8, the operational performance for North America shows a decrease in the net operating revenues for the company of 12.8% with a total of [ BRL 1.004 billion ] in the fourth quarter of '23, with North America representing 27.7% of our revenues in the fourth quarter of '22, now representing 28.8% in the fourth quarter of '23. The reduction in raw materials costs reflected in sales prices, the increase of steel and aluminum will volume for light vehicles and the negative exchange rate variation of BRL 60.8 million were some of the drivers in the variation of the share of North America. When we look at market performance in terms of vehicles produced, we can see an increase in the production of light vehicles in North America of 5.9% in the fourth quarter of '23 and a decrease in the production of commercial vehicles of 1.6%. In Slide #9, observing now the European market, we have net operating revenues of BRL 1.225 billion in the fourth quarter of 2023, a decrease of 11.4% when compared to the fourth quarter of '22. The share of Europe and the consolidated net operating revenues of the company has grown from 32.2% in the fourth quarter of '22 to 35.2% in the fourth quarter of '23. This revenue was affected mainly by the reduction of the raw materials cost reflected in the sales price of our products. In terms of market performance in numbers of vehicles produced we can observe a decrease of 1.1% in the production of commercial vehicles and a growth of 5.7% in the production of light vehicles in Europe in the fourth quarter of '23 compared to the fourth quarter of 2022. In Slide #10, we can see net operating revenues of BRL 353 million in the fourth quarter of '23 or a decrease of 3.1% when compared to the fourth quarter of '22. Asia and other markets represented 8.8% in operational net revenues of the company for the fourth quarter of '22, now represented 10.1% in the fourth quarter of '23. We had a negative impact due to the raw material costs reflected in sales price, negative exchange rate variation of BRL 27.3 million in the fourth quarter and a positive impact of the increase of steel wheels volume for commercial vehicles. Looking at some of the main markets in the region in terms of vehicles produced we can see an increase in the production of light vehicles in India, 4.7%, a decrease in the production of commercial vehicles in India of 7% and a decrease in the production of light vehicles in Thailand of 13% in the fourth quarter of '23 when compared to the fourth quarter of 2022. We have achieved gross profit of BRL 380 million in the fourth quarter of '23 or a growth of 17.3% when compared to the fourth quarter of '22. We had a growth of 3.1% in the gross margin for the fourth quarter of '23, growing from 7.8% to 10.9% in the fourth quarter of '23. Through the whole year of '23, we achieved a gross profit of BRL 1.508 billion or a reduction of 16.6% when compared to the year 2022. Our EBITDA for the fourth quarter of 2023 of -- was of BRL 289 million or a reduction of 0.7% when compared to the fourth quarter of '22. The EBITDA margin was up 8.3% in the fourth quarter of '23 compared to 7% in the fourth quarter of '22. When we look at adjusted EBITDA reconciliation in the fourth quarter of '23, we can see an adjusted EBITDA margin of 8.3% as you see on Slide 12, compared to 6.3% compared to the fourth quarter of '22. Throughout the year of 2023, we had an EBITDA of BRL 1.253 billion 5 or 27.9%, lower than the year 2022. In Slide 2020 -- in Slide 13, we can see a net loss of BRL 7 million compared to the net loss of BRL 141 million in the fourth quarter of 2022. We had net profit of BRL 31 million during the year of 2023 compared to BRL 279 million in the year 2022. In the fourth quarter of 2022, we had a negative impact of BRL 181 million due to settlement with Mexican tax authority in the fourth quarter of '22. We had investments of BRL 222 million in the fourth quarter of '23 or a reduction of 13.9% compared to the fourth quarter of '22. For the whole year of '23, we had investments of BRL 552 million or 6.8% below the year 2022. The main investments in the region were related to capacity increased to meet demand of commercial vehicle segment in North America and the construction of the new aluminum wheels plant for trucks in Europe. In Slide 15, we can see the financial leverage of 2.93x at the end of 2023 compared to 2.26x at the end of the year 2022. We had a net debt reduction of BRL 242.1 million in 2023 compared to the year 2022. LTM EBITDA reduction is the main factor for the increase in leverage in 2022. In the year of 2022. Total liquidity, which is cash and cash equivalents, plus RCF of BRL 3.462 billion in the fourth quarter of 2023 compared to BRL 2.787 billion in the fourth quarter of 2022. On Slide 17, looking at the composition of the company's gross debt, we can see that at the end of the year, we ended with 45.2% of our gross debt in Brazil, 36.6% in euros, 14.6% in Amercian dollars and 3.5% in other currencies. Looking at our total liquidity of BRL 3.462 billion at the end of 2023. We can see that it made up of BRL 2,962 billion in cash and BRL 500 million in RCF revolving credit. We can also look at maturity tower over the next few years with BRL 1.622 billion in the entire year of 2024. Also, company's rating raised by BB in the global scale and from BR AA to BR AA/AAA on a national scale, highlighting for the company in the turn of 2023 to 2024. Slide #18, some of our main launches were the personalized wheels for the pass back from Stellantis here in Brazil, which shows the multicolor timing technology and how to customize capacity of our products. The launch of aluminum wells for Honda in Mexico, seeing an attractive design on aluminum wheels, VersaStyle wheels for Toyota in Turkey, showing a case, an affordable styling solution for the urban mobility. And our share in the electric vehicle segment, which continues to grow with the launch of product in China, demonstrating reduction in premium vehicle markets. On Slide 19, we have an update on ESG. We remained in the B3 Corporate Sustainability Index portfolio with an improvement in our performance. An improvement in the performance of the EcoVadis rating with an increase of 8 points compared to 2023, and B grade on the CDP positioning among the 37% of the best companies achieved in this curve. We now open the question-and-answer session.

[Operator Instructions] We have the very first question from Fernanda Urbano from XP.

Can you all hear me?

Yes, we can.

Thank you so much for answering my question. So regarding revenue and on the fourth quarter, a marriage among raw material and a margin very stable for the next quarter. I would like to know if you could make comments and in a quality manner, what are you expecting as a margin return for this year 2024 in terms of recovery and volumes in the mix of commercials and the prices being compensated, making up for the ups and lows that we have seen in the market so far in the beginning of 2024. That's my question.

Fernanda, thank you so much for your question. So usually, the fourth quarter and the first quarter of every year are the ones that we have some lows in terms of margin, in terms of production, volumes, vacations from the industries and other variables we have between the end of the year and the beginning of the year. The volume of vehicles in Brazil will be growing from time to time between the first quarter and the third quarter. Taking into account these factors, stabilizing the prices of raw material globally speaking, between the third quarter of 2023 and the first quarter of 2024, taking into account the action plan that we have started executing this year, we are expecting to have 2-digit margin throughout the second quarter of this year. Absolutely, there may be some variables in terms of accelerating or reducing the speed of such a transition. We just need to make sure that the recovery of Brazilian market has had a growth of [ 40% ] since the last year, and we had an impact of more than BRL 1 billion in our revenue from 2023 to this year. So we have a gradual recovery, which is extremely important for us in terms of growth and the 20% of our base. ANFAVEA mentioned 32% and also LMC talks about a higher number, but we do believe that a recovery scenario for commercial vehicles in Brazil and an even more positive scenario in North America and a smaller growth in Europe will enable us to have a better growth in 2024 for our country.

Our next question is from [ Phillipe Linza ] from Citi.

My question has to do with the [indiscernible] Mover program. And the market on electrics in Brazil, we had some growth, a progressive growth when it comes to these taxes that we have been receiving in Brazil. And this program when it comes to the industry factories and its installation, how can we deal with such a biodiversity. [indiscernible] Cherry also has been gaining some new markets in terms of advertising in Brazil. So is it something that we should be optimistic about.

I do believe that the scenario for Brazil in the next years is positive and it has everything to do with the more than BRL 90 billion invested in our region, all the way to 2032. So indication, trust in Brazilian market reminds us of the level of production of vehicles. So this industrialization of our market has reached all the way up to 4 million vehicles in Brazil. So not being conservative, but undertaking the responsibility that we will get to 3 billion vehicles in Brazil in the next years. I believe that this is such a positive scenario, and it indicates that the sector can expect for the next years, investments from the industry has been a reflection of such a growth. When it comes to electric vehicles, this is a reality, a brand-new reality globally speaking. And we have the privilege to be able to work on that back in China, Europe, United States, and we have been keeping up the good numbers with them. And we have been adapting our products to add value and be more active in the segment in the next years. Something that we mentioned a lot regarding Maxion is the way we see the industry, either an electric vehicle or a traditional one with hydrogen sales our products, wheels and structure, they will keep on being an active participant of this industry. So with our ability in engineering, manufacturing, by adapting our products, for example, when it comes to electric vehicles, in terms of locations, such as Tokyo, for example, we have such quality in terms of this industry, and it is reflected in the global industry for the next years. In the case of our country, Brazil, we saw a growth in electric vehicles, particularly in Brazil between the second quarter and third quarter of 2023. I believe this is positive for our market but we need to consider that our country being a giant continental country, taking into account the electric capability that we have in terms of offering solutions to assist on me as neutral as possible on carbon and having flex engines. This will offer a positive and very interesting scenario for Brazil throughout the next years, having an interesting mix of vehicles in our internal reduction, internal manufacturing. So Brazil can have an improvement in an organized way in terms of having a new reality, globally speaking, and this automobile can be possible to be bought by the final user, by the final consumer. So this is an acquisitive power that the Brazilian consumer will have very different from the European or the American consumer market. So this is why having this organized transition can be very positive and we can enjoy this growth by offering products with high-technology state-of-the-art products by reducing the issuance of such a composition of raw material in Brazil in the future.

Our next question is from Andressa Varotto. She's a sell-side analyst from UBS BB.

I have 2 questions, I would like to make. The very first one, we had an issue in the United States in the fourth quarter, and I would like to talk about it. The next question is a follow-up on business vehicles in Brazil. Nowadays, we have an expectation in the market but with an open range, some people mentioned 30% on growth, on manufacture, other markets stayed 20 -- 10%, but when it comes to the industry and the manufacturing, what is your view and your opinion for 2024?

Andressa, thank you so much for your question. So the issue we had in North America in the fourth quarter had a small impact when it comes to the strike action they made. So they were back in manufacturing this product and everything that they lost. At the end of the day, it was a low impact loss. We can see that from last year, our revenue has improved in terms of light vehicles in North America and it ended up being very positive with a good effect, even though we had this strike in the fourth quarter. When it comes to business automobiles. We have a beforehand traditional planning based on the information we have from the industry in the market. So basically, we work since the very beginning with the planning, estimating a 20% of growth in the business vehicles. And ANFAVEA talks about a 30% and LMC talks about 40%. But communicating individually with the industry, they are very near the 1/3 percent of growth. So I believe this is positive. We plan ourselves in a conservative and traditional way because we do know our capability, especially in the area of wheels and components in terms of structure, although the movements and the production we have in our factories can speed up our results and also the way we will recover in terms of margin in Brazil in 2024. So I believe that the general feeling we have is that the reduction on the interest fee and taxes throughout the year, we'll have around 9% on the basic fees. I believe that it is extremely positive because with the economic growth, the reduction of costs financially speaking. And the fleet, the industry with new assets, new trucks, new business, it will be reconsidered in terms of investment. And we didn't have such thing as that in 2023. So this change on the way we deal with that even though we have sometimes a scenario of uncertainty in terms of interest and fees, taxes in Brazil, the planned growth for 2024 will bring more trust so we can reach more assets, buses, trucks. So all this fleet will allow us to have a positive cycle. And for the Brazilian industry, this is a very interesting scenario for us. Just remembering that we had an investment in 2023 to increase our capability to produce wheels and also for agriculture area, manufacturing, equipment. We were operating already with extra shift, extra time from our workforce since 2022. So with this increase on our capability and 2023, we will be able enough to produce in an efficient way, higher volumes when it comes to what the industry is requesting. So we do expect that it will be concrete enough to have such a new reality with a higher and better level for the next year.

So our next question is from Victor Mizusaki from Bradesco BBI, sell-side analyst.

I have 2 questions. Talked about the forged aluminum wheels. Can you give us a little bit more view of what to expect in terms of CapEx for 2024 for the region. And regarding the operations in China, looking at the numbers for the quarter, we are counting on a loss of about BRL 4 billion per quarter, how can you expect the ramp-up so we can achieve breakeven or generate profits in China? I know if it depends on the ramp-up or how are things going?

Victor. Thank you for the question. For 2024, our main planned investments are, for sure, the building of forged aluminum wheels in Europe as the investments made and the ramp-up of production for chassis and type bars and structural components in North America. These are our key investments for 2024 for various regions. Starting with North America. We have reached our maximum production capacity in our factory in Castaños in the north of Mexico, which had led us in 2023 to a not so efficient production in the sense that the truck industry in North America has reached a level of over 600,000 trucks in 2023 above our installed capacity. That has forced us to work with additional shifts over time, working 7 days a week, 24 hours a day through much part of last year. But in terms of operational efficiency, that's not ideal, and it really bites into our results due to additional costs, additional effort to continue to meet the demands in North America. For 2024, we have different forecasts -- when you look at LMC, they foresee a drop in the production of commercial vehicles. We talked to the EOMs, and they talk about stable volumes at possible very small decrease. They still have a large volume that they need to deliver. So they see an even more positive scenario for 2025 and 2026 because in North America, they should have a change in legislation regarding emissions for 2027. So they foresee stability or a very small drop in 2024, but with a very significant growth in the truck market in North America for 2025 and '26. That is why we are investing in increasing capacity for the production of chassis in North America and should be happening throughout the year 2024. The other important investment is the construction of the forged aluminum wheels to meet the European market. This is a growing market. It should be growing in the next few years. Steel wheels for commercial vehicle will continue to be the predominant component for the segment in Europe. But for the next few years, we foresee an interesting growth for aluminum was for Europe, there's an area where we have very good perspectives of business and to complete our portfolio of products, we think this product need to really complete our production globally. We are the only producers of steel and aluminum wheels for light vehicles and sell wheels globally. We have some competitors in different regions, but we don't have competitors that are able to offer this portfolio of products in the main areas of automobile production globally. We believe these investments are going to complete our portfolio, would make us even more attractive for the mobility market globally, and we'll continue to improve our economic and financial results for the next few years. This aluminum oil plant is being -- started being built in 2023, should continue to 2024 and you should start production in 2025. So for the next few years, we believe these are 2 key project for the improvement of the results of our company in '25 and '26. The investment in the structural component factors in North America is ongoing for the year 2024 and we will be adding capacity for us in that region. And looking at these 2 main investments and looking at the other investments we have and efficiency productivity improvement or other changes due to regulations, we plan investments in 2024, similar to the ones we made in 2023 with a little bit of variation up and down, but investments at similar levels that we really position the company in a very interesting level, not only for the rest of 2024, but mainly for the 2025, '26 in the next years. With regards to the aluminum wheels plant in China, we started an actual ramp-up last year, the Chinese market due to the economic conditions in the country. It's still in transformation. We are doing business with some interesting clients such as Neo that produces a trick vehicles we started producing for them at the end of last year and should be growing for the next few years. But this is a gradual process. We are a new player in the market. There are large wheels for the doctor and manufacturers in China, and we intend to gain share with good quality products bringing proper financial results. This is a slower ramp-up products. And when I mean slower, I'm talking about market with a growing demand but a limitation in terms of production capacity, but we believe that this search, this aiming for this breakeven is going to happen gradually. So we can reach the balance in the year 2025.

Our next question comes from Marcelo Arazi, a sell-side analyst from BTG.

And I'd like to see how you are thinking of leverage for the next few years, we're still at a high level of leverage for the fourth quarter as reported. So how do you intend to continue with the projects you have just mentioned? And if you allow me to ask a second question to understand, what would be the ideal mix of products for you considering that for the fourth quarter, that mix affected the margin? What -- how do you see that for -- going forward?

Thank you, Marcelo, for the question. As you have seen, we closed with a final leverage of 2.93x. We see that we had a very relevant impact on EBITDA of about BRL 480 million due to the reduction in production of commercial vehicles in Brazil and considering all the information we have from LMC, ANFAVEA, and the forecast of improvement, LMC foresees a growth of over 40%, ANFAVEA foresees a growth of 30%. We believe that this EBITDA can go back to increasing growing so that the reduction of leverage will come with this growth. On the other hand, we had some changes made in working capital. We have reduced BRL 778 million when you use a ratio where we get total working capital divided by net sales, we see that we have reached 11.22%. Just to give you an idea, in 2022, we had [ 4.49% ]. So I think we are in the right path. And I believe that with the reduction in the payment of interest, we close the year, you probably saw in our financial statements. We had approximately BRL 400 million at a cost of 5.5% fixed interest with an issuing of debentures to face other ones, whether CBI limit. And so we have a reduction of interest -- and we have a drop of interest rates in Brazil. So we see possibilities, and we are very optimist regarding an increase of EBITDA and generating cash to reduce gross debt and better leverage going forward. Marcelo, with regards to the mix of products traditionally the segment of commercial vehicles is a strong segment for us through the last few years, we have operated at over 50% or 55% of our mix of revenues in commercial vehicle. In 2022, our mix was 49% of our revenues and it went down to 42% or 43% of our revenues last year -- this year. And that was affected by the drop in the Brazilian market. Although we have an interesting movement in the North America, we had a drop in production of 40% in Brazil, which affected us in an important fashion. Our global profile of providing aluminum wheels, steel wheels for light vehicles and the mix of products we have today without mentioning the forged aluminum wheels for commercial vehicles that we will have as of 2025. We have a mix close to 50% for commercial vehicles, 50% for light vehicles, which we consider a good healthy mix in terms of global share. If it's a bit higher as it has been for the next year, but a mix close to 50-50 is a healthy one. And we expect that as the Brazilian market recovers, we -- the North American market continues, we should be approaching this 50%, 50% mix there. But we work, of course, seeking consistent results in all products we manufacture, we then -- steel wheels for light vehicles or structural components, wheels for commercial vehicles. We work to have margins in no products that are consistently increasing. Of course, the value of each unit in terms of components or wheels for commercial or agricultural vehicles, they have different way due to the amount of raw materials and that, of course, have an important impact on revenues. But we believe that we are able to work close to this 50%, 50% mix that would be quite adequate. But of course, our goal is to have margin -- the same level of margin in all our products.

We have 1 more question through the chat from [indiscernible], he is an investor and he asks, I'd like to know what will be the company's priority for the next few years, increasing revenues or cost reduction, financial expenses reduction.

[indiscernible], thank you, for your question. Clearly, in our strategy, focus from 2023 to 2024, we seek to reduce the company's staff as a whole, an improvement in our margins and improving the margins due to cost reduction and better pricing in the market. And that combination is very important. And that's our priority for 2024. Of course, we have projects to increase capacity with new products, new technologies that are going to put the company in a very competitive position for 2025 and 2026. With these projects I have mentioned in other questions. These projects are very important for our future. So we cannot stop our investments completely because that would limit the future of the company. And our goal is that our results, our margins, our revenues continue growing moving forward in the next few years. But -- for 2024, our goal is recovery margins, reducing that and a growth that can keep up with the trends in the market, allowing us to position our products with more added value and consequently, better economic results in the next few years.

We have 1 more question through the chat from [ Andrea Orlandi ]. He is a buy-side analyst from [ Brave ]. And he asks, can you give us a sensitivity of the variation in revenues for the year regarding price and volume?

Andrea, in general, the impact of pricing coming from the reduction of raw material costs was through -- definitely important. In our revenues as a row, more than BRL 1 billion were a reduce of the impact of price reduction related to raw materials, BRL 1 billion of our revenues -- over BRL 1 billion revenues came from this reduction. And then you have BRL 1 billion that came from the reduction in the sale of -- in the Brazilian market regarding commercial vehicles. Just to give you an idea, we have about BRL 2 billion that come from these 2 factors, and they also have an impact from exchange rate variation with over BRL 300 million in exchange variation throughout the year. These are important factors that directly affected our net revenues and that, of course, in a scenario of stable raw material prices that we are achieving for the year 2024 with a relatively stable exchange rate that we expect for the year. And with market performance and growth in the market for commercial vehicles in Brazil, we see all this as a positive scenario for the year. I'd like to remind you that in 2023, we had an important impact of inflation and of the significant devaluation in the markets of Turkey and Argentina. These are important factors that we expect that in 2024, even still expecting higher inflation in these countries. We expect the speed of devaluation not to be as significant as it was in 2023.

We are now closing our question in answer session, and I'm going to give the floor to Marcos de Oliveira for your final considerations.

Thank you all for your participation. We continue to pay attention to the change in the market to the geopolitical issues that affect the whole globe, the inflation pressures that are lower, but it still exists at different levels, in different parts of the globe and the variation in volume of production in our clients, which are important. Therefore, we adapt quickly in our operations in the different countries and in Brazil to face the current demand for commercial vehicle in a way to reduce the impact of the profitability in our units. We continue to focus on productivity gains and efficiency -- production efficiency, new products, new technology in the development of advanced engineering, digitalization and increased efficiency and strengthening our balance sheet. So we can provide sustainable value through time. The video conference related to the earnings release for the fourth quarter of 2023 of Iochpe-Maxion is closed. The Investor Relations department is available to answer any other questions. Thank you very much, and have a good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]