WEG S.A. (WEGE3) Earnings Call Transcript & Summary

[Presentation] [Interpreted] Good morning, everyone, and welcome to WEG Day 2022. For those of you who don't know me, I'm Andre Rodrigues, the Financial Director of WEG. And on behalf of the company, I'd like to thank your attendance here today. Happily, we were able to carry out this event in a presential form after 2 years because of the pandemic. And I'd also like to thank the presence of Décio da Silva, the President of our Board of Directors, Harry Shmelzer Jr., our COO; and all our executive directors that are here today. I'd also like to thank for to the people that -- for those of you who are not able to be here essentially today but are following online from your offices, from your house is the first time that we are transmitting streamlining this event in an online way. The event today was thought in a way to bring to you 2 details of the most important business units, the industrial motors and also the GTD area. And the agenda today will follow -- will be as follows: we are starting the presentations with Alberto Kuba, who is going to give us all the information on industrial motors -- WEG industrial motors, followed by Manfred, who is going to present WEG Automation and the recently created WEG, a system automation. And followed by that, we're going to have Joao Paulo's presentation, who's going to bring to us comments on the WEG Energy business unit. And lastly, Carlos Diether Prinz who is going to present the WEG transmission and distribution. After these 4 presentation, we are going to have a first Q&A session in which we are going to address the business areas of the company, followed by an a little coffee break. And right after that, we're going to have André Luis Rodrigues, our CFO, who is going to dwell on the financial performance. And finally, we are going to have Harry Schemlezer Junior, our CEO, who is going to bring our perspectives for the following years to come. And Harry and Andres, presentation, you're going to have another Q&A session, which we're going to have the opportunity to ask your questions on the financial and strategy aspects of the company. Some important information, the presentations, which are going to be made here today that are available on our site on the investors related, which you can access through our QR code or through the link ii.weg.met. And as I said, this event has been streamlined on the Internet and is going to be available after -- should you missed a parts and especially for those who are attending online. So it's going to be available on our site for quite a bit of time. To start our presentation, I'd like to call a bear to Kuba to make the first presentation. And only to give you a context, everything that Kuba is going to present, and in our vision and the vision of the market is within the Industrial Motors business unit. So have a good event, everyone.

[Interpreted] Good morning, everyone. It's a pleasure for me to welcome you here, presentially and welcome for those of you who are online. For those of you who do not know me, I'm Alberto Kuba, I am and responsible for the Industrial Motors division. I work in WEG for over 20 years. And since 2020, I'm working ahead of this unit, this business unit. And to start, we would like to make a quick update on our numbers. We are present in 8 countries. We have a 13 plants around the world. We manufacture over 3 million industrial motors per year. And today, we have about a little bit over 13,000 employees around the world. And out of this 13,000 employees, about 4,000 are outside of Brazil, so it's a very internationalized operation. And when we look at our revenues, basically 80% of our revenue from the Industrial Motors division comes from abroad and trend is for this number to grow given our international expansion. We have a great distributors line with over 3,000 distributors around the world. That gives us a lot of capillarity specially in places where WEG does not operate. And it also gives us an advantage in places where WEG is already strong with our dealerships. And I think something important is to talk about the strategy of products. So WEG is working very strongly to have general application products, niche products, and I'd like to talk about the general purpose. This is a line that we have generated in the last 2 years when start thinking about attacking more of the global or we're talking about the Southeast Asia, India and Southeast Europe. So we launched this product. We've made a benchmark, which was very intensive in these markets to guarantee that we were have -- could have a competitive product to be successful in opening this new markets. We have made this launch in March this year. And here, we have something very important to imagine that this aluminum line of products with these 2 motors here is manufactured in China and the cast iron motors that we have up there is manufactured in Brazil. So in a general way, we have brought together what's more competitive in the world, what's more competitive in Brazil, and we are taking to our assembly lines in India and Turkey to accelerate the gain in the markets. Here is also a very important view of the markets in which we want to attack, which is the medium voltage market. We had a very intense work to have a medium voltage in cast iron motors that allows us to have competitiveness to work in key markets in the OEM market. And also, this line here that we call the W60. For you to have an idea, about 10 years ago when we were making motors for compressor we would put it in like carcass 550. And all the technology that was developed, you make same power with smaller carcass. So we have a line of product that is very complete in general applications to work in markets, to operate in markets in which we need more competitive products, already initial markets such as medium-voltage manufacturing companies, in which we didn't have so many serial and competitive products as we have today. We have a complete line of special products. We are increasingly having electronic embedded products and what Harry mentioned in motion drives last year, he commented we're going to have this in the strategy all as well as in products. And in this product here, we have an incorporated drive which is already part of the product. We have other lines of products that also have an incorporated and embedded drive. And in our motion drive manufacturer companies are our main target, other import aspects in our strategy that addresses the investments that we're making in the motors, electric traction we are for buses and delivery trucks. And for that, we saw that launch in Jaraguá do Sul plant and now is to be able to have higher volumes in when the market is ready. And we have a very big market now that we are investing a lot in products since WEG made the first acquisition in the reductors drives gearboxes. This product here, specifically with that line of general purpose motors are aligned because of this product here specifically for factory, for machinery manufacturers. And the W50 line was launched last year industrial gearbox application. So as the motors, the gearboxes unit have more complex products for -- from small to big, for mining, sugar and alcohol, ethanol applications. So our line of products is very much aligned with our view of target markets that we are working. So what work in the last -- what happened in the last few years. We have advanced in our market share during the pandemic in 2020. It was a very hard year in which the volume of sales of motors went down. 2021 was also a very hard year when we saw the produced markets. That was a drop in the sale. But in these 2 last years, WEG was able to capture a very interesting number of clients, and we advance in markets. So if we evaluate the DH as media research with interact analysis research. You'll see that volume of motors was smaller. However, we were able to capture a bigger market share. And many of the actions that were made for you to have an idea, in several different markets we have still a lot to grow in Europe, Eastern Europe and here where there are certain actions that we've made in opening new branch offices, actually restructured the Italian branch office, focusing on low voltage motors. We restructure our business in Malaysia and looking for the Southeast Asia. So that's to have a stronger action and motion drives, and we recently opened the Poland branch like in our assembly line in Turkey to meet the market in Eastern Europe. We changed the reference now. We are making an interacting analysis of this study because we want to focus on the Pacific rim contracts in which we have more detailed data in countries such as Indonesia, Thailand, in Malaysia, in which we understand that we need to reinforce our presence because there are a lot of opportunities to be capped there. And in a general way that what we understand that we are marching in a very structured way in order to increase our market share because we are now going to markets in which bag has a limited participation, especially when I talk about Eastern Europe. Let me talk a little bit about what happened. Many questions that I answered yesterday were associated with the pandemic, and pandemic brought to the surface a big questioning about the resilience and flexibility of the supply chain of the companies. So we have received a lot of potential clients or clients that already buy from discussing how we can scale our partnership given the footprint of the company. So when we analyze the way that we are organized, the view, the vision that for us to buy from global companies, not considering where it was produced, only analyzing the cost of the products is being left behind. And companies are increasingly now looking for a nearshore location in order to buy things that are closer to where they are producing. And our global strategy for production has brought a great competitive advantage. I'm going to give you a few examples. We have an operation that is very strong in Mexico, that is increasingly becoming more strategic because of the presence in the American market. And because of the growth we had in the American market, both the American, the Mexican and the Brazilian market manufacturing plants have increasingly sold. And as the Mexican plant has the name of products already, maybe they could have supplied the American as the Brazilian we're able to supply to Europe. When we manufacture to China when Europe is scaled, the volume, we had a lot of clients with supply risks and what could we do? We transfer the production from China to Brazil in order because we could transfer the production from Brazil to Mexico. So back today, when we analyze the footprint, we have a vast footprint for industrial motors in the world. These are products that you're able to interchangeability of plants because there are components, they have the similar components. And when our competitors look at production, it always looks locally. And because of our footprint, we are able to mitigate eventual risk transferring the production from one plant to the other. And how are we organized? So China, the main focus is China to China and rest of the Asian countries. We have an operation very strong in Mexico and increasingly stronger for the American market. And there is another interesting point. A few years ago, you may remember that Trump has taxed in 25% imports from China. And given always the strategy that we had from -- between Mexico and Brazil WEG was not affected by that. On the contrary, we were benefited because Chinese were not competitive anymore. And our view now is to prepare both the Turkey as well as India for a future scenario that is increasingly more complex. We do not know what is going to happen in the future, but we understand that our great manufacturing plan for the future is going to be located in India. But India, we are going to inaugurate in the -- at the end of this week on Friday, we are making cast item products, and we understand that the Indian plant is also going to be an alternative for manufacturing, especially for this region here or for the China Pacific Rim, when China does not meet the demand. Another factor is entering. [indiscernible] is another factory in Turkey because we understand that increasingly, we are growing in this Eastern European region, and it is very important to have a local manufacturing plant to supply the whole market. Turkey -- and we are talking about $500 million potential market, which is very big market, much bigger than the Brazilian market. And we are talking about India, we're talking about a potential market of over $350 million. And we are talking about in a structure that we had initially for low tension. We are talking about a $400 million market in which we are capturing a very little value. So we are very well prepared for footprint -- in terms of footprint to be closer to our clients with global products. A point of attention here is we have a WGP. Here we have GP. Here we have GP, all this manufacturing and assembling plants are prepared to scale the general purpose products. And this is what we are launching, looking for new opportunities in serial products. Now we're talking a little bit about our strategy. I think this is very interesting that it goes back to the very origins of WEG, which is the verticalization. Verticalization represented a very important aspect in the strategy in the difference of the results that we had in 2021. The verticalization -- when we look at manufacturing plants in Brazil, in which we have 100% verticalization. And when we analyze a plant in Mexico, in which we have basically 100% verticalized as well, that brings us a lot of flexibility because with all the production verticalized components, manufacturing, we're able to all the assembly lines around the world. We have situations, for instance, in Brazil, we wanted to scale the volume. We did not have cast iron. So we brought a cast iron from Mexico. We have situations in which Portugal were not able to scale up the production because lack of production. So we were able to shift from China to Portugal. We also had a situation in which the manufacturing, the reductors, gearboxes manufacturing plant. We're needing carcasses then we brought them from China. So our model of verticalization makes that WEG has less interactions with Level 2 clients, with Level 2 suppliers, which are parts suppliers. So that brought us more domain of what our production. So that is different -- a distinguishing point in -- now I'd like to talk about product strategy. If you take a look at the very beginning of motor manufacturing up to the state of the art production, we have always increased our energy efficiency. WEG has been working ahead in terms of efficiency standards, which makes that as the efficiency law change and increase, we gain competitiveness. So we took a major leap when we launched this line, which was very successful, very early days in China. How is the world today is to [indiscernible]. This is what we're moving. These are solutions we've had for 3, 4 years. What are we doing now? We have numerous products. For those who participated on yesterday's technical meeting, we're working with hybrid where we have variation of products in function of the size of the carcass. We have just magnet or non-magnet always trying to get higher power density. We are no longer seeking power density, but also the reduction of the amount of material used. This is aligned in term of sustainability, reduction of material, the more efficient the motor, the less carbon emission there is and the less material we use, the more sustainable the product is because we need less natural resources to produce it. Just for the sake of comparison, these are product lines that already exist from -- this is in this carcass 355. This product weighs more than 1,400 kilos. Today, we have -- in the catalog, this option weighs 900 kilos to carcasses less, which is we are able to produce twice as much relative to the active material we have in the 355. When we use new technology that we have already learned with e-mobility, now we are able to decrease in 4 carcasses. So then happen is an advancement coming from electric traction products. So we are able to produce fourfold motors with the same material that we would be doing with iron die casting. And now actual flow power motors with the power equivalent to the first one. We're able to reduce 28 to 29, that is to produce 28, 29 more with the same amount of material. This is the niche market that we are going to be using ever more in high-tech solutions and WEG has been studying a lot of this product for us to use it in the industrial segment. We want to increase the bar in that perspect. Take a look at this actual picture of our sample the laboratory compared to the traditional or conventional induction motors. You can easily see a difference from one product to the other. Obviously, this product here is a niche product because it's high priced. And our challenge now is to scale it up in production setting. Now we're going to refer to some of our plants overseas and the major investment we had the India plant is almost ready. We are already producing some motors. We are going to inaugurate it officially now on Friday. India is a major strategic step for WEG motors. WEG Energy has already broke ground there in the medium voltage field. And we believe that the greenfield is the most intelligent way that we get best ROIC. We are taking 100% verticalized plant to India. The India plant is an assembly plant? No. It's a very verticalized plant where we have old processes except stamping why not stamping yet because CapEx would be rather high. But we have also identified that it makes more sense to produce all the stamping in China and then produce it locally in India. India has steel prices much more competitive -- I mean China more competitive than in India. Now we continue to invest in more automated products, verticalized processes for us to be able to capture all this increase in demand that country has been having over the -- these years and will generate even more in the future. This is another major step that we took in Turkey. And we we're already exporting into Turkey, in fact. But in Turkey, there is an interesting example because market leaders are not the 2 largest WEG competitors, they are local manufacturers. And for us to understand what happens in that country, we have to take advantage of assembly plants because we are not able to export it because of the lead time. So this is an assembly plant, low CapEx facility, where we have all the facility ready. We are already assembling motors there. And now we're studying the localizations, bearings, axles, coatings and paints, locally manufactured axles, and also aluminum die casting, we are going to learn a lot of this process. Now we are moving fast. We are opening many dealers or distributors in Turkey in GP products, our strategy is very well designed. Once this plant grows, we are going to get ready to be a local alternative to larger motors. What's our strategy? Today, in Europe, we have a plant in Portugal, which manufactures special motors and supplies to OEMs, generalists for 200-plus carcasses. This plant here is going to meet OEM's needs for 200 lower carcasses by using the Turkey operation, the Portugal operation with a larger volume is still in Brazil in the future. If we understand that Turkey is really competitive. This is a very nice opportunity to build a plant, a fully fledged plant and reduce the China risk because China has been losing competitiveness year after year because it's becoming more expensive. So we will be able to share the Chinese volumes in case the European Union imposes a barrier, a trade barrier to China. So we are going to be able to supply it from Turkey. I was asked, why Turkey and not Poland. The Turkish market is at $220 million market. So this operation here makes a lot of sense for us to win the Turkish share. Poland is a $90 million market, much smaller. The other extremely important investment was made in the Portuguese plant. We are transferring our operations to Portugal. Those of you who had the opportunity to visit the low-voltage, one is a huge plant, and we are building thousands of square meters now in this plant in Portugal. This site here has HBS, which is WEG Energy services. This is a strategy -- this is where we're going to repair motors sold in Europe. This is a major step for us to consolidate medium voltage motors. This plant here will take explosion-proof motors being produced there. Our major competitor was German and is having issues as far as cost and competitive and that then shut down its operation in Germany. So we are trying to start this new phase, by beefing up our competitiveness and investment there. CapEx, considerable CapEx. This plant will be ready by February next year, and we're going to start transferring stuff there. This is the very last slide that we have extremely important and strategic investment in Brazil. For many years, we took a very interesting tap by beefing up our capacity overseas, which allowed us to diversify the location plants being near the markets. With the strategic step we took with more assembly plants, we will be able to supply components as well. The Brazil plant it's going to have considerable investment in the next 3 years to produce components and expand in better motors. In this pandemic period, WEG developed more value-added products, 200 plus 400 carcass. A lot of projects are going on, and our capabilities and capacities are being exhausted. So our strategy is to build a new plant called, Plant Number 8, where we're going to be ready meet the e-mobility market as it grows. We are going to have this plant nearby, and we will be ready to meet the demands for 225, 250, 280 carcass motors, reorganizing our production footprint in our manufacturing plants. This is the vision, considerable investment since we are using many facilities, existing facilities, this is an enabler for us and costs are diluted here. So our risk and ROIC is much higher. This is it. Just to conclude, wrap it up. I understand that the verticalization model has shown to be really resilient in volatile scenarios. WEG has a competitive edge there through its verticalization model. The strategic location of plants are also a major advantage for our customers. We always invest regardless of a crisis or not because we have a long-term vision, and our portfolio diversification is a major competitive advantage for our customers during this period that we have more opportunities. This is it. Time is up. Thank you so much.

[Interpreted] Thank you, Kuba. Now I call Manfred for his presentation. As I said in the beginning that automation recently in September has split. We have that automation and digital system managed by Carlos Grille. To provide some context, everything that Manfred will present here is within the electronic industrial except for the solar equipment which is part of the GTD line of business. Thank you.

[Interpreted] Okay. Let's start the automation presentation here. These are some highlights. The automation business today has more than 6,000 employees worldwide, 15 plants in 9 countries. The largest manufacturers and market leaders and voltage inverters and protective -- protection equipment in Brazil and a leader also in major product clients more than 100 patents holders. We export to more than 55 countries, more than 560 technical technicians worldwide, more than 2,600 dealerships and distribution operations worldwide, more than 400 integrators for distributor generation in Brazil. And we are the largest manufacturers of panels and e-houses in Brazil. Our portfolio is very extensive and could be subdivided into different categories such as low- and medium-voltage drives, controls. And I will refer in more detail to each 1 of them a specific line developed for infrastructure, solar energy e-houses, e-mobility and bringing it all together, we have digital business up there. Now talking briefly about the drives. Our line is comprised by frequency inverters, both low- and medium-voltage substates. These are the 2 product lines we operate in different geographies in Brazil, complementing those product lines, logic programmable controllers, PLCs, servo drives, UPS and others. Control lines is very extensive. It could be subdivided into command switch gear at server drives, no brakes on rectifiers, electric circuit protection, devoted to machine safety, complemented by devices for electric connections. In addition to our operations in jointly to the industry, which is our most important market, we developed line for infrastructure, starting with chemicals for medium volt -- medium-voltage panels, totally tested, used a lot in hospitals, bus bars, bus bars for energy distribution, many circuit breakers, and DRs and surge protection equipment. We also finished with power alkylate and circuit breakers and switches. And to complement our offers, we are developing a specific line for comfort and safety, WiFi and monitoring cameras devices. As far as solar energy is concerned, we are operating in distributed and centralized generation. In distributed generation, we have inverters for single phase and 3-phase facilities, hybrids with batteries. Some one asked me during dinner yesterday. This is just for the off-grid operations. We are not able to plug it onto the grid yet. And this regulation results going to be elaborated, fixation structures, cables and accessories. That is, we have all products to put together a photovoltaic -- full photovoltaic facility, centralized generation, we have full EPC projects, and we also provide equipment of it. We have central solar inverters, solar skids. We manufacture both the skids and the inverter, solar inverter. It could be also assembled on a solar skid where we have the panels and the transformer assembled on the skid, and to complement this offering we have the energy storage, battery energy storage system that could be part of a solar or wind generation plant. Talking about the solar market, now install power in Brazil. This is the source new solar, compared to the power system that we supply but adding up distributed and centralized this generation, gives us a market share of 19.3% in Brazil. Analyzing the distributor generation figures this year, we are going to supply 33 solar kits through our integrators. With over 400 integrators all over Brazil and analyzing here, once again, the power for the distributed generation with the valid that we are going to supply in terms of power gives us a 22% market share. Here is a question. I also spoke with a few of you yesterday. What about -- what changes in the distributed generation from the moment on that the law 14,300 in comes into force. This law was discussed for a few years. And finally, it was approved in all instances, and it will be effective in January 2023. So what changes in the actual rule from the moment that this law comes into force is that there will be a taxation fee from the Wire B distribution. Remembering fee armed the energy distribution is composed by several parts. One part is the wire distribution of low voltage and this part represents 28% of the total cost of the distributed energy. So from next year onwards, this share is becoming -- is going to be taxed. And trying to simplify today, every unit of energy that you generate in the system and puts into the grid, you have as a credit, the same energy, the same quantity of energy. The relation is one-to-one from the moment that this law comes into effect, for instance, for a system of about 500 kilowatts. You're going to have a fee of 100% tax of -- 100% of Wire B. That is for every unit that you input in the grid. Your compensation is going to be 0.72% units of energy, watt is. That's 1 less -- 1.21% less. That's for the system is about 500 kilowatts. For systems, which are under 500 kilowatts, there is going to be a transition role. So the first year is going to be 50% from this 28%. Second year, 30% of the 28% and so successfully up to 100% in 2029. When you're going to finally have the compensation of 0.72% for every energy you input. So it's worth mentioning the projects that our existence or whose access required is filed by the of January 7, 2023 has maintained the conditions of compensations, the actual up to December 2045. And then I was also asked about what I think about the market is going to go down. First, the next year, basically, we are not going to fill the effect of this impact because all the projects that have already a request -- access requests filed. They have at least 1 year deadline to be built. So these projects are going to be built next year, generating a very considerable revenue. And from 2024 onwards, I would say that perhaps the impact that we're going to fill is that the solar area comes back to normality. Because we lived in this year, what we lived this year was an acceleration, a very accentuated growth in access requests from distributed generators up to 5 mega because of this change that is going to take effect from next year onwards. So I think that the first impact is that we become we go back to normality in which we're going to have a growth that is not so accentuated as we had in this request of access for the distributed generation. And here, I have a few simulations, and that changes according to the region where you are according to the solar radiation or the power utility. But running a field simulations of the impact that is going to generate in a residential unit, for instance, in which the payback of this -- discounted payback is 4.8 years in 2023 with the new rule is going to be 4.9 and so successfully up to 2029 in which we would reach 5.9 years for the payback. In a commercial system, it would go from 3.8% to 4.7%. And I remarked power plant is which you would feel the highest impact from '23 onwards. Again, here, it depends a lot on, for instance, on the evolution of the photovoltaic module. Nowadays, the photovoltaic models are with a lowering price. It also depends on the tariff on energy, whether it's going to go up or down. It depends on the exchange rate. So it depends on a series of variables in order to actually see how this is going to evolve. Another important information is for the centralized generation from 2023 onwards. It's -- the barrier -- the entry barrier is going to be lowered for -- to 500-kilowatt so that companies may be acquired, energy from the free market. So that opens up a very interesting and big market for the centralized generation power plants. Today, the barrier is 1 megawatt and is going to halved. So more companies will be able from January 3 onwards, acquire energy directly from the free market the auto line of products, lateral motor control centers. So we manufacture a very big portfolio of products for industrial plants. We do all the stamping, all internal components, most majority is also made by us -- also motor control center for lower voltage with medium voltage cubicles, e-houses and load centers. Speaking a little bit about electric power trains or electric mobility, we have 2 variations to focus of attention. First is the electric powertrain. Here, we manufacture in motors and inverters. And to complement the offer, we also became assemblers of batteries. We acquire the cells. And from the cells, we assembled the modules. And from there, we assembled the whole park aggregating, adding the refrigeration system, which was developed by ourselves, fire-extinguishing systems and ending up with the housing. And we already supply various battery packs for buses. This is an electric bus. If I recall well from the Espirito Santo state, which is running on our battery pack motor and invertors also supplied by ourselves. And as a complement, we also assemble auxiliary electric controls for buses and trucks for instance, for the compressed air, for the braking system. He is an actual picture, is the complementary, the e-Delivery truck for Volkswagen. So it has our motor, our inverter, and has our electric auxiliary control. Here's another application, which is a market all of us, which also is running with our powertrain and also within this mobility electrification, we have a strong participation in the naval propulsion in the marine segment. Another variant of the electric mobility is the recharging stations for electrical vehicles. Here, we develop all kind of EV charging stations, slow, semi rapid and ultra-rapid models. We are sole manufacturer that does makes everything in Brazil. There are other starts up that are basically working on the slow charging stations, but everything else is important in Brazil. Apart from the hardware, which is the charging stations, which are manufactured by ourselves here. Brazil, we develop all the software that are -- that equip this equipment and management system here. We have also developed a smart charging system both for both software and hardware. And this is for instance, when you have several charging stations installed in the condominium or in a shopping mall and you have a demand that cannot be over past, you have installed capacity that cannot be overshot. So it knows the intelligent management of all these charging stations limiting therefore, the power to be supplied to vehicles according to the capacity, installed capacity, it's an intelligent demand control system. And to wrap it up the offer part of bag automation, digital business, all our products are connected or prepared for connectivity. We have created and developed a line of hardware, the marketing and connectivity layer here on the above layer, the PLCs and automation and control, machinery, the manufacturing management system and above everything else, intelligent -- artificial intelligence called WEGnology, all hardware and software also dedicated. WEG smart machine, for instance, the software that has been developed by ourself, specifically for machinery manufacturers and so on. Our industrial footprint, we manufacture our line of products in Brazil. In Brazil, we have 6 manufacturing plants, panel and product manufacturing plants. We also assemble panels and invertors and soft starters of medium voltage in Colombia, Argentina, Mexico and the United States, Portugal and South Africa. In Spain, we have a company that is dedicated to the assembly of panels here to -- focus is the machinery manufacturer that comes from a past acquisition. In China, we manufacture also inverse low- and medium-voltage drives and miniature circuit breakers, which are division equipment. In Italy, we made recently an acquisition of an inverter for medium voltage -- I apologize, for low voltage. And speaking about this line of products that is very important within our strategy for the motion drive area, inverters, frequency inverters for lower voltage applications. These line of products, our revenue is very well -- very divided. 50% is made in Brazil and 50% of the revenue of this line of product comes from foreign operations. In Brazil, we have a above 40% market share. In South America, we have 10% market share in Africa 16% -- 17%, actually. And in other regions, our participation, our market share is small, which gives us a great opportunity to increment our revenues. Within this strategy of motion drive to accelerate the process of internationalization of inverters productions. And one of the strategy was exactly to acquire the Gefran company, Drive Motion GDM, in which -- the headquarter it is based in Italy. It's not an assembly plant, it's a manufacturing plant. It has all the stages of the manufacturing process. So you assemble as well the electric cars, you do all the steps of the manufacturing in this factory that is based in Italy. Had -- besides it has operations in Germany, Chile and India, 142 -- 182 employees and it brings us an increase in our portfolio. Our actual portfolio is more dedicated to general purpose inverters. And it brings extended portfolio with dedicated solutions for lifts, for conveyor belts, plastic industry, metallurgy, among other applications. Here is worth mentioning that we have made investments -- strong investments, very heavy investments. In the last year, we invested with over BRL 100 million. In 2023, we're going to invest more in order to increase our productive capacity. So much so in our [indiscernible], in China plant. The enlargement of our plant here in Brazil as well and also investment -- a very strong -- a very heavy investment in machinery, fully automated machinery in our manufacturing process in order to increase our production capacity. And to wrap up my presentation. I am nearly out of time. The main strategy for the expansion of the automation area is to expand the low-voltage drives through new developments and acquisition of the Gefran Drive and Motion. The acceleration of the internationalization process through the synergic action of motion drives to use our installed plants to join forces for selling the motor and inverters to continue to advance in industrial market with all the line of products, but increasingly to increase our portfolio in the electrification area, in the building and infrastructure area to advance in electric mobility. And the 2 -- in the electric powertrain as well as in the EV charging station and a constant expansion of our portfolio, be it hardware or software for digital solutions. That was all. Thank you very much.

Thank you, Manfred. I would like to now call Jan Paulo to present WEG Energy. And the same, as I mentioned, in the auto presentation, WEG Energy, in the market vision, all the motors, high and medium voltage is within the electro-electronic, industrial electro-electronics and the rest of the energy in the GTD area. Please Joao Paulo, the floor is yours.

Good morning, everyone. I think you have to reset the time here. 1 minute is not enough for me. Well, it's a pleasure for me to be here. But in the physical presence, I'd like to thank your presence here as well, your attendance. I will make a quick presentation on WEG Energy, our product portfolio and some generic numbers. I'm not going to dwell on all of them, but perhaps the strongest point here is that WEG Energy makes medium voltage motors on the carcass of 400 and above, which is a bigger machine, and we go up to the 2,000 carcass with 145 megawatts motors, which is the biggest that we have already produced. But also, we have a lot of portfolio of products, which is a hydroelectric power generation water -- hydroletric power turbines. We do not do civil engineering, but we do part of the construction. We concentrate only on the turbine and the generator and some valves. Also we have about 1 gigawatt of wind turbines, installed wind turbines, the biomass generation with steam turbines with a considerable presence in the American countries and something that has been very interesting for WEG Energy in the last few years is the growth of the service area in which I'm going to dwell a little deeper. Here is a brief picture of the products that we supply. As I mentioned hydropower generators with something very important for us in India. We do not make the turbine, the hydraulic turbines. We do not participate in this market, but is the main participator of hydrogenerators for the Indian market. The line of turbines, the 3 models, Pelton, Francis and Kaplan. A product that has represented an important part of our revenue is the synchronous condensers, specifically in the U.S., we have already taken 2 orders there. We have now 2 more good perspectives for Canada. We already have some projects in Brazil. And later on, I'm going to dwell into this, because this line of products may be -- may represent much more businesses for WEG in the future. Our industrial footprint, evidently, our largest plant is here in Brazil, in Jaragua do Sul. We have another plant in Minneapolis, which was an acquisition that took place 11 years ago from GE. We have a small area in Portugal with good possibility for growth. We don't have a manufacturer of those items in Europe because we recently started that. And now in Portugal, we are expanding this plant in Portugal for us to be able to capture more market share in the services area, both WEG motors and generators, and competitors as well, a small assembly of turbine, steam turbines and generation kits in Nuremberg, Germany, an acquisition with TGM Kanis that designs urban solid waste facilities for England, Turkey and also for generation from industrial waste biomass. Our plant in India was built 10 years ago, almost 11 years ago, greenfield, you've seen a picture of it. It's been growing a lot in terms of market share. It's a full plant. We have to do a lot of maintenance there and our opportunity for growth. China accounts for 35% of these items worldwide. So if we are outside China, it's not an option. Being outside China is not an option. We've been growing a lot, but was a small or rather small market share yet. And our objective is to grow there. Medium voltage motors. In the Americas, we have a good market share as well as in Europe. But in the Asia Pacific region where we have the largest market, China, requires a lot of focus and attention there. For larger motors, carcass 550 and upwards, our market share is 10% because our more specific motors, they are not sold to OEMs. So we -- the specs are more demanding. So probably, this is one of the slides I'm going to dwell a little bit more. The blue bar are the product lines that we are offering up to August this year 2, 3 months ago. These are our European competitors. And this is our new line in terms of power per carcass. So for example, this carcass over here, our offer was not competitive. But thanks to this new product line that we launched in August, it practically doubles of power density, which will allow us to achieve much better margins or more market share or a combination of both. We have already launched carcass 450, 500 and 560. It's ready for sale by March next year, we will release 610, and then next year, we're going to work with larger carcasses. This is crucial for us to be able to enhance our competitiveness and increase market share in numerous markets. In the case of medium-voltage motors, medium- and high-voltage motors, where do we apply these markets? Some of the most traditional markets such as in mining, oil and gas, but we've seen a lot of growth. And here, we talk about motors and generators. A motor and -- a large-scale motor and generators are practically the same in terms of technology. There are some specific things, of course, but this is a market that's been growing a lot. We've been designing lots of the projects with Ormat, Israel, also projects, many projects with them and new opportunities are coming up. This is a very strong market for us for offshore oil and gas, Europe, U.S. Carbon capture is a project we have in Sweden, concrete plant that captures CO2 and mixes that up on the concrete for us to do carbon sequestration forever. Capturing carbon, there is technology for that, but sequestration is something different is for good. It's just like catching a fly. If you open your hand, it will fly again. You have to kill the fly somehow. Another project in South Korea for export of green hydrogen to Europe. We are supplying all the motors there, compressor motors there. Notably, in China, we enhanced our product lines being offered there still limited to carcass 900. We don't have the whole line there in terms of size. We are starting to dedicate this plant for medium- and high-voltage motors to enhance our productivity and offer, and to win market share in China. This is an interesting line. Maybe we haven't paid much attention to it, but it's becoming ever more important. But it's kind of an old line, a 20-year old line, which in WEG made us wonder how are we going to acquire a company in Europe, especially? But in our assessment, this is a market that is going to face a lot of competition from battery storage segment. So we are going to -- through this line going to face strong competition, especially for those applications that are not critical. First is grocery stores not critical, hotel is not critical, but hospitals, telecommunications, major plants, refer plants cannot rely on battery storage. Can you imagine an ICU at a hospital, it has to continue to operate. It cannot rely on battery power. So instead of investing through inorganic growth by acquisition, for instance, in a market that tends not to grow so much, since we have a small share worldwide, we're going to create a new, more compact line what smaller alternator powers without carcass. This is going to be an altogether new line, extremely competitive without acquiring external companies and 2 came up over the last month. We want to grow organically instead. This is our plan for this line. And there's a lot of market share out there. Power -- Steam power generation. These are complete solutions that provide not only the turbine, but also the [indiscernible], the generator or the -- excuse me, the gearbox and so on and so forth. This acquisition took place in 2018 in Sertaozinho, which has a branch office in Germany, as I told you. These are the applications. I won't dwell on it. But this is the business that has grown considerably, especially the services side. This machine need constant maintenance, extremely specialized maintenance. Therefore, we have been generating a lot of revenue with excellent bottom lines. And we want to take this type of services that are extremely successful already in the U.S. that also provide repair services, maintenance service of steam turbines jointly with the gearbox and generator. We have already struck interesting deals there. Hydropower plants. This is the picture of the largest hydropower plant we supplied equipment for 500 megawatt equipment, [ sound rocket ] power plant -- hydropower plant that had a major delay in the construction, but it was concluded earlier this year. We have already delivered a 50 megawatt generator, we didn't supply the turbine, just the generator for hydropower, low rotation. And despite the power is not so big, the machine, the piece of machinery is big, and it's a relatively small piece of machinery. And this is just to mention what we've been doing as far as hydropower plants. This is -- we are going to enhance our services and products through consultants, from Austria, Germany to increase our competitiveness. There are smaller competitors in Brazil that make very aggressive offerings. Therefore, we need cutting-edge technologies here. Wind power turbines. This is a product, and this is the number of equipment we installed from 2014 to 2018, 2019, well there was a hiatus between this product and this product here launched, but we have a full plant full of orders, by mid-2024 is all taken to provide the service and more recently incurred that WEG announced in August, the largest offshore wind turbine, [indiscernible] 7 megawatt and a European manufacturer announced a 7.2 megawatt wind turbine. This is going to be a change in technology. The generator is a very heavy piece of machinery, expensive one. We are here making a technology shift from direct drive to middle speed, which is the technology of the future for wind turbines, this big, there are 2 medium speed and high-speed technology ones. The high-speed ones have smaller reliability because of mechanical issues. These developers been done jointly with engineering teams in the U.S., our engineering team here in Brazil and the numerous WEG divisions, our engineering team in Germany, we signed an agreement with Biowind, a small wind power engineering firm, very fully fledged and highly skilled engineers in wind turbines and our India team as well. This is just a rendering of how this machine looks like. This is the speed multiplier, an extremely compact generator, permanent magnets and the rest is similar to the current technology ones. In India, and this is the expansion that Kuba has shown us. This is the new WEG motors planned to be inaugurated in -- on Friday and this is the WEG Energia inaugurated in February 2011, that is 11 years old. Therefore, now we are expanding. This plant is 300 meters long. This is going to be the boilers for the new wind turbines. The 4.2 that we are launching in India. In fact, there's a prototype running there, an operation under test. Two weeks ago, we started that this is the boilers part, and this is the assembly part of the generators. We are now going to launch 7 generator in India. This is the largest wind turbine ever installed in India. This is an $18 million investment worth. This is a new business that WEG help develop, which is energy storage, gravitational energy storage. These are train tracks, 230 tons each. At dawn, we take energy upwards, uphill, and during peak hours, we bring them down again. This is the discharge area. This is the charging area. And each one of these carts or lines are 5 megawatts each. We supply -- we provided the first system in July. It's been installed near Las Vegas by a company called ARES, which is our partner in this project. We are making the proof of concept. The difference from this system to a battery storage system is that we are able to store a lot of energy for [indiscernible] scale. That is a GTD with a relatively low cost compared to battery storage system, 50% of the storage costs relative to battery storage. This is the synchronous compensator. We have already supplied 100 VGA to [indiscernible]. We are now providing or supplying 2 more in a deal that was struck 3 weeks ago. This is a version power solution utility from main, and we are providing the whole EPC, the accelerator within the compensator, which is nothing, but a hugely 50 megawatts power machine. We accelerate with the small motor, and it starts with nameplate rotation, and it supplies transient energy to the grid. Why the battery storage and the gravitational storage system are important? Because until then, energy was considered firm that is we had major hydroelectric power plant, 500 megawatt turbine, constantly operating with high inertia or a gas turbine or steam turbine, carbon-fired turbine and energy supply was steady. But as we add wind power and solar power, we inject a lot of instability to the grid because the harmonics and the fast supply of power. And as the grid becomes ever more reliant or dependent upon the transient energy sources, we have to find ways to stabilize frequency and voltage. This guy here is extremely important for small microseconds of power supply. And this is a graph that depicts what I mean here. What's the difference between each one of these systems. BES or Better Energy Storage is charged early in the morning, 1, 2, 3 megawatts. For the grid, this amount of energy is nothing. This is a medium-sized company. But for power and voltage control, this is extremely important. So we charge it from 1 to 4 a.m. and at peak time of energy consumption, we discharge it. In the meantime, it controls frequency in voltage. This is a very simplified explanation, but I just wanted to show you the difference between those 2 systems. This is the loading time or charging time, frequency and time and during peak time, it discharges or unloads. The gravitational compensators takes a long time to charge, but also are much more resilient and the synchronous condenser provides a lot of energy. This is a graph where I'm going to compare the features, most important features of the 3 of them that are totally different, but extremely important for the grid. Charging time, discharging time. So battery storage is for short periods of time, 3, 4 hours, GES are for long periods of time and synchronous condenser very short periods of time, microseconds, but every single time, why? Because when the generator or the condenser decelerates, it starts losing frequency. So it doesn't have much time, and it creates a different frequency from 50 or 60 hertz. So it loses speed and continues to consume energy from the grid to speed it up. So these are the 3 technologies that provides solutions that are going to be extremely important for the grid. And to conclude right on time. Like energy, capacity, global manufacturing capability and flexibility minimizing uncertainty, some important segments, such as mining and wastewater driving demand for high voltage motors. [indiscernible] mega is a wind turbine platform that we intend to launch in Brazil, but move elsewhere to other markets, important markets such as the U.S. and occasionally India. Hydro power generation, we have done some business overseas, especially in generators, our renewable energy solutions that today has a generation portfolio based on renewables solely, some new business lines, green hydrogen. And we've been studying some solutions that are yet to define what to do precisely. Pump storage, solid waste and geothermal, we are doing now the proof of concept of pump storage and services and [indiscernible], we invested recently and TGM Kanis to expand the building to provide turbine services, especially non-WEG turbine, maintenance and services and repair. Same thing in the U.S., and this has been generating a lot of revenues, considerable revenues for WEG, and we will continue to invest on this business. Thank you so much.

Thank you, Joao Paulo.

Now Transmission & Distribution, Carlos Diether. Here, Carlos is within the GTD as well. Please, Carlos.

Good morning, everyone. Let's start this presentation then our transmission and distribution unit. I'd like to start my presentation supplying you with an overview of our business unit for the generation and transmission in a world concept. We have 13 plants, 5 of them located in Brazil and 8 abroad. Today, we are the largest transformer manufacturer in Latin America. We are manufacturer that produces about 75 MVA a year. And for you to have an idea that is to produce transformers for about 6x to a [indiscernible] power plant every year. We are certified in terms of -- with the main utilities in the Americas. And I can tell you that we have advanced a lot in the U.S. utilities. So nowadays, we are certified in all of them. We're credited by all of them. Also now in the United States, we have about 4,600 employees and about 1,700 are working abroad. We are the Brazilian leader in mobile solutions, speaking both about [ skids ] as well as the portable substations. We have about over 550 substations up to 500 kilowatts under operation. And most of them in -- outside Brazil, and I'm going to show you later our portfolio and our strategy for operation, where we are also building substations abroad. And we have a very wide service network. And when I speak about the service network, when we besides our dealers, our commercial representatives, our commercial structure, I always repeat that we are the only manufacturer -- the only Brazilian and Latin American manufacturer that has a technical service network that is trained by the company under its own technology for both emergency and transformer, but also in the assembly supervision or bring into operation within good operations, our own products. Now I'd like to present a little bit about our strategy and our line of product. Again, WEG has a complete transformer lines from very small one from the pole transformers for distribution going through all the industrial applications. Compact ones, it's a line of product that serves the industry in a general way. We have the dry-type transformer. This is a technology. Today, we're going to see that we are not only present in Brazil, but it's a technology that is growing with its participation in the market. And for you to have an idea, WEG is the leader in this segment in Brazil, is also a leader in Colombia, has a very important participation in the Mexican market. And without doubt, this is a technology that is very environmentally friendly, has a very low cost of maintenance, but also has a very strong environmental appeal. And for you to have an idea, in Brazil, about 50% of the transformer, industrial transformer and special purpose applications are dry-type transformers and WEG doubtless is a leader in this market. We also have the submersible underground and submersible transformers are very important line of products for the big cities because we want to see a clean environment without all the wires going around in the skies and WEG is very strong in this segment. And we also have the pedestal transformer line. This is a line of products that is used in residential condominiums, in urban centers, in public squares, is an equipment that is normally supplied with the plant oil, which is also very environmentally friendly. We also have 2 very important applications. And when John shown the application and the influence of renewables in the read, he always says transformer for solar application and wind application is more or less like having a car, an automated car, which requires every minute for you to start and brake, start and brake. If it is not very well designed, it's not going to work well. So this is a technology that we have recently improved, we brought from the U.S. from our acquisition from USA [indiscernible]. It's a distinguished product, very reliable. And I would say unheard of in terms of the Brazilian market. A great part of the manufacturers of this kind of equipment that has their mean, the power higher are not making with the technology and the required reliability. And to complement our line of products, we have the medium-voltage transforms up to 145 kilowatts here that has a very important market share, very significant. In Brazil, it is the leader of the market and also the grid transformer up to 5,000 kilowatts -- 550 kilowatts. We can see that we make all the line of transformers, and we are the only manufacturer in Brazil that has this complete line of products. All others have segmented in different segments, different areas. But WEG offers a whole and complete line of products, which is very important in terms of technology, in terms of product portfolio, but it's much more important for our clients because clients that buy the distribution transformers are the energy distributors. They buy our power transformers. So we have a very complete line of products in terms of transformer to supply our clients wherever and whatever market they are. And now addressing some specific purpose equipment, we have the derivation reactors, these are products to equilibrate the reactive energy in the line of distribution. The shunt reactors was developed specifically for the energy auctions that was launched about 4 years ago. And we have all the special transformers for foreign applications, especially for foundries. We have the disconnectors, steel mills. We have the complete line for the renovation and repowering of grid capacity transformers. And this is growing in our portfolio. Everyone knows the shelf-life of the equipment in Brazil. So it's a line of product that we dedicate a lot of attention. And afterwards, we have all the solutions in turnkey solution regimen. We offer conventional substation, mobile substation. WEG is also a leader in this market and our protection systems and substation control systems. And now moving on to an update of our industrial footprint, and I am going to take advantage of this slide here to show you a little bit of our strategy. And in the U.S., I'd like to tell you how we are structured. We have 3 manufacturing plants. And there, we manufacture transformers up to 60 MVA, 161 kilowatts. But here, the strategy is distinguished. We have in the U.S. market, these 3 plants and one of which the most recent one is dedicated to supply the big utilities in the United States in the powers that we call it distribution power. So that is an extremely automated manufacturing plant, and it makes transformers up to 3,000 kVA. For you to have an idea, we manufacture in this plan about 150 transformers per week. And in talking about our 1,000 kVA, it's about -- possibly one of the manufacturing plants with the highest capacity of production in the United States. And as I mentioned, is that supplies the utilities in this -- with this line of products. Then we have the second plant, which we call the specialty transformers in which we produce all the transformers for renewable energy. So it's a dedicated plant for transformers to be used in solar and wind energy generation. This line of transformer is helped by one of the Mexico plant. We have a line of production dedicated to wind and solar energy generation, all with the technology of WTU WEG Transformer USA to meet the demands of dedicated to the renewable energy production. And then the third plant in the United States, it makes mid-power transformers up to 60 MVA, 161 kilowatts, meeting basically the utilities and municipal distributors in the United States. And in Mexico, we have 2 plants. One of them, as I mentioned, it meets partially the demands of the U.S. market on the renewable energy generation. And this part also supplies the power market in Mexico. And the second plant in Mexico, which is the transformed at high load transformer, it supplies the U.S. market, especially for the big utilities. And if the question has not come up yet, it will because with all you speak about the U.S. and the future grid that is going to be built in order to distribute all this solar generation from the East -- West Coast to the great urban centers. WEG in the U.S. today, as you can see, is an ample of WEG in Brazil. In Brazil, we participate in all energy auctions. We are present in all the distribution business and in the U.S. we still participate in what called the subtransmission of energy, which is the transformers, the lines of transmission of 138 kilowatts and 230 kilowatts. We are now supplying in 450 kilowatts. That is WEG within its strategy, it's getting ready for an effective business in the transmission sector also in the U.S. And for that, perhaps, and I'm going to show you next, for that, perhaps WEG is the best prepared maker or a manufacturer because we have plants in the U.S. that is -- we are an American company with all the technical support where the competitiveness of Mexico. Moving on in our industrial footprint, we have a plant in Colombia as well, which makes transformers up to 30 MVA and 72 kilowatts and here basically to supply Colombia and the Andean region. And in Brazil, we have 5 plants with transformers, making transformers up to 500 MVA with 550 kilowatts. And then in South Africa, we have 2 plants. And one for smaller transformers for the distribution area and the other one for transformers up to 45 MVA, 145 kilowatts. And our main client is [ WeSC ], which is one of the greatest generators in the world that has recently launched the plant which is very important to develop the electric sector in South Africa. Now moving on. Our market share. WEG today is #1 in the Brazilian market, and it has a leadership role that also plays in Latin America as a whole. I divided the Americas into 2 regions. In South America, today, we have -- we hold 23% of the market share. We are market leaders in Brazil. In Colombia, we are market leaders in dry-type transformers. In North America, we hold approximately 6% of the market share. I'd like to underscore something here. And I eroded in the upper side of the market. When we assess the market, we are considering all the manufacturing plant and sites of transformers, not always where WEG plays an active role. When we talk about 23%, 6%, we refer to all the transformer manufactured in a given market. So we have a huge opportunity there in North America for growth, where we already have an expressive market share in renewables. As I told you, for us, the time has come for energy transmission, power transmission for 345, 440 and 550 kV, which are the voltages where the new grid is going to develop. WEG has the technology for that. Up next, I'm going to show you the investment we've been making in that area. So this is the time for us to do that in Mexico up to 145 kV, we're leaders. We have an expressive share also in that market, as I said. I'd like to show you now some investment we've been making in Blumenau now here in Santa Catarina state. We are about to finish a transformer production line dedicated, fully dedicated to renewables. They grew their medium power a lot. So we have this dedicated line. We're investing candidly on the verticalization method within Brazil with boilers, expansion with the radiators plant. In Betim, Minas Gerais state, we are investing heavily as well. We are doubling the assembly line capacity in our laboratory for high-voltage applications. We are also implementing our e-mobile solutions. We're going to have both in Blumenau and Betim to provide more competitive services in Southeastern and Northern Brazil, but also in Betim renovate overhauling transformers. If Blumenau strategically takes care of Southern Brazil and Betim takes care of overhauling and repowering of Southeastern and mid-center Brazil. Itajai, which is a port nearby, we are doubling the capacity for dry-type transformer, invest heavily on dry-type transformers in Brazil. Overseas, well, in the U.S., to start with, as I told you, we've just finished the distribution from former line there with the third plant. And now we are doing capacity building for people in our renewables, energy transformer line there. We are -- the U.S. plant is getting the last investment is going to be ready for the U.S. market by March, April 2023. And Mexico, I [indiscernible] out here in this picture. Our planning is quite aggressive. This is our manufacturing site for 550 kV transformers. We are expanding the site, and we are building a new boiler facility here and a silicon cutting part there. We're going to expand this manufacturing site with 2 major goals: number one, to manufacture, transmission transformer, 550 kV transformers. And secondly, to feed the manufacturing sites with radiators, transformer course and tanks to make them ever more competitive. That's why I told you that we have a very privileged situation there to provide products and services in the U.S. market, thanks to the synergy we are building between Mexico and the U.S. Here, also very briefly, I'm going to show you Balteau which is an acquisition we made early 2022. It manufactures current and power transformers up to 550 kV. Balteau is a brand that is owned by WEG. It's known worldwide, and our strategy is clear. We are making considerable investment on this plan to internationalize Balteau and WEG in power transformer or instrument transformer, if you will. Very briefly, this is the development of new products. We're working on all digital production lines in asset management for industrial transformers, monitoring of transformers, large-sized transformers and also working on light pole transformers for monitoring and reduction of non-technical energy losses. We developed another dry-type transformer that is boosted by WEG automation, and we piggybacked on the solar solutions with this dry type transformer that is vacuum impregnated. These are the Balteau measuring instruments of Balteau. And with that, we conclude this cycle in the transformer lines with complete solutions. To conclude then our most important growth strategies in the foreign market is to keep focus on the Americas and Sub-Saharan Africa, taking advantage of opportunities that I told you about, intensify synergy between North American. Plans, focusing on verticalization as a strategy and to become ever more competitive to expand our share both in the renewable energy markets and power transmission market. In the domestic market, we continue to develop our portfolio of products, diversified product to pay attention to the auctions of renewables, paying attention on the renewables energy market, and increase our market share there and to consolidate the Betim plant to expand our footprint in the power transformer market, reactors, shunt reactors and other mobile solutions. This was my presentation. Thank you for your attention.

Right on time. Thank you, Carlos. You can say here because we're going to start Q&A session right now. I'm going to invite Kuba, Manfred, João Paulo for us to start the Q&A session.

[Operator Instructions] So let's get ready. Mics are ready, therefore, we're going to start.

This is Lucas Marquiori. I'm going to ask about the circuit breakers and Kuba mentioned that we have a doubt but I'm trying to understand what is permanent and what is provisional in this competitiveness where competitors have suffered logistic bottlenecks, and we see a lot of loss of competitiveness, having verticalized production like yours. Now in conference calls, they started mentioning they are getting more components and the logistics bottleneck is fading away. I understand that you are at a different level, totally different competitor level -- competitiveness level, but the world gets back to business as usual. How far is production flexibility -- now you can have the same competitive levels like the ones in Europe, okay?

Thank you for your question. I think that in general terms, what we have to understand are the following: the speed, which the commercial area is moving, especially in Europe, and we have markets in Europe, like Germany, where it is extremely different for WEG, for a new entrant to knock at the doors and open up this market. Our engineering teams are reluctant to admit new entrants, new incumbents. New opportunities came up during the pandemic because our competitors were unable to provide the products. So this help us open up new markets. Now we are working for this to consolidate. So all the customers, the new customers that we had the opportunity to capture during the pandemic have tested our product. Now they're applying our products. Now we are going to be able to transform an opportunity into a solid market in the future. As you said, the supply chain is getting back to normal, deliveries will be normalized, regular. But one thing that is going to happen, is happening as we speak is, we have more business with OEMs. And we are talking with major global players where WEG had a relatively small market share. Many of them are looking for us, and they are not asking if we have an operation in China or India. They want operations nearer in the U.S. or Europe. Even if our competitors are able to meet this demand in -- under normal situation, our footprint is more flexible and resilient for future logistic issues. So with the capacity building that we are having worldwide, we'll be able to capture more business opportunities as we've been doing over the last years. But as the pandemic is overcome, we are going to reduce the pace in which we were capturing new customers.

Pedro Fontana from BBI. I'd like to explore in mobility and what's the strategy that has concerning that, will you continue to operate in a specific niche? Is this a natural pathway for this business line that you have?

In mobility, we have 2 variants, so to speak. One is the electric powertrain and the other one are the recharge stations. In the electric powertrain, we have the inverter, the motor and the battery packs. On this segment, the electric powertrain is specifically -- our focus right now is on buses, on trucks especially. This is the demand we have in Brazil, and the focus is the Brazilian market right now. There are other applications in marine applications or naval applications, which are new line or revenue line. Can we do it for other vehicles? Yes. But the demand we have right now is for buses and trucks. Therefore, we are focusing on them. Other geographies might come up, yes. But this is our focus right now. We are testing this year in Brazil and then check other opportunities out there. As far as recharge stations are concerned, we have already sold in other countries, small numbers of those recharge stations in South America in addition to Brazil. And this is a product line that we are preparing our service to be able to sell worldwide, except Asia because of different connector standard. But the product is getting ready. We are certified for European Union. And up next, we're going to have the certification for selling it in the U.S., IEEE.

My question has to do with verticalization. It's nice to see how you are verticalizing in Mexico and India. For instance, pre-COVID nobody followed this strategy or -- so lean manufacturing and the companies were following that. But you were doing things differently. And now during the pandemic, you proven to be right, you had less supply chain issues. Do you think that competitors will converge to this more verticalized model, like you did here in Jaraguá and in other geographies? And if they do it, how are you going to keep your competitive edge?

What we've seen is a trend in major players that move towards markets where market growth is higher. The motors market has some very small organic growth possibilities. So we understand that our major competitors done a lot -- or allocate a lot of CapEx. But on those that have much higher growth rates. We don't understand these movements is going to impact us. We do understand, however, that WEG is very well positioned, both in Asia and in Mexico to meet the demands of China, Southeast Asia and other markets. And now with the expansion of our operations in Brazil, in Turkey and Portugal, it will be even stronger to supply and provide products and services in Europe. What we see is regional competitive. Our concern is not verticalization and lower cost, but to have optimized product, to have low cost enough and competitive enough to sell in Turkey, to sell in Poland with good [indiscernible]. So when you understand that, even though you want to verticalize, this is something that -- see what happened in China. We had a high CapEx invested in China. When I moved to China in 2010, a lot of outsourcing of components was out there, which is the Chinese model that was in 2014, [indiscernible] was built. So the verticalization have to be long-term strategy that takes years and years. We are very well positioned both with an interesting manufacturing strategy worldwide and competitive levels that allow us to pay fairly with any competitors worldwide.

Lucas Laghi from XP. Thank you so much and congratulations for this WEG -- for this WEG Day being held face to face. I'd like to explore the distributed generation business. In 2022, '21, the big part of the growth came from domestic distributed generation. By your presentation, we've seen market share of 22%. I'd like to understand how that is positioned in projects below 500 kV and above 500 kV that are more impacted by the new regulation. And how do you see potential strategy shift migrating towards a smaller project that would be less impacted by the new legislation to think on the maintenance or keeping of this -- the growth of this segment that allowed you to grow your revenues. What's the current positioning, I mean, larger projects versus smaller projects? And what's the way to go between both subsegments of distributor generations?

Excellent question. In distributed generation, our most important market has always been the sales of solar kits, not the distributed generation power plants up to 5 mega. For us, that accounted for 10% of our business. In the last years, this change because of changes in legislation. And therefore, now we are in 30%. There is an increase, a significant one and is [indiscernible] because of the alteration in the law that is going to come in effect in January. The strategy to maintain our revenue from '24, when we believe that we are going to start feeling the effects of the law is to participate more in monophase -- single-phase market. Actually, our integrators, the most participation of them is in the 3-phase market of solar kits. So for that, we are developing a line of products that are more dedicated to this single phase market. We have a specific inverter. For that, we are going to briefly launch a solar module also for the single phase modules and for -- Besides the solar integrators, we are developing some -- in distributors, specific to operate in the single-phase market. So these people are going to be getting distributors to sell to small installers. That is the strategy.

I think we have 2 questions from the front here.

Lucas [indiscernible] from Santander. I'd like to exploit a little bit more the strategy of India that you commented that you see as the manufacturing park in the future. And I would like to understand whether you already have a CapEx strategy as Kuba commented to the verticalization there takes a longer time. What would be the time schedule for the CapEx so that we can have more numbers on that?

Well, in regards to WEG Motores, we've made an operation there with the capacity for us to reach 2,500 motors. That's the estimated volume that we can put in that factory. We have structured a whole base of technical support, distribution, we restructured our commercial area to supply to a short cycle product, which is different than the WEG Energia that is long cycle. And we understand that we can take about 3 years to understand market to scale as well. And after that, we are going to have to see a new manufacturing park. But WEG Energia is also increasing, and we don't have more room in that plant. So WEG Motores designed, the India project, we understood at a time that we should go there and start an operation on the same plant on which WEG Energia operates, and we have everything ready there. And from the moment that we are going to scale, we have to move on to a new park, to have a higher verticalization with the staffing, for instance. Why not in the future, perhaps a foundry, having a foundry there. So I think in the 4 years, 5 years, this is not going to happen because we have a good install capacity for -- to meet the demands of the Indian market.

Daniel Gasparete from Itaú BBA. I Just like to explore a little bit of the strategy on the transmission area. That demonstrated the market share in the international market is relatively low. And I'd like to understand what are advantages -- the competitive advantages? Who are the players? How do you compete with your competitors? What is the strategy to gain market share in this sector?

Well, first, all, thank you for your question. Well, we have -- first, to understand how the transformer business works. Transformers are -- is a business -- is a product that because of the sheer size of them, they have a very complex logistics. Microphone has got some problems, some mic issues. Well, so it's very difficult for you to have a strategy for exporting this product specifically for the starting market. You have to have local plants. And then we have a strategy that is very well assembled for the Americas in which we have located -- the plants located in Brazil and Colombia, and I'm speaking about South America here. And then later in North America, we comprehend that as I've shown with the Mexican and the U.S. plants. And here, the different movement that WEG does in the market is to have the Mexico as a base for a production center in terms of components for the U.S. market, as I've shown you, all the boilers or the core components we are going to produce, and we are already producing part of this in Mexico to supply the Mexican and the U.S. plants. If you also asked about the movements in terms of competition. And we've had a few recent developments that were quite significant in terms of world market with several changed in the playing field. And I'm not going to dwell into these because these are public information that you are all aware of. But these are developments that can bring a lot of opportunities to WEG in its focus, which is, as I mentioned, before Americas, the Americas for all the opportunities that we foresee for the growth in the market as well as in the African market. These are 2 markets that we see as a short-term, very good perspectives for the short term, especially in the renewables in the U.S., you can -- as well as in Africa. So today, our focus in the internationalization strategy in these specific markets.

[indiscernible] from the Lira Investment. There are 3 points I'd like to comment on. First, how is the opportunity for us to do a battery. We Already export some to France, but from the [ vinculation ] with wind generation where you have all the oscillation and the difficulties of maintenance in the distribution line. And why not transformers in India, where you have everything in place for making. You already have a foot there. Wouldn't be interesting to produce transformers there as well? So actually 2 points that I'd like to raise.

Well, in regards to the intermittency of the renewables both solar and wind generation. Actually, there is a great opportunity for Brazil to become a supplier of green steel, especially in the Northeast part of the country in which we have better wind conditions in the world and the solar radiation that is stupendous. Eventually, we will be able to attract and we're talking about this in the Board [indiscernible], we are going to be able to attract investments, but that has to go through industrial policy. It's not only the wind that is going to solve this problem. To attract this kind of investment in the northeast region of the country so that we can have power plants to produce green hydrogen with -- meant to be exported to the Europe that's happening in South Korea with U.S. investment. I think that here, our generation capacity to make green hydrogen is better than any other country in the world because of our natural resources. But I think that this is still a bit far off. There are some [indiscernible] projects. And you also mentioned battery. Battery comes to firm the rates. This green renewable energy or green -- still they can be isolated clients. They do not need to be connected to the national grid. But for the interconnected national grid battery and long term storage is necessary in order to solve or mitigate this intermittency of this non-firm renewable supply. And besides the very important hydroelectric power plant, the -- is able to generate months on hand. So there is a whole many things to be studied in order for us to implement something the green projects and to be able to export green hydrogen. And as I comment to today, our focus is on the Americas and on Africa where we can see a lot of short-term opportunities. We are following a verticalization project as well in our plants in Mexico in order to achieve higher competitiveness and become a very important player in this process and this coming -- the development of the new grid and now India is not part of that short-term strategy.

We still have time for one more question. I'm going to pass the floor to the back part of the room.

Here is [indiscernible]. And I think the question is for Kuba. But in the beginning of the presentation, you mentioned about 660 million investment for the expansion of our capacity here in Jaraguá do Sul. So my question would be, what is the time frame for that project? When should that be executed. And [indiscernible] question. When we look backwards the WEG had a CapEx on net revenue because that is a measure that we used to do. That was bigger than it is in the last few years. So the impression that is that you gain a lot of good market share and expanded your operations. And The investments have not grown in the same rhythm. So my question is, how is the utilization of the installed capacity? How do you see this? Are there any bottlenecks gain on productivity because of this investment. That's why I didn't have to invest that much. Well, I mean is in terms of capacity or production capacity because there's a lot of opportunities, and you're still performing well in the growth area.

Well, that is a very good question. In the last 3 years, they were perfect years in which to do the plant management because when you have a full order you have better opportunities to identify bottlenecks and when you identify this, you have better notion of your production. In 2020, you had a drop and then we started accelerating from 2021. And from '22 onwards, we have all production taken. I mentioned that we have a lot of transition of components between plants going on and moving forward, 2022 with all production taken all over the world. So the first question that you asked was in regards to the timeline for the investment schedule. And Brazil's investment in 660 involves the construction of new buildings and the acquisition of new machinery. So in '22 and '23, we are taking a big step towards constructing new physical structures. And with this building done, we are going to buy the machineries so we are talking about '22, '23, '24, beginning at '25 in which we're going to buy the machinery as we have an increaase in the demand both for industrial motors as well as for electric mobility, as was mentioned here. And what is happening in regards to CapEx. WEG Motores is still investing a great share of the percentage of the investment on [indiscernible]. And when we look backwards 10 years back, we see that we had an increase of revenues that were very significant. So that's somehow is marching together in lockstep. And as we had this increase in revenues, in the last few years, obviously, we were able to have a better utilization of our plants to use as well. With this, we have several programs that were implemented that worldwide. WMS in which we gained a lot of productivity in all our operations. Today, China operation, Mexican operation, Portugal and in Brazil operations are all monitored in a remote way, and we can run benchmarks in the Brazilian plant with any other plant anywhere in the world. And I think that, that is something that distinguishes WEG with vertical production that is able to do that. Very few other manufacturers are able to do. So this better intelligent allocation of resources over the CapEx using just what makes sense in every country. I think that's it. So we are running out of time.

Yes. For us, in order to keep on time, we are going to finish this Q&A session. Thanks again the executives here for their presentation. We are going to have a quick interval, and back -- we're going to come back at 11:45. Thank you very much. [Break]

Okay. Let's resume our session, the second part now, I'd like to invite Andre Rodrigues who's going to talk -- our CFO is going to talk about our financial performance.

Hello. Good morning, everyone. It's a pleasure to be here to update you on our financial performance, convey some more information about our business units. Let's start in -- Okay, talking to you about our growth record over the last 2 years, we had a growth rate in average of 16%. I think it's important to convey the information that this growth rate in adversity like the ones we faced with the downturn in Brazil, a deceleration of global economy, the pandemic in early 2020 and now the Russia-Ukraine war. This growth rate, if we consider the last 2 years, we're growing a little above 30%. In the first 9 months of the -- our growth rate is quite attractive at 28.8%. Now talking in further detail about our business unit. The first point in the 4 business lines that we divulged. Result is growth rate in 3 of them. And the other thing to the profile between breakdown between the external and domestic market. Growth in GTD Brazil generation -- solar generation, wind turbines and good performance of transmission and distribution has changed the profile of revenues relative to the past 2 years. The other point is that our product diversification, market diversification, solution diversification has helped WEG to find new opportunities in different market cycles. For example, the continuity of a good portfolio of short-cycle products, both in Brazil and overseas has helped us in this growth process. And also, a good, long-cycle product portfolio, both in Brazil and overseas. Now getting into the business lines, starting with the industrial electro-electronic motors, which is most important part, accounting for almost 50% of our revenues, industrial electro-electronic equipment, 33% foreign market. Clearly, we're talking about industrial motors and industrial automation equipment. This excellent performance results from favorable conditions, economic conditions, that is of our most important market, coupled with important segments that have been showing excellent performance. Oil and gas, pulp and paper, water and waste water and also agribusiness. Now moving to green part GTD, generation, transmission and distribution, which has been standing out because of our strong position in providing renewable energy solutions in addition to research and development with full solution for wind, solar, thermal and hydro power. When we examine the growth of 70% of the domestic market, it's really robust. Thanks to the excellent performance of research and development as Manfred showed, the solar and distributed generation business and also the new wind turbines in the external market. Despite the good performance we're having in North America, particularly in some other countries, in 2011, we had very important growth in Colombia and South Africa that has raised the bar. Even a little below last year, this year, we are performing very well in the U.S. and now having our product portfolio beefed up. Now in the models for the appliance industries, we had a performance a little below the expected one during the pandemic on the second semester of 2020 and early 2021, we had a huge demand for appliances. So this sharp drop was expected. And now we are picking up again and creating the conditions to improve the situation next year. In the external market, in countries like the U.S. and Mexico, where the improvement of economic conditions and our market share has allowed growth in those markets. When we talk about coatings and varnishes and we're talking about liquid and power industrial coatings and varnishes for industrial purposes as well, the domestic market, a good performance of the markets where we operate and the excellent sales in Latin America has allowed us to have a 30% growth rate. Now next slide, I'll show you our EBITDA performance, EBITDA margin. In the first 9 months of this year, we have a margin of 18.5%, a little below what we had in the last 2 years. But definitely, this EBITDA margin delivered in the first 9 months is above our expectations. I think it's also important to comment that we are delivering the solid EBITDA margin in a stable scenario in issues in the global supply chain and also in the European economy and also -- this is also the result of our productivity enhancement and cost reduction programs. Kuba mentioned the WEG Day 2018, there was a presentation of this program that has been widely publicized and also the enhancement of our operational capacities, long-cycle product improvements and operations overseas. Now I will talk to you about our working capital, where we had been following this historical series. But in 2020, we had an increase of the ratio of operational working capital relative to the revenues, and this happened to our stocks. This was due to a strict decision made by the company to improve -- enhance -- increase, excuse me, the stock of raw materials and stocks in this period of uncertainty in the supply chain, punishing our performance indicator. And what we showed you this morning proves that this decision brought positive results for the development of our business and such as market share gains. In this slide, I'm going to talk to you about our investment. In the first 9 months of this year, we invested BRL 672 (sic) [ 762 ] million of investment, an amount that is much higher than the amount we invested in the same period. If we consider historical series, we invest from 3% to 5% of our revenue. And the focus of our investment, as you've seen -- our focus is capacity expansion, internationalization of WEG Business and also investment in modernization in Brazil and automation in Brazil and also overseas. Now moving on and show you our most important performance indicator, which is ROIC. In the first 9 months of this year, we finished the first 9 months with 27.9%, a very expressive ROIC, which is the result of business development with excellent returns on investment discipline in capital allocation and CapEx programs optimization. Our message here is that we're going to work to deliver our ROICs above expectations consistently. Getting to the end of my presentation, I'd like to share with you our dividend distributions, which has been increasing year-on-year, that is to our more than 400,000 shareholders and the payout [ mean ] is incredible, keeping what we practiced over the last years. The earnings per stock. The take-home message that I want to share with you, first off, we keep our long-term focus of continuous and sustainable growth. We're going to be able to achieve that, thanks to the favorable scenarios we have in the markets where we operate through verticalization and financial viability have helped us deliver that consistently over the last years as shown. The other point to be mentioned are margin of EBITDA that are very attractive. Our competitive advantage is here such as verticalization is scaling of production as shown today, and the solid and clear industrial strategy, coupled with our productivity gains, program, cost expense, reduction program has helped us do that. And to conclude, the moment we go through is normalization of supply chain, and we want to improve our KPIs. Thank you so much. Now I pass the floor to Harry.

Thank you, Andre. I'd like to call Harry now to continue. [Audio Gap] and show us the prospectus for the next quarters, the next few months ahead of us.

Good morning, everyone. I'd also like to start by manifesting gratitude, my pleasure to be here back to WEG Day in a presential form. And WEG Day is a nice opportunity to show WEG plans, what is doing, but you know that we end up transmitting much more in our informal conversation, informal questioning because people ask more -- that's why our being here presentially is very important because we have these opportunities as we had last night. So welcome, everyone. Good morning again. In my brief presentation here. It is not going to focus on the results of the next quarters because maybe you're expecting this, but I'm not going to dwell on that. But I am going to make a brief presentation, a summary of our last review of our strategic plan to see what were the business that decided to place a special focus on, how is the scenario for our businesses and the macroeconomics scenario, the perspectives that we see in then afterwards, a few drives, a few directions to show you how we are moving them about. So to maintain this decision that is apparently simple, but it's a very important decision at once. And this is a plan that we had from '21 to '26. And we had, as we always said, to place a focus somewhere in a very broad way, but there is a lot of important information. So we put focus on drive electrification, automation, energy generation and the grid, which is the transmission and distribution part of the business. And you can see that here, we are bringing on a new name here within our market action, our product operation, which is the Motion Drive, which is a bit different from the strategy that we have been doing up to this moment. And I'm going to dwell on that later on. And with that, we are able to advance in the electrification for a new world of mobility. And here you can see WEG going margin towards that direction. The world of mobility is set within the 2 of these business units, which is the power train and motion driving, electrification, compasses, the system station, charging stations focus of our investment and also developing digital solutions as a complementary and integrated solution to all WEG businesses. And so these were the topics that we were rediscussing, reassessing and decided to be our focus. And from them, I'm going to speak about the scenarios. But before that, I'd like to make a comment on macro scenario. Without a shadow of doubt, if we start analyzing economical aspects, which is too much macro that signals tend to be not very positive. We are talking about inflation, we are talking about interest rate. So this is a simple theory. We can see that. There's a war going on in Europe, and I was -- many times, this is that impacting WEG -- by itself impacts businesses general way. But on the other hand, we have lots of things happening not only in the macro trends that favors WEG businesses. And what are the perspectives, the perspectives are positive ones. We have to have a special attention to what may come out of all this political changes, and we have to be very attend to that. And what we do is redirecting along the way. We have this capacity to redirect our focus not on the businesses, but where we are investing, how we are investing, what sector we are investing in, and I'm going to give you examples about the war, again, that everyone here is supporting that this will end up soon. I think it's already gone too far. But at the same time, that they are suffering with the lack of energy, higher price of energy, the world is also marching towards how to supply this demands in Europe because it is marching toward changes. So it is a difficult balance to strike whether we have positive prospectives, especially because of the scenario of the businesses that WEG is involved in and what is this scenario? The -- every demand that stem from society. And it's a very strong demand to decarbonize the world and this decarbonization movement is going to bring more electrification, electricity is the most efficient way and the way to have clean energy for all applications. So the world is going to be more electrified. We can perceive this all over the world in all moments because this takes electrification, which leads to more investments in GTD. We were talking about renewables in the U.S., distribution several things going on there as well as in the world and in Brazil. So throughout the world, these investments are going to be at higher levels than were the historical records levels of energy electricity generation, the generation is going to be predominantly renewables. And WEG, since a few years ago, invested in this wind/solar and this is something renewable, João Paulo has commented upon. There is a complementary need which is the way to store this energy. So this demand is going to -- demand storage system, WEG also very attend to this. We already decided to invest in the storing batteries. But I'm going to give you just as an example, about hydrogen. In my view, hydrogen is, again, a way to store energy because what is happening different than the gray hydrogen, we are talking about the green hydrogen. Here is wind turbines and solar generation are going to transform that in hydrogen to reuse that as a source of energy. It is not to produce hydrogen to use as was commented. The green steel uses a lot energy to be produced, but this is something as -- but WEG is also attend to this, but much more as a supplier of electro-electronic equipment as something important in the production of hydrogen in this [indiscernible]. There is the wind turbine and electrification of the transportation system. So all this movement of electrification of transport in the infrastructure of recharging batteries and mining of minerals for transformation, that is something very important. There is no way to make this transformation without mining. You know that we will have to mine for lithium, copper, silver. There is a lot of investment going on in mining, and there will be more than normal in order to make this all viable in reality. More companies are adhering to the commitment to reduce the emission of CO2 as a growing movement. Industries increasingly, when they take this commitment and within the global pack, they start actions within their companies to outsource renewables, to substitute types of polluting energy but one it is very important is to consume less energy because when we talk about energy, that is one of the problems of the world. Today, we have not only to transform the way we produce the energy and all the associated pollutants that, but we also have to bear in mind that also implies a lot of investment and things run out and the whole world will have to look for more efficiency. All of us, all the processes have to pursue efficiency to use less energy and less resources. That is a great movement as when we are talking about decarbonizing our economy is not only substituting fossil fuels for nonfossil, it is to be more efficient in all we do and make is to use less resources. The less resources you use, the more you are contributing to save energy and make it available for essential things and to keep on growing. So this is going to demand as business that you already are aware of. Those of you who follow WEG, WEG invest permanently in the search for better efficiency in all the products that we manufacture. It's a very important approach in the market. Kuba has shown how we are investing in this, how our technological advancement is going on in the electric motors. We saw differences in the uses of the resources, the uses of the raw materials that is enormous with auto technology, but in a different way of cooling, refrigerating also the use of drives is growing still have a significant number of electric motors don't use drives, the gearboxes that gain a lot of efficiency, you will save on energy using with drives and automation and digitalization. Also in the motor markets, as I'd like to make a comment, Kuba made a comment here the drives in automation and motors is the market is going to still grow more than the industrial activity. I just recall this because he shown -- made a comment on what happened to the motor engine. But historically, this is not so. Historically, this market grows more than the GDP -- industrial GDP growth. World GDP, the market for this kind of motor drives -- for drives and automation is a market that grows more than industrial GDP. So these are all positive signs in the scenario that we have in regardless of the macroeconomic signal that many people wonder what is going to happen with war. In fact WEG is attend to this, certain sectors always will have a feel more or less and certain sectors in this transformation market that we have is going to migrate, it's going to invest, we're going to have investments in other areas. So our vision is of a positive scenario. These are our perspectives and that is why WEG still going on investing in these areas that has -- or perhaps even a bit more because of new businesses opportunities. Here, actions that I would like to highlight for the coming years that somehow it's been commented here in the meeting. The first is to accelerate, to advance to -- with the transmission and distribution business in the Americas, it has been shown that we have with 3 transformer factories the United States. We're still investing a lot in Mexico and Brazil. But the United States, we participated in market which is a bit -- our participation is very small, and we are doing well in that market with all the support that we have from Mexico, from Brazil in terms of fabrication and doing work in conjunction and we have a lot of potential to go on growing. That is a highlight I would like to make to continue to advance in the renewable energy business and to invest in the battery energy storage. That is a decision of WEG today. There are several other systems to store energy, but we chose battery, and WEG is going to be analyzing all these other alternatives because it's part of our business. But today, it has -- it makes more sense to store in batteries because it has invertors, it has battery-packs, automation. It has everything in the system. So that is our expertise. We have to have a special Invertors and to become a specialist in battery applications. Electric power train was better comment in the and if you charging infrastructure solution, which has already been commented to invest in master the most efficient motor and drives technologies as has been shown. WEG has had a history -- a fabulous history in the evolution of these systems, and we are on the top of this technology. To incorporate globally the offer of digital solutions for asset management and this in the digital area, we have 2 strategies. You've seen that WEG today works with software. But software for the industrial area. Our focus in this moment is the industrial area for energy for digitalization, energy distribution in Brazil has a lot to evolve in this. And we have several products. But besides this action in Brazil, WEG has already in the international market is incorporating the asset management in all the product offer that it makes when you're going to do a management of motor substations. It's already incorporated to it in the package that WEG offers internationally to strengthen the motion drives and to accelerate internationally, the business of automation. And I am going to comment this with this slide here. Just -- I'd like to make to clear why WEG is using this motion drive and the internationalization of gear boxes or inverters. Leader, we are second in Latin America because of the United States, but Brazil is an absolute leader in the United States. We have a relevant participation. We are the second player with a relevant participation in Europe, we also have a relevant participation. We are the third player there. And in Asia, we are around 4/5 place, but we are investing a lot to grow in Asia. You can see our investments in China. You can see our investment in Asia as a whole in India, in Southeast Asia, we are investing a lot in order to grow more rapidly in this region, which is our important focus of our strategy. And this position, WEG has conquered this. You've always hear WEG speaking aobut oil, gas and mining, cement, which is a very strong areas. Countries that produce this -- the market share of WEG is very important in this producing countries and especially of more general applications of rotary machinery ventilators, pumps. And this is where WEG stands out in the international market. But in Brazil is different. In Brazil for you to have an idea that is an agricultural -- has an important agricultural market is the second market for consumption of motors after oil and gas and pumps is machinery for agriculture and WEG needs now to establish the strategy to work in processes beverages, food as a whole management of materials. And why did WEG wasn't so strong in these sectors? Because these segments normally demand motors and drives and gearboxes. And WEG has started a plant in Austria and here, a gear boxes, and we have a ready factory, and it's a more aggressive strategy with more synergy that we classify here as the manufacturer of machines, which is the manufacturer of machinery and equipment. Machinery for processing food products for cooling and refrigeration systems. So these were calling motion and drive. We have rotatory motion oil, gas, mining, and we're starting to address this in a little bit different way, using all of the technologies that WEG has to increase the participation with machinery manufacturing. And there's a lot of potential for us to do so. So this -- and I was satisfied that was how Manfred and Cuba presented this because we need a lot of synergy. We need work in conjunction in approaching the market several different applications. And then we have for 2 actions that we have here, these 2 points, these directions here that were, first, the separation of WEG automation. I think Manfred has mentioned upon WEG automation. We have created business unit called WEG digital and systems and the system area itself that is going to be responsible for this new division digital and systems, then you can see here that is highlighted in bold Digital Solutions system for industry infrastructure and energy systems as has mentioned is #1 in electromechanical construction for the industry. It's a leader in the market, and this is what we call systems because apart from electromechanical construction, we have automation is -- we have several softwares and WEG is of this. So this is what we used to call systems, and this is going to be under this new unit along with the new systems that we have specific names for, which is battery storage system and electric mobility systems. For us here is a motion drive, but each application is going to be a system is going to be a specific development for each type of OEM for the automotive industry. So they need a lot of engineering, a lot of applications. So we're there as well. Also to have -- to say that I didn't have a focus is not correct, but we need to apply more focus on this in order to accelerate these actions. And this is the moment. So our new COO, Carlos is here today. He is leading this digital solution within automation. So he is still with digital solutions now. The system area was transferred and was transferred the battery energy in order to give more focus and we grow faster in that way. And on this side, on the automation, you can see drives and control and then we have products for company center of business. Now WEG automation here drives and controls is what we have within the strategy of motion drive along with gearboxes and motors we want to strengthen our structure out there in order to work in synergy in conquering segments that did not have the participation as it has in pumps, oil, gas and mining. We have to grow there. And as a start -- and for this new restructuring, I think comment as for this restructuring. For example, our head office or Chief Officer, the COO all of the WEG Motors and Automation. The center is based here. HQ is here in and they are transferring this office is -- Manfred is transferring his office to Europe along in Italy along with and Cuba is transferring his office to the United States from January onwards. So you can see there is Europe and the United States in order for us to implement and to start in conjunction to have more part anticipation in the day-to-day of this contract to see eventual possible restructuring in order to make this strategy more successful and to be more aggressive and to look for machinery manufacturers, to offer something in construction industry motor, gearbox and so they are transferring their offices there, and it's the office itself that has been traced so that we can strengthen this. This is a temporary solution. Also because of is 1 more executive that is going there to work in conjunction with all the offices in Europe to increase the synergy as well as in the United States. Now I brought robotization and digitization of operations. Once I was asked about CapEx and investment deck has something really clear. We have to invest to grow. Do we have a continuous sustainable growth rate. This is our flag. We have to grow. We invest in businesses. We invest heavily, and we are investing ever more on robotization and digitization systems for productivity gains. And enhancement of our competitiveness, a lot was said about competitiveness and reduction of costs of our high-voltage motors, et cetera, but this is not for us to make more machines. The key word here is competitiveness. If you are competitive, you're going to gain it. If you're not, you have to become competitive and increasing volume and then you have virtuous cycle turning. This is an example -- those of you who attended the last flag day, this is an example of digitization within WEG. We -- as we develop products for digitization of our customers, we are also taking digitalization journey within WEG and other actions to become ever more competitive. An example of robotization in 2010 we had 10 years in a row growing 4x and 4x and 4x. In 5 years' time, we have to have 4x more than our base, and this has been speeding up. The other example of digitization, and we have this product to sell. You can see here that in 2018, we invested BRL 300,000, in 2019, we invested BRL 645,000 which is BRL 945,000. And the result today in the effective use of equipment in the wire manufacturing plant evolved as such. And we are now saving BRL 21 million because of that. This is digitization, the collection of the information. And by doing so, we have excellent performance. I usually say when you are responsible for managing something, you have to list what are the indicators you want to achieve, you have to select them and then you follow it and you don't overcollect information the way -- otherwise, it gets in the way. Today, as a plant, we have to collect maximum information possible because are not only going to learn, but IA is going to do the work for you, and it will tell you where you have to focus. You can have it all because the data collection and the analysis through IA is going to help you focus to prevent downtime and so on and so forth. And as this evolves, you are improving over time. This is what WEG believes is offering in our platforms and software management systems that we are offering our customers in Brazil. And this we have 89% then the world average of digitization is 7%. But worldwide -- in Brazil, excuse me, is -- WEG is an example that invest heavily. It's always using cutting-edge technology from 77% to 89%. So this is another piece of information of all the investment that we have and the yesterday, Cuba was asked about investment in India and CapEx and so on and so forth. It's the following. Historically, WEG has had an investment percentage continuous and sustainable development. This has been our strategy. Of course, once in a while, you have to invest some more but the average considers a longer cycle. Sometimes you need to invest more when -- but this varies the percentage, but the average is kept at that percentage. Have you shown percentage of investment? Have you shown it? 5%, right? Now it's a little more. And that always reinvesting either by automating or investing on a new technology or on innovation or on new business. This has been our history. A plant in India. So the we succeed the better for everyone. Exception to a foundry -- with this whole reception of a foundry, these are modular investment. You create lines of investment. So we are going to invest on a business that will give us good ratio between investment and revenues. So percentage of our investment is specifically for robotization process improvement and is a significant amount considered to what others invest elsewhere. To raise productivity levels this is a complement. We are working strongly on this. There's not a level of -- this level of efficiency overseas as yet because we don't have the same resource levels, supporting workers. That's why we are insisting to achieve the same level as the 1 in Brazil and to strengthen the WEG culture and ESG actions. Well, a lot has been discussed about WEG culture. And the best description or definition of what our company's culture is all about is the way company does things. WEG does it in a comanagement through comanagement with a commitment of all workers, all stakeholders. And thanks to this engagement of commitment, and we are able to overcome challenges. A company that grows and affords its employees and collaborators to grow as well is the desirable thing to do. The other is really strong in our culture that it insists on training all levels of operation. You may hire late operator in the market, okay? You can hire a late operator in the market, yes. But we are going to do capacity building to our own personnel to ensure this in the digital field. Well, more so. So we start a new business. Now we have a group, how many people are there? 25. So SENAI, which is the national apprenticeship system -- industrial apprenticeship system trains people, we also continue training them, and we can give those people opportunity for them to take advantage of the opportunities that open up at WEG. This is our culture. And to strengthen our ESG actions, maybe strengthening is not the right word, but I picked this word myself. Here, WEG is listed at all ESG levels and is faring well according to the assessments that are carried out by numerous magazines and awards, we are faring very well in ESG, but the world is changing. And we have to beat demand by beefing up our ESG actions. The social component is really strong and decarbonization is also one of the things that since we are in the business, we have to give our contribution move in that direction. So -- but we define and establish our target. And this is part of the company bonus to achieve a ESG target. Very soon, we're going to have more, which is decarbonization being the second one. Now showing you how WEG is aligning itself to sustain values, the search for new values in this world in transformation. We defined our purpose, our goal is to develop technology to contribute towards the construction or the building of a more efficient and sustainable world, driving efficiency and sustainability and here repeating to strengthen that culture and to strengthen also our ESG actions. Take home message. Our major goal is to continue to grow sustainably. And this is what we're doing to grow in Brazil to keep market share and positions mature business and invest in new businesses. For example, in energy storage, et cetera, et cetera. I would like to mention something about WEG automation. WEG automation, the electrification part of the company in all the products it has it standouts in the Brazilian market as a leader in some product lines. But by using this position, we are little by little offering products into direction, a technological synergy or a market synergy. Foreign market to try and achieve 2-digit organic growth in all regions by winning more shareholder participation in the U.S., we have transformers and generators and so on and so forth, but we're going to evolve to other products, investing technologies in operational excellence competitiveness is part of and parcel of that culture. We always have to do things best than what you did last time. This is part of our founding fathers culture. This is part and parcel of our culture. This is a permanent search for competitiveness, to set ourselves apart in the way we relate to our customers and to strengthen our actions in general, ESG general. Now I'm ready for Q&A. I think I spent more than 30 minutes to make my presentation.

We're going to start now the second Q&A session. I will ask Andre Rodrigues to come up stage again and to stick around. We're going to keep the same dynamics as the first Q&A session of you who want to shoot a question, raise your hand, identify yourself and let us know what organization you work for. We appreciate it. We have 1 back there.

Marcelo from Credit Suisse. Congratulations for the meeting excellent results this year. You mentioned something during your presentation, e-mobility and e-recharging stations, okay? My question is what comes first, electric vehicle or recharging? And then question #2 is how e-mobility or electrification is going to take place worldwide? Is California more aggressive, Brazil, India where people have resiliency in renewables, et cetera. This is just to see where you see the potential, how big the potential is and what's the implementation or deployment time line. 10, 5, 10, 15 years or longer.

Time line is the most difficult answer or question to answer, right? But as you mentioned, timing will be different. In the U.S., you mentioned California. In principle, everything almost has started there major boost in electric vehicle and this growth in electric vehicles is now incredibly growing in China and Europe. And this is clearly the way to go in deadlines established by governments and the infrastructure to be built, and the question is what comes first, the chicken or the egg, but they're doing that simultaneously because they have a clear cut plan for those countries in Europe as well as in China. Well, concerning Brazil, this is going to happen more slowly. You mentioned alcohol or ethanol. Brazil will have to use its assets, which is ethanol, corn ethanol and the -- for electric vehicles, for cars, okay? So electric vehicles will grow more slowly in Brazil. But what about for buses and trucks. Things is a different ballgame. Urban buses for example, our focus or truck this is in our opinion, in a very short term, much, much faster because our government, municipality, state governments and urban buses are moving in that direction, not probably at the same pace as things are taking place in China because everything is electrical there or in Europe, but it will happen. And then comes the recharging systems. Recharging stations will not be business because there's not plenty of money or money enough to build infrastructure everywhere. But in urban centers, there are going to be private investment. Companies will have to provide for their own vehicle fleets. So this is how things are going to happen. But all that will be imported, electric cars importers. In 5 years' time, they come from Europe, they will be electrical. And what happens vehicles get to a condominium at the same time, an argument starts because they have to recharge and there's not enough infrastructure. So they have to expect they have to build, taking into account the growth in the EV fleet and there are going to be companies investing on recharging equipment, but growth rates will be much bigger in fleet owners. Just to conclude, the power training strategy now we are starting this in Brazil for urban buses and trucks. All companies truck builders are international. And so this is the way to go for us to sell our powertrains. There's 1 question here in the front.

I would like to understand how is the budget planned in WEG because of the different fronts that you can invest and being 3.5% of your revenues these are 3, 5-year cycles or is by the expected level of return on invested capital?

WEG has -- well, we had a strategic plan, and it was a 10-year plan. Now it's a 5-year strategic plan because of the market volatility because of pandemics and logistic issues. So -- and we list all the initiatives, we believe that are going to take off. And after discussing providing inputs, all initiatives that make sense for WEG's strategies are shortlisted, and we show how much it will investment require. That investment per region, okay, either in Turkey or in India or elsewhere is projected in the 5-year plan, and we make estimates of that. And as far as ROIC, we know that we have midterm or longer-term ROIC, but some products take a little longer than others. It depends on when things are going to happen. For example, mobility market. When it is going to take off truly? So for us not to miss out the opportunity and to build our position in that market. And this is how we discuss the businesses and investment and implies in increasing our productive capacity. If it makes sense and it's going more in a big -- in a certain region we invest more in that region and so on and so forth. We discussed the risk involved, et cetera. Let's see if everything is aligned, but the return on investment is assessed on a project-by-project basis without knowing what is the actual things. But there are some variables number of variables, by the way, we invest this percentage and the investment that we've been making is linked to our strategic planning. And these are things that we at WEG continuously do it. We have 1 more question from the front here.

I am Renata Cabral from Citibank. And my question is in regards to automation. A lot of was spoken about it and that this is an area which is a bit different to WEG in the sense that it's going to involve services, does involve service software. So my question in regards to what the ambition of WEG in the markets in which it's incertain itself in a different way, which I understand is Europe and the U.S. market, given the transfer of the offices to these places. So what would be your ambitions. And also analyzing the competitors in these markets. It seems to me that the CapEx investment is a bit bigger than this 3% to 5% that you mentioned in general terms for WEG. Is it to be expected increase the CapEx where the is a focus and automation that is going to give.

Automation that you're referring to is the digitization or the inverters or both sensor with digitization? Everything. Well, what I see is the strategy for inverters and automation in terms of what has been done so far. This investment are going to be within the natural cycle of investment in this is around 5% to 6% of our revenues. And this is the digitization is still hard to tell, but I don't believe that is going to change profile of tax because our strategy, as we previously mentioned, for digitization, we started with mass. It was not in the software. That was always an applicator of software now is manufacturing. We brought to mass. And our focus is now in Brazil, we have the digital platform, but has to do with the actual business. So software is something new in this strategy, the global strategy of WEG. As a management system -- and we have Brazil and this focus in Brazil is not going to demand strategical changes that are very important. But depending on the success of this strategy, WEG may think about other mergers or acquisitions in area. But there isn't an offer nowadays. And the digitization has to be inserted within our growth strategy in the automation and it's in this percentages. I do not -- I do not see anything that deviates from these standards. We have a question from the middle of the room.

Congratulations on this event. We know that the macro scenarios contributed. It's a more difficult the upper and opportunities come up with such conditions. And we know that you have always had a very clear mind about acquisitions to enter new markets or new sectors. And I would like to understand what business unit of yours generate this opportunity to amplify the product portfolio in a scenario that we have -- tighter scenario that we have. Because I believe still there's such space in this movements of migrating the management to Europe and the U.S. actually will tap some opportunities. And I'd like to understand whether this is actually happening? And what is your mind about this in sense of new acquisitions? Specifically in terms of acquisitions. And you have said specifically said that WEG has done this or access new markets and technologies.

Yes. WEG is permanently evaluating opportunities for businesses that may bring a technological fit or may open up access to new markets. It was asked why does that doesn't do more acquisitions. But WEG's strategy actually, as you can observe, has not been to pursue acquisitions the gigantic acquisitions. These are acquisitions in which you buy and incorporate into the company in which you don't have a shift in the strategy. WEG is -- in the example of separately EUR 43 million in revenues. This is the intention that WEG has today with this kind of business we -- in this M&A is it's a tool similar to what we are applying nowadays. So that's our mind. We have another question from the back of the room now.

Gabriel from Citibank. And I have a question. I think that in line of what my colleagues have already mentioned, thinking towards the end of the presentation, we're talking a lot about ESG. And at the end of the day, the company is putting commitments to that end. But at the same time, some of the main clients of the company are working in sectors that are -- contribute a lot of generation of CO2. So how does the company deal with these 2 movements in the segment that is trying to become ESG and working with sectors that are not so much and work with investments in technologies gears towards this sector is consume less carbon, how does WEG help -- how can they help, how can you help your clients improve that and what level of investment should the company do in order to achieve that?

Well, in terms of clients, the great thing that as one of the biggest consumers of electrical energy or electric motor. So the role is to make these electric motors to become more efficient to consume less and less energy and put out the same capacity or that is to eliminate losses and automation solution as with inverters, which we can up to 30%, 40%, perhaps is a little bit exaggerated, but 30% reduction in consumption for example inverters and pumps and automation as well as 6%, 7% efficiency gains is what is being offered to our clients. So our clients are able also to improve their consumption and reduce the resources need. This is the movement that WEG doing in its contribution to our clients. This is what I can answer, but of this will happen in a gradual way. No 1 is able to or rapidly go to zero carbon or net zero from day to night -- overnight. So I have to also bear in mind that there is the world a movement towards the renewable. So our clients at the same time are going to gain on efficiency are going to pursue themselves sources of -- renewable sources of energy, and then you close the loop if they have the consumption renewables, be it solar, wind, whatever. And all the consumption is optimized, they're going to end up there. So this is the movement that is taking place. We have another question here.

Gabriel Hanson, CM Office is a company that invests in company since 1971. And the question is from the configurations that we're seeing yesterday, specifically about hardware and software to the verticalization of the company, it seems to me that is designing a very important competitive edge along with opportunities for the growth opportunities out there. And within the company, how do you deal with this process? And what is the percentage or the level that you are able to address a sale of mining, for instance, but to embed these products, the digitization features. What -- how major is the company towards that?

Well, depending on the sector. When we are talking about mining, oil and gas, these people these are companies that are very mature, so they are able to pursue efficiency and efficiency gains towards the decarbonization the address the approach that I think is easier -- that is easier. And the manufacturing sector is a bit harder. There are a lot of things that still need to be done in this sector. And that needs a more work so that they can understand the offer of WEG. And by understanding this to start calculating their returns on investments. So this is how I see. Do we have any more questions. Well, we have 1 more here in the front. We still have time for a couple of ones.

The question comes from -- as a complement, actually, veg is a rare case combining growth accentuated growth and high returns on investment. And there is always this difficulty -- this strategic difficulty to combine and align strategy and rentability. And I think that is a good problem, which is to raise the bar very, very high. You have 30%, 30% -- 2 digits growth. So is there this internal vision or that you from now on is increasingly harder to maintain this number and up to extent should you have any figures in mind, up to where would you be willing to open 1 of the sides of the equation, be it growth or to have a high revenue lower than you have today. What is your vision towards this ratio between growth and return on investment.

Well, this question -- it's a hard 1 to answer because -- well, let me give you an example of the electric motors division. It's historically, well, brings good rentability, good revenues, Vegas expertise, knowledge log and the margin that you were able to gain the on the moments. For instance, demand -- that has good demand, the margin increases. If there is lower demand your margin decreases. Your inputs, your raw materials increase your margins decreases -- increase your margins decrease, but we do not see loss in margin percentages. But always -- again, it depends on the cycle that you're working. If you are writing a bad patch -- bad cycle in terms of raw materials, we will lose a little bit of the margin, but WEG in motors, just as an example, again, the way forward is we have more market share is an attractive business. All businesses of WEG are attractive, but we haven't analyzed yet to give you a right answer would be the margin in 3, 5 years? How this is going to be? One thing we know, though, it's -- we know that there will be new competitors out there. There will be more demand for price reduction and you have to be ready for that the time. We still have time for question for Debbie. Is it working?

I think Brazil has many bottlenecks. And the most important 1 we trained just a few engineers. It's really hard to retain talent and when we look at WEG everyone is 30 years in the company with a rare exception. What do you do differently to be able to retain talent and to attract so much talent to retain this talent for so long. Where does this is it possibility for growth, earnings compensation. How do you do it so well?

There's 1 thing I'd like to say that WEG invests at all levels -- of employee levels by delivering training by affording opportunity to its employees. That's why people stay 20, 25 years at the company because this has been the pathway, the professional pathway. This person is constantly learning, constantly applying knowledge. And the company is creating new is all the time. So the best way of retaining talent is to have a good performance to have a clear-cut plan for investment and to open up new opportunities in 2008, and I was telling the mission of WEG is not the 1 that is on screen. It's what the company does. And we discussed then what are going do about that. Let's make the company continue growing because if the company is to continue to grow it's going to continue creating opportunities, is going to account to the capital market that invests on WEG that continues to grow and provides a good bottom line to the investors. So as we work for the new opportunities will come up. So this is a way of retaining talent at a company at all levels. It's strategy, this movement of wanting to acquire more knowledge and market share and so on and so forth. So thank you so much. Once again, I'd like to express my appreciation and all the directors that made their presentations during the day today. I'd like to express my appreciation to all the organizers who put together this meeting, our IT team, all service providers that have also helped us achieve the wonderful results we're having at this meeting. And for everyone who watched and joined us online, thank you. See you next time. [Statements in English on this transcript were spoken by an interpreter present on the live call.]