Mahle Metal Leve SA

BOVESPA:LEVE3

Q3-2025 Earnings Call

[Caroline Chiarini, executive]

[Interpreted] Good afternoon, ladies and gentlemen. You're welcome to our earnings release conference for the third quarter of '25.

This conference is being recorded, and a replay will be available on the company's Investor Relations website. The presentation is also available for download. [Operator Instructions]

Before proceeding, I would like to remind you that forward-looking statements made during this presentation are based on the beliefs and assumptions of MAHLE Metal Leve's management and on information currently available to the company.

Such statements are subject to risks and uncertainties as they refer to future events and depend on circumstances that may or may not occur. Investors, analysts, and the general public should bear in mind that factors related to the macroeconomic environment, the industry, and other factors may cause actual results to differ materially from those expressed in such forward-looking statements.

Today with us, we have Mr. Claudio Cesar Braga, CFO, and Daniel Brasil Alves, Corporate Marketing Communications Manager. Please, Claudio, proceed.

[Claudio Braga, executive]

[Interpreted] Good morning, Caroline. Thank you for the introduction. Good afternoon, actually, because it is afternoon already. I would like to thank you for your time, your attention, and interest in our company's results for the third quarter.

I believe that this quarter is a little bit different from the other quarters this year because we are sharing some positive news, which are very interesting. Things are a bit uncertain still because we do have some political discussions that go beyond the performance of the company itself. But during the presentation, we will discuss them.

Could we move on to the next page, please? So, we will start talking about our agenda. We have a page of highlights as we did in the previous quarters, and we will approach the topics that are most relevant to us. And then we turn over to Daniel Brasil for a market overview and net revenues. After that, I will explore a little bit more about the financial results for the accrued results in the latest 9 months. Then we'll talk about financial management. And in the end, I turn back to Caroline for us to start the Q&A session.

Today's speakers, as in the previous quarters, are myself and Daniel. In terms of our highlights, there are some aspects we would like to call your attention to. In the latest 4 months, we had a net operating revenue of BRL 4.1 billion. At the end of last year, even if we exclude the purchases made, we had a 7% growth based on volume, and also some very interesting news for us. On the right side of the information, we can see that in the meeting we had with the Board 2 days ago, we authorized the use of our own capital. And it is planned for December '17.

And I will talk a little bit more about the EBIT margin, and the same is true for the EBITDA margin. The highlight that I would really like to call your attention to is that after a period of 8 to 9 years, when we were awarded this Transparency Award, we were once again acknowledged with this prize in October.

For us, this is especially important. It acknowledges the transparency of the company, and this is for the 2024 period. We now want to receive the price every year, but the effort has to be higher. The company remains committed.

And another interesting aspect that caught our attention regarding this award is that we've seen it in our portfolio. We already have some pouring investors. And I think that the market and market analysis can see all of that based on the quality of the reports and the efforts we make in the company regarding our governance. I now turn over to Daniel Brasil.

[Daniel Alves, executive]

[Interpreted] Well, thank you very much, Claudio. Good morning, everyone, and thank you for your participation in MAHLE Metal Leve's call for the third quarter. We have the ANEFAC award. So, I will talk about the market highlights. On August 18, the U.S. government included new items in Section 232, and 50% of taxes in raw materials and the rest in the remaining areas, which significantly reduces the previous tariff. We had considered 50%.

And now with this new setup and going into this Section 232, this reduces, and we are in the average with 14% to 18% of tariffs depending on the materials. But undoubtedly, this was significant improvement to what was announced back in August.

In addition to that, Brazil and Mexico have signed a bilateral agreement aimed at leveraging the use of technology in Brazil's experience, especially in the production of ethanol. And this is with Mexico, also with the regulation and certification of vehicles, which is very interesting in the area of biofuels. And we see this cooperation with good eyes and the increase in the use of fuel, not only in Brazil, but in other countries as well.

The third item is the commercial agreement between Mercosur & European Union, which is expected to be signed by the end of the year. We had a meeting with our President Lula and them, and the expectation is that the agreement will be signed.

We are now in the phase where we are concluding the impact and the last items, but we see this with good eyes so that we can expand. We see it as an opportunity for this agreement between Mercosur & the European Union.

And the next one is an agreement between GM & Hyundai announced to be developed together with five new vehicles for Latin America and the first launch by 2028. We've seen this in other occasions. And more recently, we had the announcement by GM & Hyundai.

The last item is GM's announcement. They will assemble the Spark BEV in the Northeast of Brazil in 2026. So, we are already preparing for a local production of electrical vehicles. However, I highlight that the market has had an increase of hybrid vehicles. So, this market share has increased, and it is more accelerated than BEV.

In the area of new business aligned with our strategy in this third quarter, we've been named as a Mechanical Variable Compressor for Light Vehicles, Connecting Rods for Diesel Engines Conventional & Hybrid. So, the company remains struggling to obtain new businesses so that we can increase our revenue, all those aiming at growing above the market with a good market share.

And in the new slide, in the next slide, I'm sorry, this is Slide #6. We have an overview of the market with sales and production in Brazil and Argentina. Also, production in North America and Europe, the two main export markets of the company. So, we've announced it according to sales in Brazil, where we had a growth of 3.3% and 1.809 million vehicles, we have had some deacceleration in these figures. We monitor daily sales. And in November, it was very similar to October. The trend in sales is that we will remain at this level. And then I will later give you an expectation for 2025.

In Argentina, the performance was amazing. We had a 63% increase with the new government. We had more favorable conditions, reaching levels if we extrapolate it compared to previous years, we have a very large number of vehicles, 600 is very significant when compared to other years.

Combining Brazil and Argentina, sales had a growth of 11.5% with BRL 2.264 billion. Now for the end of '25 in Brazil, we have 3.3, ANFAVEA has reviewed the projection of light vehicles, which was 6.5% and it was reviewed to 5.5%. However, we are not likely to reach it, and it will be between 1% and 2%. In other words, 3.3% going down to 1% to 2% of growth.

In Argentina, the expectation is to close the year with a growth of 45%. So, in the combination of Brazil and Argentina, we will have grown 7%. And in the past quarter, we mentioned an expectation of 8%. Even though ANFAVEA and ADEFA had indicated 12%, we already foresaw a lower growth. And in reviewing this number with more updated information, we expect to grow 7% by the end of the year.

For heavy-duty vehicles. So, we had a decrease of 0.9%. And in Argentina, a growth of 20.6%. In the combination, we have 1.3% of growth. This is even more critical in face of the economic conditions, interest rates. So, we have a projection by ANFAVEA to close the year in Brazil and the sales of heavy-duty vehicles, a decrease of 5%. However, we believe that it will be 8%, so minus 4.8%.

In Argentina, a growth of 63%, and it will close at 50% at the end of the year. And in the combination of Brazil and Argentina, the projection to close the year will reach minus 3%. And therefore, we expect to have a decrease in heavy-duty vehicles.

Now talking about production in Brazil, we had a growth of 6% in the 9 months. In Argentina, 4.6% Brazil plus Argentina, 6.2%. And in the projection to close the year, Brazil plus Argentina, it will be 4%. So, it is still positive, but it went down from 6.2% to 4% of growth.

For heavy-duty vehicles, minus 0.9% for production in Brazil and in Argentina with a growth of 20.6% and a perspective of decrease of 5% when we closed the year. And therefore, we can see that things are a little bit more complicated for heavy-duty vehicles because of the high interest rates and the economic scenario despite the record crops we had this year.

So, we are also anticipating a collective vacation, which will be a little bit longer than usual in the market of Brazil and Argentina. And talking about the European market, 9 months in the production of light vehicle, a decrease of 3.2% in North America, a decrease of 2.4%, totaling Europe and North America with minus 2.3%. And the perspective is to close the year with 2%, which will be very close to this level.

This global production market is also anticipating some challenges. So, we always analyze Europe and North America, which are the main destination of the company's export for heavy-duty vehicles in Europe.

We had a decrease of 17%. We had a decrease resulting from the economic effects of the tariffs. We also have government issues and the different policies for emissions. But combining Europe and North America, we see a decrease of 10.1%. In other words, increasing a little bit in this global export scenario.

In Slide 7, we have the net revenue performance, starting with the third quarter of '25 compared to '24, a growth of 76.5%. And if we exclude the new purchases, we had a growth of 15.4% for the original ones we can see here on the slide with and without these purchases totaling 42%, then we would have a growth of 9.2% of the revenue.

We have a very similar results in aftermarket exports, 17.5%. This doesn't change. So, in the total, we will have a growth of 5.7%. And if we exclude acquisitions, the total revenue will be a growth of 25.6%. And if we exclude acquisitions, it would have been 6.4%. So, we have a higher comparison basis when compared to the previous year.

Now for 2025, we reached BRL 4.1 billion, a growth of 80%. If we exclude acquisitions, it would have been 18.3%, which is higher than what we see in the market. And here, we had a market share gain, especially in terms of filters and pistons and engine parts.

For the original equipment, despite the exchange rate, and we saw this in the previous slide for light and heavy-duty vehicles in Europe, and we actually did a little bit better than the market. For original equipment, we had a growth, which would have been 8.8% if we exclude acquisitions.

In the domestic market, if we exclude acquisitions, this is 13.2%. And this was commented in previous calls, especially in Argentina with the market opening, we see price levels that are more aligned with the market.

The market was closed. We had restrictions for imports, and there was a differentiated situation with the market opening, we have adapted the market levels and have a reduction in the revenue, and I consolidated have a growth of 13.3% for Brazil and Argentina; then 10.3%. And if we exclude acquisitions, the total revenue has a growth of 26%. And if we exclude acquisitions, it was 6.9%, very interesting increase in our revenue at the end of the year, reaching BRL 4.1 billion.

I now turn over to Claudio, and we will be available for the Q&A session at the end.

[Claudio Braga, executive]

[Interpreted] Well, thank you, Daniel. So, moving on and discussing this slide and the next slide, just to give some more transparency in Argentina in the past years in case there is somebody new among the participants here.

Argentina has accumulated in the last six or seven years in 2023. Just to contextualize in December, in addition to the accumulated inflation, we had a de-appreciation of the Argentine peso of 100% in a single month, and that had a significant impact in '24. We saw this impact in '25, not at the same intensity. But all of the results of the economic plan in Argentina and accommodation and acceptance of the public in general and government members, inflation has gone back to more adequate levels, aren't good enough to de-characterize hyperinflation.

They still have hyperinflation and according to the Central Bank projections, it will remain until '27 and potentially 2028. But the levels are much lower. This is your future projection. But based on the parameters we have for 2024 and '25 and in the first quarter, we had an impact that is very positive from an accounting point of view. But then when we analyze inflation, we can see this impact on the company's assets, but you have all of the details available in the report.

So, to shed some light, because sometimes we were asked questions comparing things that couldn't be compared. We have included these two slides. So, we go from the darker gray column at the end, the results for nine months. And then in lighter gray, we see the impact of hyperinflation.

You can see the net profit. And in the previous year, where it was 1.6%. So, when I remove all of these impacts, we created a central column so that things can be a little bit more comparable. I don't need to explore sales. Daniel Brasil has already done it. So even if we remove the effect of the acquisitions, we do not share this information because they have to do with commercial fact.

But if I, as Daniel mentioned, we had a growth of 6.6%. And to review what we've been saying from the first quarter, the aftermarket, the cost structure of acquisitions and the project, it has actually a gross profit of sales, which is lower. It has to do with the aftermarket. I don't see it as a problem. Aftermarket in the acquisitions has a total participation in sales that is much lower.

But I see this with positive eyes as an area to be explored in the future. It's not reason for concern, and it was estimated, but that will take our gross profit to lower levels, which is what we can see in the last row. So, if I remove the effect of hyperinflation, I will remain within 20.4% and last year, a little bit less. But in theory, it would be a deterioration.

And actually, when I include the acquisitions and when I remove it here and if you recall it, we've had a very specific problems and in Argentina, more general, both in the exporting area, also in the aftermarket. But when I remove these factors, which are atypical, when I remove them from the comparisons, the 29.4% that you can see there in the gross margin would actually be 34%, a little bit higher than in the previous year.

And still talking a little bit about the atypical fact that we've seen the Limeira plant with good eyes. And we can see some results, more significant results. But we have seen a resumption to normal activities. And it's what Daniel has just commented because the market is a little bit more closed, and our import capacity was lower. So if we remove this effect because it has to do with the market adjustment, basically, in the third quarter, this tends to be 0, and we can see significant improvement.

In the next slide and talking a little bit about the results following the same logic, this is a little bit more noticeable. When we talk about hyperinflation, we had an impact of BRL 10 million in the last line and then BRL 37 million year-over-year. And following the same logic and removing the effect of acquisitions commented by Daniel of almost 17% for 2024 and going straight to the gross margin, this would be 34.3%, which is relatively superior to 2024.

And talking a little bit about the transparency we can give the market about acquisitions. And I think that we will stop talking about acquisitions. I wanted to remind you that in the last quarter of '25, this had an impact. And when we got together to close the year, basically, the fourth quarter will be comparable, and the acquisitions will be seen in both quarters. But we will still have to talk about it when we talk about the accumulated amounts for the year because the acquisitions were not present then.

But looking at the performance of the acquisitions, actually, you can see the valuation and everything on the left side of the central bar in dark blue would be below what we considered as the axis and translating it into a more positive approach. And the base that was used for the calculation, when we talk about revenue, the performance is well above.

When we look separately the revenue and the acquisitions, we're talking about an increase of 20%. Just to give you an idea of how they are performing, how much better they are performing. When we analyze the EBIT, you can see that our meter is a little bit better.

I cannot talk to you about the cost structure, but our performance has been much better than what we had anticipated. The ROIC also follows the same trend. Still in this slide, all of this was meant to give you more information. In the end, the consensus of the company was that we will talk about this when we close the year.

We have paid our debt with the seller of the operation. And if you remember in the discussions of the independent committee regarding the evaluation and the final cost at the time with the cash, we had available. Basically, we had a debt of 100% of the operation. But this never happened.

We paid for these acquisitions in October. And when we show you the results for the year, you will be able to see it. We have good news. The leverage was lower of the 100% we anticipated having to loan to pay the acquisition, the purchase itself and because of the results and the performance, we only had to ask for 50%. So, this also has a positive impact. So, when we combine revenue and EBIT, it will feed our cash. And we only had to loan 50% of the operation. Now talking a little bit about the financial management in the third quarter and the last line, we have the details and the financial results.

In the third quarter, you can see BRL 6.7 million for the net income. And when we compare the results for the 9 months, it's 13.6%. But what's interesting here is that there is one aspect I would like to remind you. If we think about the debt profile, part of this money is based on exports, exports and debt, which is payable in '26 part of it and the other part in '27. And basically, 80% of this revenue.

When we receive the exports right here in Euro, we can payout for the same amount. And even if we talk about debt today or a [sale] in the order of 15% for the company, the negotiation that was made for this with guarantees in euro is in the order of 5%. And today, when we look at the situation in Europe, the debt of a company in Europe in euro is higher than 5%. So, I would say that we couldn't have done better with the structure we funded the operation with. And also, part of the acquisition that was required.

And talking a little bit about the graph, you can see an improvement in cash. It will not persist. I will try to phrase it in a different way. The excess cash you can see in the closing of the third quarter is not the same we will see in December because, as I mentioned in the previous slide, we paid off our acquisitions now in the third quarter. There is a cash consumption, of course, as a result, but we can see a change in the loans in the short and long term.

We remain as a company that pays dividends, the acquisitions, even if we generated cash to pay, I still have to get 50% of loans. If you look at the financial results, you will see that we have invested a lot in machines, equipment, new products, retrofitting, which will increase safety and the life of the equipment.

But all of this requires money. Even with the company's management regarding the debt structure, our leverage is not comparable to the 9 months last year. It's better than we anticipated. But if we compare year-over-year, it's not at the same level.

Talking a little bit more about the cash flow very quickly. We can see the working capital with almost BRL 500 million and also the cash generation, which was greater than BRL 500 million. We see taxes, dividends and IOC, and these are things that are not under our control. But in the end, you can see an increase that was also seen in the previous slide. I believe that we can close here. I will turn back to Caroline, and we will now open for Q&A. Thank you very much.

[Caroline Chiarini, executive]

[Operator instructions] [Interpreted] Our first question is from JPMorgan.

[Unknown Analyst]

[Interpreted] I have 2 questions. Number one, about the machines that were mentioned by Claudio. They had a very high level this quarter and a lot of it because of the thermal impacts and the improvement of 6 points quarter-over-quarter. But I wanted to understand what the driver was for this improvement and what segments played a role here? Is it more aftermarket domestic or export? The second question is MAHLE is a known dividend payer. We have discussions in Brazil about the payment of dividends. But I wanted to hear from you. They say that leveraging is not a problem, but I wanted to better understand these effects.

[Claudio Braga, executive]

[Interpreted] Well, thank you for your question. I believe that I can answer part of your question. Otherwise, Daniel, feel free to answer it. I'm not going to answer in the order you asked. I will start with the bad news first.

But regarding potential taxing of the dividends, this is something that moved fast this year. It started in August at the Congress, and then it was approved by the Senate in October. We now need the approval of the President. But you're probably more familiar with the logic of the market than I am. We all expect the law to be enforced. We've said it a lot, and we presented it to the Board, actually, and what the suggestion was for this matter.

We were also in contact with the controller and if they vote in favor or against, basically, the decision would be made. But what I can tell you right now is that if the law is kept as it is now, we do not plan to anticipate dividends. There is a logic behind it. We have 2 law firms that have supported us in the analysis and some physical persons with dividends greater than 50,000 will be the most impacted. But when I look at the composition of minority, there is an impact of foreign funds and Brazilian funds do not have an impact of funds. When we look at companies that are overseas, there is an impact.

And we can see the controller and the company located in Brazil. There is no impact on taxes and in theory, everyone would be impacted. But what we are planning in case things remain as they are is not to propose the payment of dividends because the impact of taxes for investors that are directly involved in metal is lower than the financial cost because otherwise, we wouldn't have enough cash.

I would like to correct a little bit. We still do not have a high volume of reserves. We started redoing and something in the order of BRL 67 million. But if we exclude this, we can see the legal reserves. We have capitalized it and have restored it to 5%. So, if we look at the financial cost today, even with the impact of 10% is not good for investors in the mid and long term. It would probably benefit some investors but our approach here was always focusing on investors, 100%.

Regarding the controller, this is discussed at a different level because we have a company in Brazil and the decisions made here are different than those of MAHLE Metal Leve. And there's a mismatch between this new potential law and the anonymous society law. The behavior is different for companies that are listed or limited companies. And this company is a limited company. It's not listed and therefore, the cash out is a little bit different.

The cash out works differently. What I can share with you this far, we do not anticipate paying dividends. Another important fact is that the reserves belong to investors, and it's a matter of timing with the financial cost. It could vary one, two but it wouldn't be adequate according to the Board and our structure. So, we're not planning it.

But regarding your first question, and Daniel can help me with that, there is an impact of thermal, but it, we also have to take our own products into account. And talking about Daniel's comments, if you exclude the effects of thermal, we had a growth of 6%, almost 7% accumulated. We do have some filters. They are performing really well and the demand for our filters has increased a lot. It's a complicated line. The market is focused on quality, which is what we offer our clients.

But for the aftermarket, it's a little bit more complicated and in some segments, the quality is not as relevant and maybe our filters will not be as competitive. But even so, the performance of filters was excellent. I would like to highlight new projects that came in and that leverage the revenue of filters.

And when we talk about growth and the total revenue, if we look at the filter operation separately, the impact was very significant and helps us leverage with the maintenance of fixed costs and then an improvement in the margins with new businesses that are now full contributing for the increase of the margin.

[Unknown Analyst]

[Interpreted] You're right, Claudio. I was looking at it. It was 57 for expansion and modernization.

[Claudio Braga, executive]

[Interpreted] I think we have one more question or two more Caroline I turn over to you.

[Caroline Chiarini, executive]

[Interpreted] The next question is from Diego Bisera, Citibank.

[Diego Bisera, analyst]

[Interpreted] Congratulations for the results. I have two questions. The country is doing well in Argentina in the manufacture of vehicles, but I would like to know what your plans for the future. Then we look at Brazil, both sales and production remain very low. There are, do you see any signs of improvement? How do you see the sales of vehicles here?

[Daniel Alves, executive]

[Interpreted] Well, Diego, thank you for your question. Regarding Argentina, as I commented, we're reaching similar levels to previous years with sales of 600,000 which is lower than the levels that we've reached. We see it with good eyes, for us in the company, we always look at the combined market.

Sometimes Brazil compensates for the poor performance in Argentina and this year, it's the other way around. But we do have the engines used in the cars manufactured in Argentina. Most of them are from Brazil, but we have some that are exported from Argentina to Brazil. We always analyze everything together. Of course, we see a trend towards stabilization, I would say. And in the beginning of the year, we do not see any major changes in this scenario.

Now regarding Brazil, indeed, we have a deterioration of these levels and the sales. At the end of the year, we usually have an acceleration in sales of vehicles, but this is not what we see for November. For October, it's not bad. However, we will have now the end of the year bonus, the 13th salary. But on the other hand, we know that the aftermarket in times when new vehicles are not selling very well, we have the maintenance of the used vehicles.

For heavy-duty vehicles, it's even more significant. We're talking about investments and sales that are very rational. But the industries have been waiting to make investments when they exchange their vehicles. Next year, we have elections. We anticipate a growth for light and heavy-duty vehicles. It's not a 2-digit growth. We're talking about 2% to 3%, but it is growth. And then we have Argentina which is part of these amounts. This year, we had an increase in the imported vehicles share. We had a loss of production because of the number of imported vehicles. But now we have BYD production here in Brazil and of course, in the beginning with a lot of imported components. We can see the plans. We do have a partnership. MAHLE participates in what is sold here. So, we will be participating in the process.

The automotive market, not only in Brazil, but globally speaking, we've seen Europe and North America with challenges. The automotive market has ups and downs. Right now, we are deaccelerating a little. But let's see if we have incentives that will help us for '26. The levels we've reached this year is comparable to pre-pandemic levels. They are reasonable, and we can see the company's results with this level of production. And next year, we understand that if it is maintained like this, it is positive, but I don't know whether I've answered your question or not.

[Diego Bisera, analyst]

[Interpreted] Well, perfect. Everything is very clear.

[Caroline Chiarini, executive]

[Interpreted] The next question is from Gabriel Rezende, Itaú.

[Gabriel Rezende, analyst]

[Interpreted] This is just a follow-up regarding profitability in the last quarter. We've seen an improvement, and you detailed the factors. But I wanted to understand to what extent there will be an impact in the fourth quarter. We understand that in the third quarter, this was a little bit lower when compared to what will happen in the fourth quarter, but I wanted to understand how you see this dynamic?

[Claudio Braga, executive]

[Interpreted] Gabriel, thank you for your question. Well, following the sequence of what Daniel presented to us in the beginning of the presentation, we started this discussion, and the government started this discussion talking about tariffs of about 10%. The discussions were heated, followed a more political track and we were already considering 50% of tariffs. When it became 10%, we were partially impacted. When it became 50%, of course, we were impacted. And now as Daniel mentioned, with the opening and inclusion of our products based on with only steel and aluminum with 50% our profits, and we are talking about import tariffs in the United States. So, the 50% tariff and the impact for us will be 14.8% in average.

We haven't had an impact yet. But what happened in the second quarter was lower than when the tariff became 50% and now going back to 14.8%, we estimate the impact will be even lower. When we reported it, to the market, basically, about 4% of the mesh was impacted approximately 7% to 8% of Metal Leve's revenue are exports to the U.S., but that depends on the modality you sell.

For some, the cost of the tariff was already paid for by the client. And also because of our commercial structure for Metal Leve, it would be 4%. It's not very representative. We believe that it was more of a macro than a micro nature. We were already advanced in our discussions with clients and approximately 85% of the clients already had a reimbursement agreed upon and the impact of the tariffs on our sales became more a concern of timing.

We would pay for the tariffs and then we would have to wait a while for the client to audit. We have to submit documentations for imports, then we would know what the impact would be and would receive the reimbursement. The reimbursement is already taking place. It has become a reality.

Now with 14.8%, it indicates a more favorable scenario. However, what is more important here to be very honest with you is that we're back in the game, we started discussing we are a partner, a commercial partner. When you have countries that supply auto parts in the case of the U.S. if one country has a tariff of 50%, that would exclude us. But we're now back to the discussion table.

Another important aspect is that we started in one state, but it's now in the U.S. court. They are discussing that these tariffs are illegal, but this is uncertain. It's more of a political nature. We will go back to the discussion on the constitutionality of these tariffs. But in terms of the percentage rate, we expect the impact to be less negative than we had anticipated. Daniel, if you want to add anything, feel free to do so.

[Daniel Alves, executive]

[Interpreted] I wanted to highlight that the negotiations with clients are advanced, and we are already receiving the reimbursement. Of course, this is still being discussed. So even the 10% tariff is being considered by the U.S. courts. And it's like what Claudio mentioned. It should be similar to all countries. We cannot have all countries with 10% and only Brazil with 50% that would have been significant. So, with these discussions between the 2 governments and if we reach an agreement, I believe that this is the best way to go for both.

[Caroline Chiarini, executive]

[Operator Instructions] [Interpreted] The Q&A session is now over. We would like to turn the floor back to Mr. Claudio Braga for the company's closing remarks.

[Claudio Braga, executive]

[Interpreted] Caroline, thank you for your support. Thank you all. I think that the reports and the financial statements are self-explanatory. The improvement in the quarter is clear. We expect to be with you at the closing of the year when we publish our numbers. And then we will give you more details on how we closed. We will talk about the Athena project, and we have political and macro factors, which are difficult to anticipate, but there is an indication that this is going to be very positive.

Let's wait. And Daniel mentioned the deacceleration in the sales of vehicles. I hope that with the efforts we've made, the impact on the results will not be significant. I think that we can stop for lunch now. I thank you all for your participation. The Investor Relations web. You can access the Investor Relations website. And I thank you very much for being here with us. MAHLE Metal's video conference is now over. We wish you a good afternoon.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]