Driven forward by acquisitions, Fras-le surpasses the mark of R$ 1.0 Billion in net revenue

ASK Fras-le, Armetal and Fremax are some of the new Business Units.


“Fras-le is a company in transformation. At the extent it develops its strategies and advances in its position in the global market, it begins to deal with a larger number of markets, products and customers, bringing more balance to its business”. The last and recent cycle has been intense in M&A projects. These changes bring experience gains in new business opportunities and evolution in the implementation of our expansion plans, allowing us to reach a larger number of consumers and faster growth benefits. The figures in 2018 were positive, surpassing the mark of one billion, and the prospects for 2019 are optimistic.

Consolidated net revenue grew 37%; consolidated gross income increased by 39.8%; EBITDA grew 72.8% and consolidated net income increased 38% when compared to the previous year. More and more internationalized, with several acquisitions made in 2017 and 2018, the Company exported in 2018 the equivalent to US$ 84.3 million, out of Brazil, accounting for an increase of 13.5% when compared with 2017, raising by 25.9% its sales in dollar to the foreign market (US$ 163.0 million in 2018). . "Over the last two years, growth has been intense, and this intense period of expansion has resulted in experience gains, allowing the Company to reach a larger number of consumers”, states the CEO Sérgio Carvalho, bearing in mind that the current international exposure is higher than 50% of the Company`s revenues.
Consolidated net revenuesin 2018 exceeded the mark of million, reaching R$ 1,141.1 billion, an increase of 37.0% when compared to the R$ 832.8 million in 2017. In addition to the acquired companies, this performance is also the result of larger sales volumes in most segments, in the main markets in which the Company operates. Exchange rate was another important factor in this evolution of revenues, when it comes to exports, since the average dollar of R$ 3.65 in 2018 went up by 14.5% when compared to R$ 3.19 in 2017. It is also important to consider that the sales mix composition in 2018 was more favorable as compared with the previous year.
FOREIGN MARKET- Exports made progress in 2018. The result was not even better because of factors that are specific of each country, such as in Argentina, which faced a strong economic crisis and the consequent reduction in its economic activity. On the other hand, sales to North America remained with excellent performance throughout the year, surpassing even the sales forecast for the region, reflecting the economic performance of the United States in 2018. New commercial alliances and the renewal of a Supply Agreement with our major customer were decisive for the good performance in that country. In the Middle East, the Company`s performance in exports was good, as well as in Central America and the Caribbean. As a result, exports out of Brazil totaled US$ 84.3 million in 2018, accounting for an increase of 13.5% as compared to 2017.

Sales in dollar in the foreign market, in addition to reflecting the factors that have impacted exports, now revenues are added from the new acquired companies, reaching, in 2018, US$ 163.0 million, which accounts for an increase of 25.9% as compared to 2017. Of the total amount of sales to the foreign market in 2018, US$ 25.5 million come from the new controlled companies acquired abroad.
Consolidated gross income in 2018 (R$ 303.6 million), grew by 39.8% as compared to the R$ 217.2 million in 2017, reaching a gross margin of 26.6%. As mentioned before, in addition to the combination exchange rates + larger sales volumes, a more favorable composition in the mix of products sold, throughout the year, has to be considered. On the other hand, this performance has been impacted by the combination of several factors that have already been reported above, influencing revenue performance and production costs. As for the effects caused by Accounting Standard in Hyperinflationary Economies, gross profit absorbed R$ 2.4 million (negative), considering the difference between revenue and the adjusted production costs.

In 2018, consolidated EBITDA amounted to R$ 183.9 million, an increase of 72.8% as compared to the previous year, while the EBITDA margin of 16.1% is equivalent to an increase of 3.4 percentage points on the same comparative bases. This performance considers an operating gain in the calculation of fair value on the acquisition of the controlled company Jurid. "At the time Fras-le completes 65 years in existence, one perceives the vigor that the Company perpetuates. There are many examples to illustrate it, but the main one is the strong expansion that has taken place through the consolidation of new operations”, states Sérgio Carvalho.

Investmentstotaled R$ 80.2 million in 2018, of which R$ 25.5 million were used in Fras-le`s unit, in Caxias do Sul, and R$ 54.7 were used in the controlled companies. The Company has made clear that the value of investments made includes the amount of investments made in the new controlled companies (which were not foreseen in the initial guidance, estimated at R$ 42.0 million. The Company, which continuously innovates, has also informed that its investment in research and development was higher than 2% of the net revenue in 2018.

Expansion and Acquisitions – 2018 marked the completion of important acquisitions. The year began with the full consolidation of the companies acquired: Armetal and Farloc (in Argentina) and Fanacif (Uruguay), acquired in December 2017. In January 2018, the consolidation process of Federal Mogul was completed, transferring the shareholding control of 80.1% from Jurid to Brasil to Fras-le. This latter business began in 2016, pending, meanwhile, the CADE`s approval, In February, Fras-le signed the setup of a new Company, forming the company ASK Fras-le (India), of which 51% belongs to Fras-le. Finally, in October, the acquisition of 100% of FREMAX was made. Fremax is one of the leading manufacturers of brake discs in Brazil, in the premium segment, with important presence in foreign markets as well.


Photo: Jefferson Bernardes


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