#1bam Investor Relations Presentation May 2013 WEGE3/WEGZY WEGE3 NOVO MERCADO BM&FBOVESPA meg Índice de Sustentabilidade Empresarial ISE 2013 meg meg#2Best way to invest in fast growing global energy efficiency and renewable energy weq One of the highest growth capital goods companies; is number one or number two in all product lines in Latin America ■ Unique business model is based on vertical integration, production flexibility and technological innovation ■ Diversified product lines allows strong growth across different market cycles ■ We have a history of achieving CAGR of 18% over past 17 years through organic growth and accretive acquisitions ■ WEG 2020 Strategic Plan aims for R$ 20 billion / 17% CAGR through international and product line expansion Investor Relations Presentation#3Shareholding structure Voigt 33.3% Silva 33.3% Werninghaus 33.3% 圄 weq Founders' Families WPA Participações e (directly) Serviços S/A Treasury Shares and Management Free Float 14% 50% 1% 35% Investor Relations Presentation WEG S.A.#4Шер Overview BISTI#5Investor Relations Presentation Impressive growth track record Business model allows to find and explore growth opportunities even under unfavorable macroeconomic conditions Revenues (R$ million) 800 1.066 CAGR 18.3% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 6.174 Шед#62007 Investor Relations Presentation 3.749 20%* 4.502 Resilient business model We are back on track on top line growth, despite challenging macro conditions Net Revenues (RS$ million) 19% weg 6.174 18% -6% 4% 4.211 4.392 2008 2009 2010 2011 2012 5.189#7Diversification across markets We adapt and thrive under almost any condition Domestic & External markets 41% External Market 51% 59% Domestic Market 49% 2007 2012 Investor Relations Presentation weq 圄#8Broad and synergistic product portfolio Business areas revenue mix Шед 6% 5% 6% 7% 6% 7% 14% 12% 12% 11% 15% 9% 24% 24% 23% 27% 34% 26% 57% 55% 59% 59% 54% 48% 2007 2008 2009 2010 2011 2012 ■Equip.Industrais GTD Uso Doméstico Tintas e Vernizes#92007 39 839 EBITDA and margins (New methodology) Eeg EBITDA (R$ million) and EBITDA Margin 21,7% 22,4% 22,7% 19,3% 18,0% 16,4% 16,5% Investor Relations Presentation 1.021 -20,4% -2,8% 812 789 7,9% 851 19,5% 2008 2009 2010 2011 2012 1.017#10How to improve margins / increase competitiveness? Strong focus to improve competitiveness ■Internal productivity and continuous improvement ▪ Improve global manufacturing footprint ■Innovation and higher technological content ■Recovery of overall economic conditions Investor Relations Presentation Шед#11bam Industry structure and WEG's business model#12Our industry is undergoing major change weg Шед Megatrends cause changes in demand and create opportunities Energy and industrial efficiency Electric motors represent around 25% of world electricity consumption ■Industrial productivity increases and ISO 50.001 (energy management) drives investments Renewable energy ■Global need to diversify energy sources and lower GHG emissions Scale and technological development increases viability Smart grid 'Electricity distribution network has to become "smarter" More sensors, more automation, more efficient generation and use of electricity Electrical mobility ■Increasing urbanization adds to congestions and need of new solutions Electric vehicles, hybrids or alternative fuels will become more common Investor Relations Presentation#13Electric equipment industry structure As perceived by WEG Шед Generation (into electric energy) Thermal Biomass Thermal Natural Gas Small Hydroelectric Plants Wind Solar Components and integration Automation (low & high voltage switchgear, drives, controls) Critical power Conversion (from electric energy) Electric motors Transformers Gearboxes Investor Relations Presentation#14"The final destination" Strategic integration of equipment into complete solutions Generation Components and integration weq Conversion Value Added Typical Applications Ventilation Pumps Compressors Generation plants Substations Segments Oil & Gas Mining Sugar & Ship Ethanol building Pulp & General Steel Cement Paper Industry Investor Relations Presentation#15Strategic Positioning Motors Appliance Industrial High Voltage Generators ABB SIEMENS Schneider Electric EMERSON Automation T&D Energy Biomass Systems Small Hydro Wind Power Dry Distribution Substations Drives Controls Panels Gearboxes Gensets Hydro Turbines Steam Turbines Gas Turbines New Business Investor Relations Presentation REGAL ALSTOM Шед Шед#16Differentiated business model Our capabilities and characteristics are quite unique and enable us to make the best of market opportunities Expansion Modular Verticalization Diversification Investor Relations Presentation Financial Flexibility Global Distrib Шед#17Clear competitive advantages Unique business model creates important and stable advantages Шед WEG Business Model Investor Relations Presentation Competitive Advantages ■Large and synergistic portfolio Worldwide presence "One-stop shop concept ■Mass customization ■Production in low cost emerging markets ■Low financial leverage ▪Focus on M&A enabling continuous future growth#18bam Strategic Planning wwwww#194.392 18% 19% 5.189 Investor Relations Presentation 6.174 WEG Strategic Plan 2020 Corporate aspiration of R$ 20 billion by 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20.000 Шед#20Growth drivers "More and Better" ■International Expansion "New Businesses Investor Relations Presentation weq 圄#21Growth comes from diverse base Disciplined approach to organic and non-organic expansion Шед 3,60 5,48 5,19 2,40 2,60 0,73 20,00 1/3 Non Organic 17.0% a.a. 2/3 Organic WEG 2011 WMO WEN WTD WAU WTI WEG 2020 15.3% 21.3% 15.2% 19.5% 16.0% Investor Relations Presentation CAGR 2011-2020*#22Portfolio Strategy Clear vision of attractiveness of opportunities ZEST WEG Group May 2010 Market Access VOLTRAN WEG Group May 2010 weq E-M WEG Group November 2011 watt CESTARI drive October 2011 WEG Group November 2011 Pulverlux Grupo WEG May 2011 TINTAS PAUMAR December 2012 ★ STARDUR Grupo WEG June 2012 MTOI MTorres Olvega industrial March 2011 INJETEL October 2012 Instrutech Sensores Eletrônicos June 2010 EquisulGPL SOLUÇÕES EM ENERGIA ELÉTRICA December 2010 Investor Relations Presentation Technology#23ШЕП Financial performance#24374 14,9% Selling, General & Administrative Expenses (R$ million) 428 2005 2006 Investor Relations Presentation 14,2% 14,3% 14,5% 15,0% 536 352 652 633 2007 2008 2009 2010 697 15,9% 14,8% 15,0% 788 768 2011 2012 927 927 weq 圄#25Strong cash flow conversion We can continue to rely on cash generation as primary source of growth financing Cash Flow from Operations vs. EBITDA Шед 3.119,2 2.459,5 2.749,9 1.365,2 2.093,1 1.169,9 670,3 503,7 2005 2006 2007 Accumulated Cash Flow from Operations Investor Relations Presentation 85% 6.741,6 5.688,0 5.741,9 4.805,7 4.848,3 4.016,6 4.515,2 3.900,6 2008 2009 2010 2011 2012 Accumulated EBITDA (previous methodology) 24#26Working capital needs (% of Net Revenues) 50,0% 40,0% 30,0% - 20,0% 10,0% 0,0% 1Q06 1Q07 weq 圄 Working Capital Clients Inventories Suppliers Advances 1008 1Q09 1Q10 1011 1Q12 1Q13 Investor Relations Presentation 2#27Organic Capex 8,0% (R$ million) 9,3% 8,1% weq 10,2% Capex ―% of Net Revenues 7,4% 6,8% 6,5% 6,1% 6,1% 5,8% 457 5,4% 5,3% 3,6% 3,9% 305 3,7% 226 233 238 206 188 146 126 111 42 38 49 73 83 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Investor Relations Presentation#28Research & Development (R$ million) 2,5% 2,3% weq 2,5% 2,5% 2,4% 2,4% 2,3% 2,3% 2,0% 2,0% 1,7% 1,6% 1,8% 1,5% 148 131 101 86 89 83 73 63 30 34 16 18 18 21 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Research & Development % of Net Revenues Investor Relations Presentation#29Dividend Pay-out Policy Net Earnings and Dividends (R$ million) weq 59% 58% 57% 54% 55% 52% 45% 656 44% 43% 40% 40% 587 39% 575 37% 560 548 34% 35% 520 503 403 375 375 339 200 SUO 299 301 300 306 220 229 176 173 165 125 124 98 34 82 89 29 46 68 69 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Investor Relations Presentation Net Earnings Dividends -Pay-out (%)#30Recent capital markets related activities weg ■ Sponsored level 1 ADR (JP Morgan) ■ Market Maker at BM&F Bovespa (Credit Suisse) ■ New web site, with intensive use on social media tools ■ Gradually improve information disclosure ■ Increase sell side coverage ■ More intense investor contact ■ Increase sustainability communications Investor Relations Presentation 2#312007 378 2008 52 452 2009 2007 464 2010 9.882 2008 Liquidity - WEGE3 Average Daily Traded Volume (R$ th) 599 2011 7.693 2009 6.060 2010 Average Daily Trades 7689 793 2012 6.745 2011 1.075 7.406 2012 10.327 weq#32Best way to invest in fast growing global energy efficiency and renewable energy weq One of the highest growth capital goods companies; is number one or number two in all product lines in Latin America ■ Unique business model is based on vertical integration, production flexibility and technological innovation ■ Diversified product lines allows strong growth across different market cycles ■ We have a history of achieving CAGR of 18% over past 17 years through organic growth and accretive acquisitions ■ WEG 2020 Strategic Plan aims for R$ 20 billion / 17% CAGR through international and product line expansion Investor Relations Presentation 31#33Highlights Yearly Figures Net Operating Revenue Domestic Market External Markets 2012 2011 % 6.173.878 External Markets in US$ 1.609.721 5.189.409 19,0% 3.016.662 2.902.958 3,9% 3.157.216 2.286.451 38,1% 1.361.689 18,2% 2010 4.391.973 % 18,2% 2.670.443 8,7% 1.721.530 32,8% 982.835 38,5% Gross Operating Profit 1.880.856 1.556.051 20,9% 1.386.952 12,2% Gross Margin 30,5% 30,0% 31,6% Quarterly Net Income 655.979 586.936 11,8% 519.782 12,9% Net Margin 10,6% 11,3% 11,8% EBITDA 1.016.748 851.155 19,5% 788.750 7,9% EBITDA Margin 16,5% 16,4% 18,0% EPS 1,0573 0,9461 11,8% 0,8371 13,0% Investor Relations Presentation Figures in R$ Thousands 32#34Highlights Quarterly Figures Q1 2013 Net Operating Revenue 1.477.577 Q4 2012 1.662.258 -11,1% % Q1 2012 % Domestic Market 772.935 774.533 -0,2% 1.369.762 714.268 7,9% 8,2% External Markets 704.642 887.725 -20,6% 655.494 7,5% External Markets in US$ 353.077 431.141 -18,1% 370.825 -4,8% Gross Operating Profit 463.635 528.641 -12,3% 391.967 18,3% Gross Margin 31,4% 31,8% 28,6% Net Income 172.299 183.157 -5,9% 148.247 16,2% Net Margin 11,7% 11,0% 10,8% EBITDA 248.898 289.786 -14,1% 198.251 25,5% EBITDA Margin 16,8% 17,4% 14,5% EPS 0,2777 0,2952 -5,9% 0,2390 16,2% Figures in R$ Thousand Investor Relations Presentation#35Highlights Balance sheet - Assets March 2013 December 2012 (A) (B) R$ AV% R$ AV% R$ December 2011 (C) AV% CURRENT ASSETS 6.310.741 66% Cash & cash equivalents 3.279.518 35% 5.710.017 64% 2.563.500 29% 5.867.061 64% 2.931.615 32% Receivables 1.347.331 14% 1.472.839 17% 1.307.692 14% Inventories 1.316.606 14% 1.306.273 15% 1.362.314 15% Other current assets 367.286 4% 367.405 4% 265.440 3% LONG TERM ASSETS 107.528 1% 88.833 1% 432.469 5% Long term securities 2.059 0% 2.032 0% 280.635 3% Deferred taxes 43.337 0% 36.891 0% 111.488 1% Other non-current assets 62.132 1% 49.910 1% 40.346 0% FIXED ASSETS 3.078.166 32% 3.074.700 35% 2.806.331 31% Investment in Subs 7.577 0% 7.622 0% 349 0% Property, Plant & Equipment 2.544.242 27% 2.537.094 29% 2.445.760 27% Intangibles 526.347 6% TOTAL ASSETS 9.496.435 100% 529.984 8.873.550 6% 100% 360.222 4% 9.105.861 100% Investor Relations Presentation 34#36Highlights Balance sheet - Liabilities March 2013 (A) December 2012 (B) December 2011 (C) R$ AV% R$ AV% R$ AV% CURRENT LIABILITIES 2.852.160 30% 3.012.724 34% 2.752.960 30% Social and Labor Liabilities 172.007 2% 168.831 2% 161.436 2% Suppliers 365.492 4% 331.037 4% 298.195 3% Fiscal and Tax Liabilities 103.069 1% 126.655 1% 88.473 1% Short Term Debt 1.526.274 16% 1.645.772 19% 1.701.435 19% Dividends Payable 36.718 0% 79.281 1% 2.804 0% Advances from Clients 306.889 3% 358.124 4% 285.843 3% Profit Sharring 38.260 0% 33.559 0% 26.314 0% Other Short Term Liabilities 303.451 LONG TERM LIABILITIES Long Term Debt 2.528.789 1.878.432 20% 3% 27% 269.465 3% 1.709.100 19% 1.044.068 12% 188.459 2% 2.446.312 27% 1.756.293 19% Other Long Term Liabilities 123.063 1% 137.916 2% 122.485 1% Deferred Taxes 319.621 3% 320.503 4% 421.918 5% Contingencies Provisions 207.673 2% 206.613 2% 145.616 2% MINORITIES 80.931 1% 91.377 1% 106.477 1% STOCKHOLDERS' EQUITY 4.034.555 42% TOTAL LIABILITIES 9.496.435 100% 4.060.349 46% 8.873.550 100% 3.800.112 42% 9.105.861 100% Investor Relations Presentation