WEG (WEGE3) Q1 2026 earnings summary

Executive summary

• Net operating revenue fell 6.1% year-over-year to R$9,468.3 million, mainly due to lower solar generation deliveries in Brazil, weaker domestic demand, and exchange rate impacts, but order intake and backlog remain strong in long-cycle businesses, especially Power Generation, Transmission, and Distribution (GTD).

• EBITDA was R$2,102.8 million, with a margin of 22.2%, down 3.2% from Q1 2025, but up 60 bps year-over-year; ROIC remained high at 33.1%, down 10 basis points year-over-year.

• External market revenue grew in local currencies, offsetting domestic weakness, with strong performance in North America and Europe, especially in power generation and T&D segments.

• Non-recurring events, including profit-sharing reversals and restructuring gains, impacted margins; staff cost increases and raw material price volatility also affected results.

• Management remains confident in the business model, supported by diversification, operational efficiency, and ongoing industrial expansion.

Financial highlights

• Net operating profit after taxes increased by 2.8% versus 1Q25.

• EBITDA margin was 22.2%, up 60 bps year-over-year, reflecting a favorable product mix and lower operating expenses.

• EBITDA totaled R$2,102.8 million, a 3.2% decrease compared to Q1 2025.

• Investments reached R$622.2 million in Q1, split almost equally between Brazil and international operations.

• ROIC remained stable at 33.1%, indicating strong capital allocation discipline.

Outlook and guidance

• Positive outlook for long-cycle businesses, with strong order intake and backlog in GTD and Industrial segments in Brazil and internationally.

• Expectation of margin normalization in the second half as new capacity comes online and revenue growth resumes, especially for solar generation.

• Ongoing investments in production capacity and operational efficiency are expected to sustain above-industry margins and ROIC.

• Price increases implemented to offset raw material costs; further adjustments will depend on market conditions.

• Forward-looking statements are subject to market, economic, and geopolitical uncertainties.