Iochpe-Maxion - First Quarter 2006 Full Presentation

1 May, 2006

2

DISCLAIMERDISCLAIMER

The material contained in this presentation is general background information about Iochpe-Maxion S.A. (Iochpe) as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the information presented herein.

This presentation contains statements that are forward-looking within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Iochpe and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements.

Although Iochpe believes that the expectations and assumptions reflected in the forward-looking statements are reasonably based on information currently available to Iochpe management, Iochpe cannot guarantee future results or events. Iochpe expressly disclaims a duty to update any of the forward-looking statement.

This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.

3

BUSINESS STRUCTUREBUSINESS STRUCTURE

Railway freight cars: 28%1

50% 100%

Railway casting and wheel: 13%1

Frames: 32%1

Wheels: 21%1

Auto parts for lightvehicles: 6%1

IochpeIochpe--Maxion S.A.Maxion S.A.

AmstedAmsted--Maxion Fundição e Maxion Fundição e Equipamentos Ferroviários S.A.Equipamentos Ferroviários S.A.

Maxion Sistemas Automotivos Maxion Sistemas Automotivos Ltda.Ltda.

Railway Railway EquipmentEquipmentWheelsWheels andand FramesFrames

DivisionDivisionAutomotiveAutomotive

ComponentsComponents DivisionDivision

1 % of consolidated net revenues in the first quarter of 2006

4

MARKET SHARE – BRAZIL (1Q06)MARKET SHARE – BRAZIL (1Q06)

FramesFramesCommercialCommercial VehicleVehicle

WheelsWheelsRailway Railway FreightFreight

CarsCars

RailwayRailwayCastingsCastings

Source: Maxion estimate

71%

28%1%

Maxion

Dana

OEM

58%

39%

3%

Maxion

Borlem

Others

85%

15%

Maxion

Others

80%

20%

Maxion

Cruzaço

MaxionMaxion

1Q051Q0569%69% 65%65% 80%80% 80%80%

5

AMSTED MAXION JOINT VENTUREAMSTED MAXION JOINT VENTURE

Amsted Industries is the leading manufacturer of railway castings in North America

Access to state of the art technologies

Access to the largest markets of railway castings worldwide

Important costumer of Amsted-Maxionexports

Brand widely recognized worldwide

General characteristics of Amsted-Industries:

85% of sales are derived from the North American market

47 plants located in 11 countries

9,200 employees

Revenues in 2005: US$2.5bn

+ =

Strategic alliance with Amsted IndustriesStrategic alliance with Amsted Industries Benefits from the partnership with Amsted Industries:Benefits from the partnership with Amsted Industries:

SucessfulSucessful partnershippartnershipLeadershipLeadership in in thethe Brazilian marketBrazilian market andand

competitivenesscompetitiveness in in thethe international marketinternational market

6

INDUSTRIAL PARKINDUSTRIAL PARK

MG

SPContagem (MG)Auto parts division

Cruzeiro (SP)Wheel and Frames

Divison

Cruzeiro (SP)Rayway Equipments

Osasco (SP)Rayway Equipments

Hortolândia (SP)Rayway Equipments

Salaries16%Raw

materials and inputs

78%

D&A and maintenceexpenses

6%

92%

75%

Rayway Equipments Wheel and frameDivision

Utilization rate

21,1% 20,2% 20,7% 19,3%15.0%

20.0%

25.0%

0

200

400

600

800

Jan-02 Jun-02 Dec-02 Jun-03 Dec-03 May-04 Nov-04 May-05 Oct-05

2002 2003 2004 2005

Iochpe’s gross margin International steel price

1 Weekly spot price of US imports of hot rolled coilSource: Bloomberg

44,2% 6,5%

90,9% (18,3%)

IochpeIochpe--MaxionMaxion’s ’s productionproduction plantsplants localizationlocalization Costs of goods sold (% of total Costs of goods sold (% of total -- 202005)05)

IochpeIochpe--Maxion’sMaxion’s gross margin vs. steel price1 (US$/ton)gross margin vs. steel price1 (US$/ton)

7

CUSTOMERS AND QUALITYCUSTOMERS AND QUALITY

Daimler Chrysler

31%

VW26%

GM13%

Ford7%

Others23%Exports

27%

Tractors19%VW

12%

Scania11%

Others31%

Products and processes certified in Brazil and abroad by leading independent institutions

CVRD/FCA29%

Exports29%

Brasil Ferrov.

25%

MRS5%

Others12%

Wheels Frames Amsted-Maxion

Exports19%

CVRD/FCA12%VW

12%

Daimler Chrysler

11%

Brasil Ferrovias

10%

Others36%

Exclusivity in the supply of (among others):

Frames of S10’ platform for General Motors

Frames for Volkswagen Caminhões (trucks)

Frames for Ford Cargo (8-ton trucks)

Frames for Scania’s buses

Side members for Daimler Chrysler

Highway wheels for (i) Volkswagen Caminhões (trucks); (ii) Scania; (iii) Volvo; (iv) AGCO; (v) Valtra

Castings for industrial machinery for Caterpillar

Distribution of consolidated net revenues by client (Distribution of consolidated net revenues by client (1Q061Q06)) Exclusive Exclusive suppliersupplier

Distribution of net revenues by client in each of Distribution of net revenues by client in each of IochpeIochpe Maxion’sMaxion’s major major businessesbusinesses ((1Q061Q06))

8

STRATEGIC VIEWSTRATEGIC VIEW

ExpandExpand ourourproductionproductioncapacitycapacity

Enlarge our industrial park and increase production capacity in Brazil so as to enable the Company to meet the growing demand in the national and international markets

Increase our Increase our share in share in international international marketsmarkets

Consolidate our presence in the segment of spare wheels for commercial vehicles

Increase exports of railway freight cars to countries with no local production

Increase exports of railway castings through the partnership with Amsted Industries

Increase share in the U.S. market of large steel castings for industrial machinery

Manufacture of some of our products in Asia

New businessNew businessandand productsproducts

Strengthen services rendered to railway operators (maintenance of railway cars and supply of spare parts)

Increase number of products and services having synergies with our current activities

Selected acquisitions in our industry

Our strategies have focused on the maintenance of our leadership position in the markets in which we operate

9

NET OPERATING REVENUE (R$ million)NET OPERATING REVENUE (R$ million)

374

676

1,099

1,494

353 340411

2001

2002

2003

2004

2005

1Q05

1Q06

∆ 05-04 = 36%

CAGR 01 – 05 = 41%

∆ 1Q06 – 05 = (4%)

10

GROSS PROFITGROSS PROFIT

80 87

137

228

72 64

28921% 21% 20% 20% 19%19%21%

0

50

100

150

200

250

300

350

2001

2002

2003

2004

2005

1Q05

1Q06

0%

10%

20%

30%

40%

50%R$ MM % net sales

11

NET EARNINGSNET EARNINGS

25

72

1515

51

(5)(24)

7%

-6%

-1%

5% 5%4% 4%

(40)

(20)

0

20

40

60

80

2001

2002

2003

2004

2005

1Q05

1Q06

-10%

-5%

0%

5%

10%

15%


12

(*) EBITDA, throughout this presentation means: net income plus income tax and social contribution, plus non-operating result, plus net financial expenses, plus depreciation and amortization, plus goodwill amortization.

EBITDA (*)EBITDA (*)

58 6989

156

205

48 45

16%17%

13%14% 14% 14%

13%

0

50

100

150

200

250

2001

2002

2003

2004

2005

1Q05

1Q06

0%

5%

10%

15%


13


R$ MM x EBITDA (*)

NET BANK DEBTNET BANK DEBT

65

125

151158

102

115106

1.1

1.5

1.3

0.6 0.6

0.9

0.7

0

25

50

75

100

125

150

175

200

2001

2002

2003

2004

2005

1Q05

1Q06

0.0

0.5

1.0

1.5

2.0

14

LIGHT COMMERCIALS – BRAZIL (‘000 units)LIGHT COMMERCIALS – BRAZIL (‘000 units)

Source: Anfavea

216180

216

318366

80 9056 40

72114

156

32 35

2001

2002

2003

2004

2005

1Q05

1Q06

Production

ExportCAGR 01 – 05 = 14%

∆ 1Q06 - 05 = 13%

∆ 1Q06 – 05 = 8%

CAGR 01 – 05 = 29%

15

TRUCKS – BRAZIL (‘000 units)TRUCKS – BRAZIL (‘000 units)

Source: Anfavea

77 6979

107 116

28 242537

7 7.47 513

2001

2002

2003

2004

2005

1Q05

1Q06

Production

Export

CAGR 01 – 05 = 11%

CAGR 01 – 05 = 54%

∆ 1Q06 – 05 = (12%)

∆ 1Q06 – 05 = 5%

16

BUSES – BRAZIL (‘000 units)BUSES – BRAZIL (‘000 units)

Source: Anfavea

24 2327 29

35

8.2 8.67 7 913

19

3.64

2001

2002

2003

2004

2005

1Q05

1Q06

Production


CAGR 01 – 05 = 29%

∆ 1Q06 – 05 = (8%)

∆ 1Q06 – 05 = 6%

17

AGRICULTURAL MACHINERY – BRAZIL (‘000 units)AGRICULTURAL MACHINERY – BRAZIL (‘000 units)

Source: Anfavea

4452

5969

53

14 118 1021

31 315

8

2001

2002

2003

2004

2005

1Q05

1Q06

Production


CAGR 01 – 05 = 39%

∆ 1Q06 – 05 = (35%)

∆ 1Q06 – 05 = (18%)

18

PASSENGER CARS – BRAZIL (‘000 units)PASSENGER CARS – BRAZIL (‘000 units)

Source: Anfavea

1,496 1,521 1,5051,757

1,931

470 509319 363 440 497 606 155148

2001

2002

2003

2004

2005

1Q05

1Q06

Production


CAGR 01 – 05 = 17%

∆ 1Q06 – 05 = 5%∆ 1Q06 – 05 = 8%

19 Source: Amsted Maxion estimate

RAILWAY FREIGHT CARS – BRAZIL (units)RAILWAY FREIGHT CARS – BRAZIL (units)

748

2,459

5,642

7,270

1,375 1,309294

2001

2002

2003

2004

2005

1Q05

1Q06

Sale

CAGR 01 – 05 = 77%

∆1Q06 – 05 = (5%)

20

Source: Amsted Maxion estimate

RAILWAY CASTINGS – BRAZIL (metric tons)RAILWAY CASTINGS – BRAZIL (metric tons)

3,500

2,288

3,386

5,100

1,046 733

2,230

2001

2002

2003

2004

2005

1Q05

1Q06

Sale

CAGR 01 – 05 = 10%

∆ 1Q06 – 05 = (30%)

Does not include castings used in the assembly of railway freight cars

21

Source: Amsted Maxion estimate

RAILWAY WHEELS – BRAZIL ( ‘000 units)RAILWAY WHEELS – BRAZIL ( ‘000 units)

4250

4248

9 11

50

2001

2002

2003

2004

2005

1Q05

1Q06

Sale

CAGR 01 – 05 = 4%

∆ 1Q06 – 05 = 19%

Does not include wheels used in the assembly of railway freight cars

22

SHAREHOLDER COMPOSITION : MAR ´06 SHAREHOLDER COMPOSITION : MAR ´06

IochpeIochpe FamilyFamily BNDES ParticipaBNDES Participaçõçõeses OtherOther

IssuedIssued SharesShares (*)(*)

CommonCommon

PreferredPreferred

TotalTotal

18,428,59718,428,597

34,803,70734,803,707

53,232,30453,232,304

34.62%34.62%

65.38%65.38%

100.00%100.00%

VotingVotingNonNon--VotingVoting

TotalTotal

74.6%74.6%0.4%0.4%

26.1%26.1%


TotalTotal

21.8%21.8%27.6%27.6%25.6%25.6%


TotalTotal

3.6%3.6%72.0%72.0%48.3%48.3%

23

Amsted Maxion (*) Wheels and

Chassis Division

Automotive Comp.Division

Segment (%) Customer (%)

(*) Consolidation considers 50% of Amsted Maxion’s net operating revenue

R$ 340 R$ 340 millionmillion

NET OPERATING REVENUE – 1Q06NET OPERATING REVENUE – 1Q06

41%

6%

53%

19%

12%

11%

10%

6%4%

4%3%

19%

12%

Other

DaimlerChryslerVolks-

wagen

GeneralMotors

CVRD/FCA

Ford

BrasilFerrovias

Tractors

Scania

Exports

24

50%

8%

10%6%

26%

USA

Africa/Middle EastEuropeChassis

CommercialVehicleWheels

RailwayEquip.

Segment (%) Destination (%)

Canada/ Mexico

SouthAmerica

EXPORTS – 1Q06EXPORTS – 1Q06

US$29 US$29 millionmillion

R$63 R$63 millionmillion

63%

30%

7%

25

EXPORTS (USD million)EXPORTS (USD million)

24

47

96

232933

24

2001

2002

2003

2004

2005

1Q05

1Q06

∆ 05-04 = 61%

CAGR 01 – 05 = 48%

∆ 1Q06 – 05 = 29%

26

CAPEX (R$ million)CAPEX (R$ million)

41

7384 80

13 14

54

2002

2003

2004

2005

2006

E1Q

051Q

06

27

INCOME STATEMENT (R$ thousand)INCOME STATEMENT (R$ thousand)


2,006 % N.O.R. 2,005 % N.O.R. Var%Net operating revenue 340,321 100.0% 352,579 100.0% -3.5%

(-) Cost of goods sold (276,483) -81.2% (281,082) -79.7% -1.6%

Gross profit 63,838 18.8% 71,497 20.3% -10.7%

Operating expensesSales (14,708) -4.3% (17,238) -4.9% -14.7%General and Administrative (11,505) -3.4% (12,202) -3.5% -5.7%Other operating expenses 58 0.0% (807) -0.2% -107.2%

(26,155) -7.7% (30,247) -8.6% -13.5%

Earnings before interest and taxes - EBIT 37,683 11.1% 41,250 11.7% -8.6%

Net financial expenses (6,162) -1.8% (8,700) -2.5% -29.2%

Earnings after financial expenses 31,521 9.3% 32,550 9.2% -3.2%

Non-operating result (5,106) -1.5% (5,284) -1.5% -3.4%

Earnings before taxes 26,415 7.8% 27,266 7.7% -3.1%

Income taxes (11,511) -3.4% (12,151) -3.4% -5.3%

Net income 14,904 4.4% 15,115 4.3% -1.4%

EBITDA (*) 44,666 13.1% 47,724 13.5% -6.4%

First Quarter

28

INCOME STATEMENT (R$ thousand)INCOME STATEMENT (R$ thousand)


2005 % net sales 2004 % net sales Var. 05/04

Net operating revenue 1,494,029 100.0% 1,098,597 100.0% 36.0%(-) Cost of goods sold (1,205,374) -80.7% (871,084) -79.3% 38.4%

Gross profit 288,655 19.3% 227,513 20.7% 26.9%

Operating expenses Sales (65,452) -4.4% (55,339) -5.0% 18.3% General and administrative (43,241) -2.9% (38,874) -3.5% 11.2% Other operating expenses (2,357) -0.2% (6,586) -0.6% -64.2%

(111,050) -7.4% (100,799) -9.2% 10.2%

Earnings before interest and taxes - EBIT 177,605 11.9% 126,714 11.5% 40.2%

Net financial expenses (37,118) -2.5% (32,578) -3.0% 13.9%

Earnings after financial expenses 140,487 9.4% 94,136 8.6% 49.2%

Non-operating result (20,272) -1.4% (20,570) -1.9% -1.4%

Income taxes and minority interest (48,084) -3.2% (22,740) -2.1% 111.5%

Net income 72,131 4.8% 50,826 4.6% 41.9%

EBITDA(*) 204,724 13.7% 155,478 14.2% 31.7%

29

BALANCE SHEET (R$ thousand)BALANCE SHEET (R$ thousand)

ASSETS Mar ´06 Mar ´05 LIABILITES AND EQUITY Mar ´06 Mar ´05

CURRENT CURRENT Cash and marketable securities 22,639 30,287 Loans 113,814 144,965 Receivables 186,422 180,713 Payables 64,501 73,969 Inventories 131,822 160,479 Costumers advances 51,984 69,558 Recoverable taxes 18,895 26,648 Wages and charges 29,507 25,403 Other 28,077 18,833 Taxes 9,360 23,601

387,855 416,960 Provisions 7,869 15,067 Other 12,648 36,820

289,683 389,383

LONG TERM LONG TERM Receivables 2,832 4,533 Loans 59,625 42,148 Deferred income taxes 28,945 40,090 Provisions 62,601 36,918 Other 13,762 29,872 Other 14,865 4,246

45,539 74,495 137,091 83,312

MINORITY INTEREST 195 176

PERMANENT EQUITY Investments 369 265 Paid-up capital 161,463 161,463 Plant, property and equipment 235,540 178,763 Profit reserves 68,468 24,770 Deferred items 2,501 3,736 Retained earnings 14,904 15,115

238,410 182,764 244,835 201,348

671,804 674,219 671,804 674,219

30

BALANCE SHEET (R$ thousand)BALANCE SHEET (R$ thousand)

ASSET Dec ´05 Dec ´04 LIABILITIES Dec ´05 Dec ´04

CURRENT CURRENT Cash and cash equivalents 51,962 73,926 Loans, financing and debenture 79,195 116,846 Trade accounts receivable 151,733 122,538 Accounts payable to suppliers 66,557 68,305 Inventories 142,494 149,353 Salaries and related charges 30,672 25,931 Taxes recoverable 6,130 18,779 Taxes payable 3,891 13,268 Other 22,842 23,060 Provisions 13,360 13,759

375,161 387,656 Other 89,997 106,789 283,672 344,898

NON CURRENT ASSETS NON CURRENT LIABILITIES Trade accounts receivable 3,890 5,220 Loans, financing and debenture 97,694 58,983 Taxes recoverable 21,361 12,945 Provisions 46,866 38,032 Deferred income and social contribution taxes 32,353 40,090 Other 16,586 2,899 Other 9,810 9,053 161,146 99,914

67,414 67,308

MINORITY INTEREST 182 167

PERMANENT ASSETS SHAREHOLDERS' EQUITY Investments 369 509 Property, plant and equipment 229,123 171,568 Capital 161,463 161,463 Deferred charges 2,864 4,171 Profit reserves 68,468 24,770

232,356 176,248 229,931 186,233

674,931 631,212 674,931 631,212

31

NET DEBT BREAKDOWN – MAR ‘06 (R$ million)NET DEBT BREAKDOWN – MAR ‘06 (R$ million)

TotalTotal

127.2127.2

42.942.9

3.33.3

22.622.6

150.8150.8

LongLong TermTerm

44.644.6

15.015.0

59.659.6

Short Short TermTerm

82.682.6

27.927.9

3.33.3

22.622.6

91.291.2

LinesLines

EquipmentEquipment financingfinancing

TradeTrade FinanceFinance / / ExportExport

((--) ) CashCash andand CashCash equivalentsequivalents

Net Net DebtDebt

Other lines Other lines in R$in R$

173.4173.459.659.6113.8113.8

32

71%

25%2%2% Dollar

IGPM(whosale inflation

index)

TJLP(BNDESrate)

DEBT INDEXATION – MAR ‘06 (%)DEBT INDEXATION – MAR ‘06 (%)

AverageAverage CostCost (1Q06)(1Q06)

In US$In US$

In R$In R$

7.8% p.a.7.8% p.a.

71% CDI71% CDI

Interbank rate

33

FREIGHT CARS – FIRM ORDERS FOR DELIVERY IN 2006 FREIGHT CARS – FIRM ORDERS FOR DELIVERY IN 2006

Brasil FerroviasBrasil Ferrovias

CVRD / FCACVRD / FCA

720 720 unitsunits

1,276 1,276 unitsunits

MRSMRS

MRC (MRC (MitsuiMitsui / / BungeBunge / ALL)/ ALL)

280 280 unitsunits

300 300 unitsunits

TotalTotal

CVG CVG FerromineraFerrominera OrinocoOrinoco

2,695 2,695 unitsunits

50 50 unitsunits

RevenueRevenue ApproxApprox..R$510 R$510 millionmillion

ItaItaúú Leasing (Leasing (Inlogs Inlogs / ALL)/ ALL) 69 69 unitsunits

34

(*) after reverse split

STOCK PERFORMANCESTOCK PERFORMANCE

43

1,385

171 123 139253 205 183

1,366

381

849

262144 156

296 289556

333

1,004

303 384

966

3,225

2,388

354401190151

16.3

14.214.1

12.4

9.6

8.58.7

6.85.5

4.13.94.04.04.74.9

4.0

16.0 15.915.5

13.614.2

16.2 16.2

14.4

16.8

21.1

18.818.0

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Dec-0

3Ja

n-04

Feb-

04Mar

-04

Apr-

04May

-04

Jun-

04Ju

l-04

Aug-

04Se

p-04

Oct-0

4Nov

-04

Dec-0

4Ja

n-05

Feb-

05Mar

-05

Apr-

05May

-05

Jun-

05Ju

l-05

Aug-

05Se

p-05

Oct-0

5No

v-05

Dec-0

5Ja

n-06

Feb-

06Mar

-06

-

4.0

8.0

12.0

16.0

20.0

24.0DAILY VOLUME / MONTHLY AVERAGE PRICE

IOCHPE-MAXION PN (MYPK4)

R$ THOUS. R$ / SHARE (*)

PRICE

VOLUME

35 Logistics Segment Overview

36

Ore69%

Steel8%

Grain8%

Others15%

254 260 260289 302 301

331351

402

0

100

200

300

400

500

BRAZILIAN RAILWAY TRANSPORTATIONBRAZILIAN RAILWAY TRANSPORTATION

97 04030201009998

MillionMillion of tonsof tons

CAGR% = 5.9%

Source: ANTF / Revista Ferroviária

∆% = 14.5%

05

GoodsGoods -- 20052005

Source: ANTF

37


21%24% 24% 25%

0%

10%

20%

30%

20031997

% Railway Cargo % Railway Cargo TransportationTransportation

Source: ANTF

Cargo Cargo TransportationTransportation Matrix Matrix

% % byby typetype -- 20032003

11%11%

00%00%

11%11%

04%04%

25%25%

14%14%

WaterwayWaterway

08%08%

50%50%

43%43%

53%53%

32%32%

62%62%

RoadRoad

81%81%

50%50%

46%46%

43%43%

43%43%

24%24%

RailwayRailway

RussiaRussia

IndiaIndia

CanadaCanada

AustraliaAustralia

USAUSA

BrazilBrazil 2004 2005

38

Expansion of transported volume by Estrada de Ferro Carajás from 70 million tons to 100 million tons and, later, to 180 million tons;

Extension of Ferrovia Norte-Sul;

New routes for Companhia Ferroviária Nordeste – CFN;

Expansion of transported volume by MRS from 110 million tons in 2005 to 180 million tons in 2009

Expansion of CSN’s Casa de Pedra mine from 16 million tons to 40 million tons;

Change of control and extension of Brasil Ferrovias;

Change of control of Ferrovia Novoeste; and

Construction of metropolitan “ring” railways (São Paulo, Belo Horizonte, Rio de Janeiro andCuritiba)

Source: Newsrun


Announced expansion projects in the railway networkAnnounced expansion projects in the railway network

39

BRAZILIAN COMMERCIAL VEHICLE FLEETBRAZILIAN COMMERCIAL VEHICLE FLEET

Source: Sindipeças

FleetFleet SizeSize(in (in thousandthousand unitsunits))

TrucksTrucks 1,1691,169

PickupsPickups 3,0883,088

BusesBuses 258258

AverageAverage FleetFleet AgeAge(in (in yearsyears))

TrucksTrucks 12.012.0

PickupsPickups 8.68.6

BusesBuses 9.99.9

40 May, 2006

Investor Relations

Iochpe-Maxion - First Quarter 2006 Full Presentation