Iochpe-Maxion - Santander Annual Conference Presentation

Santander | June 2005

Brazil Annual ConferenceSantanderJune, 2005


2

IOCHPE – MAXION: BASICS

• Two major operations:

- Wheels and chassis for trucks, buses, pickups and agricultural machinery

- Equipments for the railway industry

• Third operation:

- Autoparts for passenger cars

• Plants located in the São Paulo and Minas Gerais States in Brazil


3

SHAREHOLDER COMPOSITION: MAR-05

Issued Shares after reverse split (*)

Common 18,428,597 34.62%Preferred 34,803,707 65.38%

Total 53,232,304 100.00%

Iochpe FamilyCommon 75.6%Preferred 0.5%Total 26.5%

Iochpe-Maxion S.A.

Iochpe-Maxion

BNDES ParticipaçõesCommon 21.8%Preferred 62.2%Total 48.2%

OtherCommon 2.6%Preferred 37.3%Total 25.3%

Shareholder Agreement


4

CORPORATE STRUCTURE: MAR-05

Wheels andChassis Division

(3,004 Employees)

AutomotiveComp. Division

(870 Employees)

Maxion SistemasAutomotivos S.A.

Maxion ComponentesEstruturais Ltda.

Amsted Maxion Fund. eEquip. Ferroviários S.A.

(4,082 Employees)

Iochpe-Maxion S.A.(14 Employees)

Consolidado =5,929 Employees

6.2%

AmstedIndustries

50%

50%

99.99%

93.7%


5

CONSOLIDATED NET SALES BREAKDOWN (%)

1Q05 - R$ 352.6 MM 1Q04 – R$ 212.9 MM

2 6 %

1 6 %

5 8 %3 3 %

7 %

6 0 %

Amsted Maxion (*) Amsted

Maxion (*)Wheels andChassis Division

AutomotiveComp. Division Automotive

Comp. Division

Wheels andChassis Division

(*) Consolidated figures consider 50% of the net sales of Amsted Maxion


6

WHEELS AND CHASSIS DIVISION (*)

60% (*) Division of


7

WHEELS AND CHASSIS DIVISION : BASICS

• Conformation of flat steel

• Focused on the commercial vehicles segment (trucks, buses, pickups and agricultural machinery)

• Continuous capex resulting in an unique manufacturing facility in the South American market

• Local leadership

• Export base (16% of sales)


8

WHEELS AND CHASSIS DIVISION

SiderailsStamped Parts

Chassis

StructuralParts

Heavy Medium Light

Chassis - 54% of the Division’s Net Sales


9


Wheels for Vehicles - 46% of the Division’s Net Sales


1Q05 1Q04 Var%

Pickups 78.4 68.2 14.9%

Trucks 27.3 23.0 18.8%

Buses 8.2 6.0 37.1%

Agricultural Machinery 13.8 15.6 (11.6%)

10

AUTOMOTIVE INDUSTRY – BRAZILIAN OUTPUT (THOUS. UNITS)


11

AUTOMOTIVE INDUSTRY – EXPORT (THOUS. UNITS)

1Q05 1Q04 Var%

Pickups 30.1 21.4 40.6%

Trucks 6.5 5.1 27.9%

Buses 3.9 2.0 92.6%

AgriculturalMachinery 8.4 7.0 20.8%


12

WHEELS AND CHASSIS DIVISION (R$ MM)

174208 241

397

626713

124211

0

250

500

750

1.000 Net Sales

CAGR = 39.3% p.a.

2000 2001 2002 2003 2004

∆% = 69,5%

1Q04 1Q051Q05 LTMCAGR = Compounded Annual Growth Rate / LTM = Last Twelve Months


13


Chassis – 1Q05

Market Share (%) Customer Base (%)

3 0 %

2 1 %

9 %

7 %6 %

3 %1 3 %

1 1 %

Other

DaimlerChrysler

Volks-wagen General

Motors

Export

Ford

ScaniaDana

6 9 %

2 6 %5 %

Maxion

Dana

OEM


14


Wheels – 1Q05


6 5 %

7 %

2 8 %

Maxion

Borlem

Other

2 4 %

2 3 %

1 2 %

7 %6 %

4 %1 2 %

1 2 %

Other

Tractors

ExportVolks-wagen

Volvo

Trailer OEMs

Scania

DaimlerChrysler


15

AUTOMOTIVE COMPONENTS DIVISION (*)

7%

(*) Division of


16

AUTOMOTIVE COMPONENTS DIVISION: BASICS

• Light stamping

• Assembly of parts

• Focused on passenger cars

• Local leadership in main products

• Strong trend for globalization


17

AUTOMOTIVE COMPONENTS DIVISION: MAIN PRODUCTS

HANDBRAKELEVERS

PEDALSETS

JACKS


18

AUTOMOTIVE INDUSTRY (THOUS. UNITS)

1Q05 1Q04 Var%

Cars

Output 451.4 405.4 11.4%

Export 131.2 96.3 36.2%


19

AUTOMOTIVE COMPONENTS DIVISION (R$ MM)

99 94 98114

150140

34 24

0

50

100

150

200 Net Sales

CAGR = 8.4% p.a.

∆% = (29.2%)

2000 2001 2002 2003 2004 1Q04 1Q051Q05LTM

CAGR = Compounded Annual Growth Rate / LTM = Last Twelve Months


20

AUTOMOTIVE COMPONENTS DIVISION – 1Q05


Hand Break Lever 43%

Pedal Set 25%

Jack 21%

Latch 9%

Knob / Key / Cylinder 8%

2 5 %

2 3 %

1 3 %

8 %1 1 %

2 0 %

Other

Volks-wagen

GeneralMotors Ford

Fiat

Brose


21

AMSTED MAXION

33%


22

30%

AMSTED MAXION : BASICS

• Integrated freight car operation: castings and car assembly

• Capex + technology resulting in an unique manufacturing facility and designcapabilities

• Steel castings

- Transformation of steel scrap- Focused on the railway equipment and industrial businesses- Local leadership- Export base

• Freight car assembly

- Assembly of components and castings- Local leadership


23

AMSTED MAXION : MAIN PRODUCTS

RAILWAYWHEELS

RAILWAYFREIGHT CARS

BOOGIES

30%


24

BRAZILIAN RAILWAY EQUIPMENT MARKET

Freight cars – units 1,375 1,053 31%

Railway wheels – units 9,009 6,535 38%

Railway castings – tons 1,046 768 36%

Sales 1Q05 1Q04 Var%

30%

Figures do not include wheels and castings used in the assembly of new freight cars


25

AMSTED MAXION – 1Q05


30%

Freight Cars 80%

Railw ay W heels 33%

Railw ay Castings 80%

Industrial Castings 50%

4 5 %

2 5 %

1 1 %

1 9 %

Other

CVRD Export

ALL


AMSTED MAXION (R$ MM)

26

122 110 120

328

646

772

109

236

0

200

400

600

800

1.000 Net Sales (*)

CAGR = 54.5% p.a.

2000 2001 2002 2003 2004

∆% = 115.5%

1Q04 1Q05

(*) Amsted Maxion’s net sales. Consolidated figures consider 50% of Amsted Maxion’s sales

1Q05LTMCAGR = Compounded Annual Growth Rate / LTM = Last Twelve Months


27

AMSTED MAXION

Spot Orders 2005/2006 – Freight Cars – R$ 1.15 Billion (*)

30%

CVRD / FCA – 5,758Brasil Ferrovias – 500MRC (Mitsui / Bunge / ALL) – 350CVG Ferrominera Orinoco – 225Comilog – 76CBG Compagnie des Bauxites de Guinee – 24 MRS – 436Total – 7,369 cars

Deliveries (cars)

Delivered jan-mar 2005 1,212To deliver apr-sept 2005 4,781Total 2005 5,993

Total 2006 1.376

(*) Amsted Maxion’s sales. Consolidated figures consider 50% of Amsted Maxion’s sales


28

AMSTED MAXION

Recurring Orders : R$ 271.7 MM per year (*)

ASF-Amsted (USA) – railway castings – R$ 162.4 MM

Caterpillar (Brazil / USA) – tractor parts – R$ 83.5 MM

Holland Group (USA) – fifth-wheel components – R$ 12.8 MM

Metso (France) – industrial castings – R$ 4.1 MM

Truck OEMs (Brazil) – fifth-wheel – R$ 4.0 MM

Komatsu / CNH (USA / Italy) – industrial castings – R$ 4.9 MM

(*) Amsted Maxion’s net sales. Consolidated figures consider 50% of Amsted Maxion’s sales


C o n s o l i d a t e d F i g u r e s1st Quarter 2005


30

CONSOLIDATED FIGURES

Net Sales Breakdown – 1Q05

OEMs producing in Brazil

- Buses, trucks and pickups - Passenger cars

58% 51% 7%

Brazilian railway operators

25%

Exports

17%

1 7 %

1 5 %

1 1 %7 %

6 %5 %

4 %3 %

2 0 %

1 2 %

Other

DaimlerChryslerVolks-

wagen

GeneralMotors

ExportFord

CVRDALL

Tractors

Scania

By Customer (%) By Segment (%)


31

CONSOLIDATED FIGURES

Exports – US$ 22.7MM / R$ 62.4 MM – 1Q05

Product Segment (%) Destination (%)

3 6 %

2 0 %

1 8 %

1 %1 0 %

1 1 %

4 %

Africa /Middle East

USA

Canada

Asia/Oceania

SouthAmerica

Europe

Mexico

3 7 %

1 5 %

4 8 %

Chassis

RailwayEquipmentWheels

for Vehicles

Import 1Q05 - US$ 5.3MM / R$ 14.0MM (*)(*) includes US$ 1.6MM / R$ 4.2MM of machinery and equipment


32

624

374 411

676

1.0991.238

0

400

800

1.200

1.600

NET SALES - CONSOLIDATED (R$ MM)

Divestiture50% Maxion

Motores

DivestitureMaxion Nacam

AcquisitionBatz

Borlem

Divestiture50% Amsted-Maxion

2000 2001 2002 2003 2004Divestiture

WindowRaiser

1Q05LTM


33

FIRST QUARTERS COMPARISON - CONSOLIDATED

21%

24%

18%20%

7%

-5% -5%

5% 5%

17%

13%

18%15%

12%14%

3%

13%

9%12%

9%

Gross Profit Ebitda Ebit Operation's Res.

1Q01 1Q02 1Q03 1Q04 1Q05

Operational Margins - % Net Sales


34

INCOME STATEMENT - CONSOLIDATED (R$ MM)

2,005 % Net Sales 2,004

% Net Sales

Var 05/04 %

Net sales 352,579 100.0% 212,872 100.0% 66%

Gross profit 71,497 20.3% 38,677 20.3% 85%

Operating Expenses (30,247) -8.6% (20,427) -8.6% 48%

Earnings before interest and taxes - EBIT 41,250 11.7% 18,250 11.7% 126%

Net financial expenses (8,700) -2.5% (8,597) -2.5% 1%

Earnings after financial result 32,550 9.2% 9,653 9.2% 237%

Non-operating result (5,284) -1.5% (1,634) -1.5% 223%

Earnings before income taxes 27,266 7.7% 8,019 7.7% 240%

Income taxes expense (12,151) -3.4% (5,925) -3.4% 105%

Net income of the period 15,115 4.3% 2,094 4.3% 622%

Earnings before interest, taxes, depreciation and amortization - EBITDA 47,660 13.5% 25,832 13.5% 84%

January to March


35

NET DEBT - CONSOLIDATED

2001 2002 2003 2004 1Q05

R$ MM x EBITDA

6 5 .1

1 0 5 .71 1 5 .0

1 0 1 .9

1 5 6 .8

1 .11 .5

1 .3

0 .60 .9

0 .0

2 0 .0

4 0 .0

6 0 .0

8 0 .0

1 0 0 .0

1 2 0 .0

1 4 0 .0

1 6 0 .0

1 8 0 .0

0 .0

1 .0

2 .0

3 .0

4 .0

5 .0


36

IOCHPE – MAXION: GOVERNANCE AND CAPITAL MARKETS

Public company since 1984 / ADR Level I since 1994Board with 2 independent members and no executive officer member

Audit Board (“Conselho Fiscal”) with 1 representative of the non-controlling shareholders

Dividend payout – 37% of net income and an additional 10% for non-voting shares

2004 Result / Paid in April 2005 : R$ 16.1 MM / Yield – 2.3% (12.31.2004)

Reverse SplitApproved at a Shareholder Meeting of March 21, 2005

Proportion - 50:1

Price quote by unit and standard quantity of one hundred shares since April 25, 2005


Strong organic revenue growth

Steady operating margins

Growing cash generation

Solid capital structure – net debt / EBITDA ratio

Focus on businesses related to the transportation industry

Local market leadership

Capex aiming at a strong competitive position – barriers to entry

Growing exports

Capacity expansion in line with demand growth

IOCHPE – MAXION: FUNDAMENTALS

37


38

STOCK PERFORMANCE

(*) after reverse split

0.9

23.9

3.2 2.7 2.84.2 4.2

3.2

22.3

6.7

15.2

10.0

5.8

4.1 3.8

6.26.3

16.0

4.04.9 4.7

4.0 4.0 3.9 4.1

5.56.8

8.7 8.5

9.6

12.4

14.114.2

16.3

-

5

10

15

20

25

30

Dec-03

Jan-04

Feb-04

Mar-04

Apr-04

May-04

Jun-04

Jul-04 Aug-04

Sep-04

Oct-04

Nov-04

Dec-04

Jan-05

Feb-05

Mar-05

Apr-05

-

5.0

10.0

15.0

20.0VOLUME / MONTHLY AVERAGE PRICE

IOCHPE-MAXION PN (MYPK4)

R$ MM R$ / SHARE

PRICE

VOLUME


A d d i t i o n al I n f o r m a t i o n1st Quarter 2005


B e n c h m a r k1st Quarter 2005


41

BENCHMARK – GROSS PROFIT (% NET SALES)

VisteonLear

ArvinMeritorSuperior

DanaValeo

American AxleDura

TRWMagna

Johson ControlsTenneco

AutolivMarcopoloFederal Mogul

StrattecEaton

StoneridgeRandon

GentexFrasle

Borg WarnerIochpe-Maxion

Nippon DensoTitanCummins

0% 10% 20% 30% 40%

1Q05 1Q04

Average = 15.5%

Source: Companies releases2005 First Quarter Results of each company, except for Nippon Denso with 12 months result, Strattec with 9 months result and ArvinMeritor and Johnson Controls with 6 months results.


42

BENCHMARK – EBIT ( % NET SALES )

VisteonArvinMeritor

LearValeo

Federal MogulDanaJohson Controls

American AxleDura

MagnaSuperior

Marcopolo

StoneridgeBorg Warner

Autoliv

StrattecFrasle

RandonGentex

Iochpe-MaxionTitanEaton

Nippon Denso

Cummins

TRW

Tenneco

-10% 0% 10% 20% 30% 40%

1Q05 1Q04

Average = 6.5%



BENCHMARK – EBITDA ( % NET SALES )

43

VisteonArvinMeritor

LearJohson Controls

DuraDana

Federal MogulMagna

MarcopoloAmerican Axle

Tenneco

TRWNippon DensoAutoliv

FrasleStrattec

RandonGentex

Cummins

Iochpe-MaxionBorg WarnerTitan

0% 10% 20% 30% 40% 50%

1Q05 1Q04

Average - 10%



N e w C o n t r a c t s1st Quarter 2005


45


Chassis – New Contratcs: R$ 35.2 MM per year

Product / Customer Country Starting Date Saler per year R$ MM

Siderails and Stamped Parts - AM General E.U.A. Jan.06 19.8

Stamped Parts - ArvinMeritor Brasil May.05 9.6

Stamped Parts - DaimlerChrysler Brasil Aug.04 3.1

Stamped Parts - DaimlerChrysler Brasil Jun.04 1.3

Chassis - Scania Brasil Feb.05 0.7

Stamped Parts - Peugeot Citroen Brasil Oct.04 0.4

Siderails Reinforcements - DaimlerChrysler Brasil May.04 0.3


46


Wheels – New Contracts: R$ 16.7 MM per year

Customer Country Starting Date Saler per year R$ MM

Workhorse U.S.A. Jun.05 6.5John Deere Brazil Nov.04 3.2Barakat Egypt May.05 1.7Dunlop South Africa Jun.04 1.5Petromaster Russia Jan.05 1.2Maxprest / Bridgestone South Africa Apr.05 0.7Jarl El Jaouda Algeria Nov.04 0.8Kristanas Spiros Greece Jul.04 0.6International Trade Morocco Jan.05 0.5


47

AUTOMOTIVE COMPONENTS DIVISION

New Contracts: R$ 3.1 MM per year

Model - Customer Product Starting Date

Sales per year R$ MM

New truck - VW Knobs Nov.05 1.6Fox Euro - VW Jacks / Door Locks Jun.05 1.1Idea - Fiat Latches Aug.05 0.4


D e b t P r o f i l e1st Quarter 2005


49

NET DEBT BREAKDOWN – MAR05 - (R$ MM)

Lines SHORT TERM TOTAL

Trade Finance / Export 25.5 27.9 53.4Equipment Financing 26.8 14.2 41.0

Buyers - Local 82.4 82.4Other Local 10.3 10.3

145.0 42.1 187.1

(-) Cash and Marketable Securities 30.3 30.3

Net Debt 114.7 42.1 156.8


50

DEBT INDEXATION – MAR05 (%)

IGPM(inflation

rate)

50% 28%

3% 19%

CDI(interbank) Dollar

TJLP(BNDES

rate)


51

FOREIGN CURRENCY EXPOSURE – MAR05 (US$ MM)

Balance Sheet

Assets denominated in foreign currency. Marketable Securities / Investments 2.4. Accounts Receivable 10.9

13.3

Liabilities denominated in foreign currency. Bank Debt (Export lines / other) (20.1). Accounts Payable (4.1)

(24.2)

Net Position (10.9)


B a l a n c e S h e e t1st Quarter 2005


53

BALANCE SHEET – MAR05 (R$ THOOUS.)

Assets Mar/05 Mar/04 LIABILITY Mar/05 Mar/04

Cash and marketable securities 30,287 26,572 Loans and bonds 144,965 89,110 Accounts receivable 180,713 94,539 Accounts payable 73,969 56,329 Inventories 160,479 103,006 Customers' advances 69,558 8,303

Long Term Long Term Marketable securities 3,029 Loans and bonds 42,148 83,276 Accounts receivable 4,533 4,833 Miscelaneous provisions 36,918 31,804 Deferred income taxes 40,090 42,959 Other 4,246 16,563 Other 29,872 17,879 83,312 131,643

74,495 68,700

Minority Interest 176 141

Permanent Net Worth Investments 265 7,740 Paid-in capital 161,463 161,463 Plant, property and equipment 178,763 142,466 Profit reserve 24,770 Deferred 3,736 14,201 Accumulated results 15,115 (7,834)

182,764 164,407 201,348 153,629

TOTAL ASSET 674,219 489,537 TOTAL LIABILITY 674,219 489,537


Conferência Anual BrasilSantander

Junho de 2005

Investor Relations

Iochpe-Maxion - Santander Annual Conference Presentation