Good morning. Welcome to the video conference of Fras-le Mobility to present the results for the first quarter of 2025. Before we begin, we would like to make some important announcements. This video conference is being recorded, and after completion, it will be available on our website, ri.fras-le-mobility.com. We have simultaneous translation into English. To access it, simply click on the interpretation button represented by the globe icon at the bottom of the screen. At the end of the presentation, there will be a question-and-answer session. Questions can be asked in two ways: through audio, showing interest by clicking the raise-your-hand icon, or in writing by clicking the Q&A button.
Furthermore, we would like to emphasize that the information covered in this video conference is not a guarantee of performance and involves risk and uncertainty, as it refers to future events and therefore depends on the circumstances that may or may not occur.
[Foreign Language]
I'd like to thank you for joining us in another earnings video conference. We have with us today our COO, Anderson Pontalti, Business IR M&A Director, Hemerson Souza, our IR Manager, Mariana Guimarães, and as a guest, Brandon Korb, IR Finance Director, Estevan Angeletti. I would like to record the presence of Daniel Handon, that's being a part of the video conference. Now I pass the word to Anderson, that will conduce the presentation. The floor is yours.
[Foreign Language]
Good morning, everyone. Thank you for the participation in the video conference of Fras-le Mobility. It's a pleasure to talk a bit about the results of the first quarter. I'm going to start off with a bit of the Fras-le agenda. In the first quarter, we had the pleasure to inaugurate and advance a second headquarters of MoveTech, our Advanced Engineering Hub at Sorocaba, together with the manufacturing unit we have. We have advanced in this local with our OEM business. It's necessary to have tests and validations in that unit to be more fast and assertive. This happened during the months of March, and we'd like to record it also March 20th. Another relevant fact, we announced an important operation regarding corporate governance, which is the change of Sergio in his role of CEO, President, Director, and the leadership.
CEO will be in September, be held by Anderson Pontalti, our current COO, and Daniel Handon, which is a member of the board currently, will take on the position of President of Fras-le September 1. So Daniel and Anderson in new roles, as we saw here. No doubt we have space.
To be closer to the market with this new configuration. We'd like to thank Sergio for his dedication. In September, he's with us. After this moment, we do the announced changes. We also had an important fact. We also always highlight, as a company connected to automobile consumption, one of the big values we have are our brands.
In a repositioning of the size, due to the size reference in quality and the size of the market that we have with our brand Controil. We validated its positioning, go with confidence, go with Controil, and the new visual identity of the company, more modern, connected to the current leadership moment of this unit in terms of presenting market to continue close and active with our end customer, the mechanics that apply this in their parts. Now to the next topic, I'd like to mention our participation in AutoMac during April after the quarter's results announcement. It's the biggest spare parts fair trade show in Latin America, over 1,200 exhibitors, over 90,000 attendees in five days of the event. This event especially, we got close connected to the end user, some resellers and mechanics.
This brings an important impact, showing our brands, showing the launching of new products that we had in the expo. We got together the community of investors in the market for a chat one of the days of the show so we could show our strength in the spare parts market that's so distinct in the automobile market or sector. Now talking about the highlights of the first quarter, making a reference to what we had to the link to the guidance. Recently, we closed with a revenue of BRL 1.3 billion, which is close to 60% above what we did for the same period last year and very much connected to what we have in terms of range for our guidance to BRL 5.7 billion-BRL 6.1 billion expected for 2025. Our revenue in a foreign market add up to close to BRL 125 million, increasing 80.5% compared to last year.
Also close to our reach of guidance between BRL 500 million and BRL 540 million in foreign market. Not only what we exported from Brazil, what we generated in our foreign units. This is a meaningful increase. It's directly related to the arrival. Important revenue coming from this operation. In Mexico, we had an adjusted EBITDA margin of 19%. The adjustment regarding what we did are detailed in the result review. We're going to mention them here. Notably, the margin is a bit above, but we did the adjustment to show the real situation and runway of the company, which is almost one percentage point above the first quarter of 2024 and in the middle of our guidance that was between 17% and 21% for 2025. The investment add up to BRL 21 million, aligned to what we did the first quarter of 2024.
The investment, we cannot look at them only in their current position because we are programming to purchase equipment. We have a range of BRL 170 million-BRL 210 million expected for 2025. Going to the next chart, I'd like to talk about DACONSA or the Mexico operation. They are part of Fras-le results since January this year. When we concluded the acquisition transaction, we have the detailing of this movement in our documentation, the video conference that we held specifically last year during the signing of this transaction. DACONSA is already close to 25% of Fras-le revenue in the first quarter, and the Mexican market is becoming a very relevant market to us, the second biggest market. When we look at all of Fras-le Mobility, only behind Brazil, it already brings an important contribution in this start.
In the first semester, we're going to talk about the range and what we are exploring as synergies. Obviously, two months and a little bit, there's not a lot of material to show, but I'd like to reference that we have 10 work fronts implemented, of which with positive perspectives, sourcing, manufacturing, fronts for increase of revenue with launch of new products, commercial integration, administrative integration, management of change in many aspects. We're very positive, and the reference numbers of the synergy for this unit will be reached here. I hope that we can have more news in the next semesters to surpass them.
Mexico is going through the changes and difficulties that we have regarding the tariff issue with the United States or several markets, especially because Mexico, its economy as a whole, is very much connected to the U.S. market, and eventual difficulties can bring impact to the Mexican economy. Our market for spare parts is very resilient, and we do not expect aftermarket car. Even more, what we do from Mexico to U.S. are small, 5% or 6%, and they do not suffer the impact due to the free agreement, free trade agreement that is valid till 2027. In the next chat, I talk about revenue, and obviously, as I said, adhering to what we expected, growth with DACONSA is very important in this moment, known by the market. We started the year 2025 with this good news of incorporating an operation. The expectation is BRL 1.7 billion in revenue this year.
It's on track. We changed a bit the configuration of the revenue of the company. Mariana will detail for the international exposition. The international exposition is higher than the domestic market already. In what we designed for Fras-le strategy, the friction adds up 42%. Five years ago, it was 95%, 92% out of everything we did. A change in the product profile and the mix of what we sell, adding spare parts for motors that are 15%, a market that we're learning. We're very excited with the possibility to increase and be very much connected to offering products for this type of component. You can see here that from the last quarter to here, we have almost a CARE in this period of 2021. This will accelerate to the next quarters compared with DACONSA arrival. That's my part.
I come back to the Q&A before I hand it to Mariana. We are going to talk about DACONSA topics, a topic that we are waiting for questions that is leveraging the company with the acquisition and the impact of the need of the working capital. Part of the leveraging of the company was completely connected to the adding of working capital that we purchased from the company. One of the works that we did in this moment to consider our working capital strategy for the Fras-le Mobility policies, this is a winning decision that we have mapped for this operation. Mariana, the floor is yours, and I come back for the Q&A in the end.
Good morning, everyone. Thank you for participating in our video conference. It is still about revenue slide nine.
We see that the company is finishing this first quarter with 91% of its consolidated revenue linked to the sector of aftermarket. The highlights are internal market, the increase of 21% in this quarter versus 2024 reflects especially the growth of aftermarket, increase of productivity, positioning, and assertive pricing. On the other hand, the decrease between the fourth quarter of 2024 and the first of 2025 is due to the economic uncertainty that made the distributors have a more assertive action. Distributors is still heated. The external market, part of the growth is related to DACONSA. DACONSA, the growth is linked especially to the increase of exports of brake pads for heavy vehicles to the United States, the gain of new OEM in India, and the restart of exports to Argentina. Slide 10, we see the EBITDA causal that brings in each line of the results.
I would like to highlight that sales of DACONSA has an impact of DACONSA. This is due to the high price of fuel and the volume exported to Argentina. Administrative expenses reflect the incorporation of over 2,000 collaborators coming from that position. Besides the expenses with M&A at BRL 5 million in quarter, as you know, considering M&A, a core competence of a company that's growing, we don't consider this expense for the adjusted EBITDA as a non-recurrent event. We had the restructuring of Panaseef with a liquid net impact of BRL 3 million. The other impact of BRL 3 million. With this, the adjusted EBITDA of BRL 253 million with a margin EBITDA adjusted margin. You can increase up 0.9, as it was mentioned in the beginning. Slide 11, we see the main variance of the operational cash flow.
We see a negative availability of cash flow due to the payment of acquisition done in 2025 and lower gain with exchange variation, considering the Argentinian peso year after year. In the expenses, there was an increase in interest rate and linked to the debt of the company and the high rate of SELIC regarding the variation in the need of capital. Cash flow of working capitals, the variation comes from DACONSA that had a high stock level and a deadline for receivables with Fras-le Mobility management that's being worked in the synergies explored after the acquisition. Exactly, we would like to bring to you that the variation is more or less BRL 253 million negative due with the impact of the restart of the import of products through Argentina and the reforce of the supply of extend due to the change in the system and the operation.
Now going to slide 12, we see that the company closes the first quarter of 2025 with a profit of 35 and a margin of 48. The biggest impact from expenses due to the increase of the debt, the effective aliquota of tax was 25.5%, almost 10 percentage points lower than the aliquota in the first quarter of 2024, especially regarding the reduction of the profit tax taxable related to the acquisition of DACONSA. Regarding the debt, we conclude the exercise for BRL 1.7 billion of capturing of loans and amortized BRL 156 million. Our financial leverage reached 2.6 times the net debt. In other words, adjusted EBITDA of the two months with DACONSA, the company would finish the quarter with two times the leverage.
Still, regarding the acquisition, we should highlight that the paid for the transition is BRL 2.2 billion and BRL 753 million was captured by the simple dependents. BRL 900 million were captured by DACONSA, and the rest was from the cash for the company. We highlight that at the end of March, we have BRL 100 million for total liquidation of the operation. Now I pass the floor to Anderson, our COO, to comment about the perspectives for the next quarter's energy.
Thank you so much, Mariana. Anderson, Mônica, thank you for everybody that's watching us. Once again, thank you for those that were with us in Bromant in April. Talking a bit about the future without talking about the. We're getting to talk about the quarter. Another spectacular quarter in the history of the company. We were reflecting the revenue. One, three was the revenue of 2019.
Six years previous to that, in one quarter, we did the revenue of one year, adhering to the strategy to increase revenue in external markets for geopolitical protection, increasing the diversity of products and strong in aftermarket because this guarantees revenue in future conversion. We continue very excited with aftermarket, despite we have a small retraction of the sale to the distributors compared to the previous quarter, but there are three important factors that we should highlight. The first one here, there is a natural rebuy that in the vacation season, our customers are ready with the stocks ahead of time. They should be ready to supply the market during an intense repair during the vacation period. There is an accommodation of stock in the chain due to the cost of capital. We have a higher SELIC rate.
People are more diligent with the purchasing level, but the good news is that we monitor the sales of our customer, and our customer continues with sales above in 8%-9% compared to the previous quarter. We are very happy and very optimistic regarding the resilience of the demand, not only in Brazil, but Mexico, Argentina, that are very important geographies for aftermarket. We see the instability of the trade war. We want to act independent of the dynamics of the tariff imposition that might come. We can explore this in detail if you desire. The cost of capital has changed the profile of consumption. I've talked about my stock that's lower, but CPS starts having problems with debt, then you can delay or seek for cheaper parts.
It's normal in the cycle, but as a counterpart, we talked about the retraction of original 7% increase, the fleet increase 7% compared to what was produced in the first quarter last year, new vehicles. In this case, we have invested constantly. Bromant is shows Fras-le Mobility with mechanics making our brands more desired, independent of the situation that we can see. It will have a memory, a good memory of a brand that brought good experiences, helped in its training. We also foresee a good second semester in Fremax in Joinville. The capacity installed after the substation will be increased in 25%. This will allow us to expand the opportunities of exports and domestic market. And Controil has changed its profile.
Despite being the Brazilian company for that type of product, the most complete one with a Brazilian footprint, we're experimenting to see a diligent manner so we can navigate not only the domestic market, but Latin American market, where we have many opportunities. Very happy, despite the numbers shown by Hemerson, we're very happy with the beginning, not only with the results, but the way that we're doing the cultural integration, the integration of the teams, the identification of opportunities are very much beyond what we expected. In several moments when we were able to talk, when we do an acquisition on this side, the buyer side, you idealize a series of opportunities and synergies. Once the bought part enters the circuit to the debate, many other ideas come to the table and increase the potential of the original ideas.
What I can tell you is that we're very happy and very optimistic regarding the delivery, the promise of value added in that region. We continue strong. Market is still resilient. Aftermarket is resilient. We are prepared for any adversity and commercial conflict or any other conflict that can come up. Thank you, Mariana. Thank you, everyone. I return the floor to Mariana.
Thank you, Anderson. Now we start our Q&A session. First comes from audio, Fernando Urbano, CEO side of XP. Fernanda, welcome. Your mic is open. Go ahead with your question. [Foreign Language] .
Good morning, everyone. Thank you for this space. Thank you, and congratulations for the visit. Two questions from our side. First of all, I would like to ask regarding the organic growth. We saw a healthy level in the first quarter, especially in the domestic market.
You mentioned a few factors at the end of the presentation, like the positive flow and the workshops offsetting a reduction of stock on the side of the customer. I want to understand better the drivers of organic growth, thinking about the sellout of your customer average ticket in the workshop and the price positioning of the brands. I want to understand this dynamics to understand how this positive dynamics was the growth of the market. How much was your gain of share? That is the first question. Second question is regarding the leverage. I want to know if you can share what you have considered as a base scenario for the leverage at the end of the year, considering the expected synergies with DACONSA. Thank you.
Thank you, Fernanda. The first question, Anderson and me can complement each other overall. We talk a lot.
92% of our business is connected to aftermarket. This is a very resilient market, a market that has a lot of strengths when we talk about a crisis moment or credit restriction like we have in the current moment, especially in Brazil. Obviously, today, over 1/2 of the Fras-le Mobility business is not Brazil anymore, but this market is good everywhere /in the world. We advance the U.K., Europe, and the United States, and leadership in Argentina and Mexico. This continues for all markets. When we talk about Mexico, the only operation that's non-recurrent this year, we have a growth of close to 15%. This comes from gain in aftermarket share, but we have advanced a bit in OEM, OE market, new in the business in the United States, Europe, and Brazil also connected to the electric line.
Adding up these small businesses in each geography, this gives an important sustaining for the organic growth of Fras-le. We had a restart, retaking Argentina that does not reflect very much in revenue yet, but we launched products there that we wanted to. Since 2015, we did not launch new lines of reference due to the restrictions we had connected to the governments that limited imports. We do not have this anymore. We have advanced. That is why we have a higher stock now there to be able to continue to be leaders and to service our customers in Argentina the best way possible.
This year, we want—I do not know if you want to add anything, but this is basically the ecosystem that allows us, when we talk about recurrency, to have a unique condition to be able to continue to grow at least for some time between 10%-15% organically with the market position that we are still seeking. Also, due to the complexity and diversity of markets that we serve, sometimes one market has more difficulty and another is growing more, but this is part of the beauty of the business that we have built.
If you allow me, Hemerson, thank you, Fernando, for your question. Bringing in numbers, it is important. The aftermarket market does not grow more than 1%. The parts demand is resilient, but the growth is not very high when I look at volume. There is not a price factor that is meaningful in the first quarter.
We did have a leap of the dollar from $6.27, an important peak, but it accommodated. We have a little variation of exchange rate that we look at the first quarter, accommodating the inflation, not allowing that price advances are applied in a meaningful way. What we notice is that the customers, distributors, a consolidation and a strong advance of new branches of the distributors. We see the gain market share since Fras-le is the biggest manufacturer or aftermarket in the country. We are together, hand in hand with the main distributors. They increased the sellout of our sellout of all parts. They sell in 9% in the first quarter. We interview, we collect data, and sellout 80% of our sales, more or less. Very relevant. We have the data effectively. When we look at our parts, we grew 14%. Their sales with our parts increased 14%.
This is a reality in Brazil. Argentina, we have a gained market due to the possibility of introducing references that could not be introduced in the past due to the limitation of imports. We are developing the portfolio, and we were talking about 3,000 shock absorbers, and now we are selling 30,000. This is a leap of 10-fold, which is very relevant. We are serving important waves of market share in the geographies. We acquired Nakata. Nakata did not have in their product line over 20% market share in their lines. We unlocked the capacity, unlocked working capital to develop product lines and develop new increase in capacity, new part numbers. We are still having gain in market share in operations. Fremax cannot gain due to limiting capacity that will be unlocked, importantly, second semester.
I think that one of the greatest valuations, despite M&A being very important in the synergies, our organic gains of market share are, in fact, very relevant and consistent during the last period. Adding also, if we exclude friction, that today is 45% of the business. We advanced also meaningful in the light line, recovering historic positions. Today, we have the best position. We did not have the light line market position that we have today any time before. We have over 60% market share. We always increase, grew. We have space of increase of 20%-25%. We can increase even more. It is still a driver growth for Fras-le. To the second question, leverage, we do not have a driver for leverage. I want to mention connected with DACONSA. As Mariana explained, the origin of the resources, the majority of the acquisition came from new debt around BRL 1.6-1.7 billion.
It was purchased, was leveraged. Part of the leveraging is in Mexico. It's good. The operation will pay for part of the leverage. What we have in terms of work to be done to reduce the leverage first. In the first quarter, we had prepared a change connected to Nakata in our RPS AP system. The last synergy from Nakata, its integration incorporation, and this is important to explore. We had this prepared to happen in March. We loaded the stocks of products manufactured by Nakata, so we should serve the market even if we had and avoid systemic problems. We didn't reduce the production due to seasonality or difficulties like the tax war, trade war with the U.S. The measures announced by the Trump government didn't affect the year, but in February, we had higher stocks that's connected to that.
We added a relevant amount of working capital at DACONSA. DACONSA has almost twice as much the use of working capital when we compare to Fras-le. There's a lot of opportunity to improve this. Those that follow Fras-le for not so long evaluate the acquisitions we made, Nakata, Fremax. We always work at attenuating the working capital, more connected to our model, to our policy. DACONSA specifically has a distinct characteristic from other acquisitions we made. It is also a big part distributor in Mexico. They have their own distribution channel, bigger than what we have in our operations. We have in Argentina and U.K., but DACONSA, with their size, needs this. We know that they need to find something in a middle ground closer to Fras-le, the reality of Fras-le and the reality they have.
Inside the synergy scope, there's a lot of space to lower the leverage, and this will happen. We won't do this in an ordered way. We need to keep the support to the customers, keep operation, and in the next quarters, find the right point to remove, reduce, especially stock, production stock, production. We're working on it, but the impact will be noticed in the next quarters. This type of work that won't be done this year, it's a bit longer. With this, if we looked only at the operation, we have an idea of closing March with twice what we have today, but there's still we can have positive news due to the work that we're doing here with working capital.
It's not something fast, not overnight, but our focus is to establish the synergies that come from expanding, integration in production, production lines, launch of products, which is what we referenced, the reduction of working capital, reduction of leverage will come, but it will take some more time.
Super clear. Thank you, Hemerson.
[Foreign Language] . Next question comes from Gabriel Rezende from Itaú. Gabriel, you may ask your question.
[Foreign Language], Mônica. [Foreign Language] . Thank you, Mônica. Good morning, everyone. Thank you for the space. I want to talk about the margin dynamics you reported in LQY, aligned to what people were estimating considering Fras-le is delivering, considering the opening of DACONSA. I want to hear from you the dynamics of this number going forward.
Maybe leave aside the synergy debate and think about DACONSA and Fras-le separate if we can do that and fit in this point what we see regarding the commodity fluctuation. We see some commodities after the tariff announcement by the U.S., this can generate pre-buy of commodities on your side, making the working capital a bit worse due to this, proactively to use to have better prices in a certain commodity. How could this impact margin in the next quarter, positively or negatively? Thank you, guys.
Thank you, Gabriel. Anderson, do you want to talk about the dynamics of margin?
Yes. We also observe due to global recession, Gabriel, we see chemical, metal, commodities and opportunity to reduce costs. There are a lot of people that are not putting in orders, trying to understand how the sales, the trade dynamics will be between China, U.S., and Europe.
This has benefited us. We have future contracts being established with margins or better positioning than we have currently. As a counterpart, the market is more aggressive, competitive on the other end, in the sales end. Above all, want to put installed capacity somewhere. This dynamic points to both sides here. Looking at margin specifically, we have a margin relatively stable compared to previous periods. There is not a current pressure of a change. Not only talking about commodities, DACONSA operates with positive, very positive margins. Momentaneous decrease in the, no, the increase of the Mexican peso increase, it gives us better results, increasing the profitability in that region. The dollar of $5.70 with the level we have today is the level we forecast for the year. If it increases a bit, we have a benefit in the short term due to the exporting position.
If the dollar decreases this level, we have a reduction in export and accommodation of medium price ahead. We have always this bit of a delay, but we imagine regularity in terms of margin for the year. Side will come from a cost, fixed cost absorption due to the increase of volume that we are expecting with the next quarters, with the restart of the stock, reposition of the distributors, increase in offers in Fremax, and increase of market share with the increase of availability in Argentina. I would say these are the three relevant points that can bring a greater absorption of what is the installed cost in the operation. I hope I answered your question, Gabriel. Thank you for your question. More or less, this is the vision we have. Hemerson, do you like to add anything?
Yeah, there is a positive vision by us to start this year and the last quarter bringing positive results regarding the synergies with DACONSA. As I mentioned, we did not bring these things yet because they are small, but as a practice, we want to make it clear for the market so everybody knows that we are capturing. It is very promising. Small initiatives bring a lot of return. We are going to talk about one specifically. We have a change of raw material brought not only for DACONSA. They have the highest benefit. The Fritec operation, where we do the brake pads, brought to Fras-le Brazil, Fras-le United States, Fras-le China, Fras-le India. Important savings. In this one raw material, the combination of volumes brought $1.4 million. With a $1.570, and we look at five years, you see that small movements bring huge opportunities.
This is almost BRL 15 million in five years in terms of savings. Besides this, there are many others that we have the pleasure to share with you. Level of margins that are good with these possibilities of being better with the synergy is a present reality from now on. Despite the market being heated or disputed, we have as a strength the support, customer service, the strength of our brands, the level of service that we provide, the portfolio, the combination of products that we have, the line of products. This makes Fras-le very different when we talk about aftermarket markets.
[Foreign Language] Hemerson. [Foreign Language], Pontalti, [Foreign Language] . Thank you, Pontalti and Emerson.
[Foreign Language] . Our next question comes to Lucas Marchioni. We will be asked by Lucas Marchioni from BTG Pactual. Lucas, pode prosseguir com a pergunta. You may ask your question.
[Foreign Language] . Thank you. Hi, guys. Thank you for the call. Actually, before the question, [Foreign Language] . I wish success to all of you with the restructuring strategy with Daniel, Pontalti, everyone. My question is one, but it's a broad topic. I have a doubt with the implication of tariffs in the automotive industry. I understand that you didn't adjust guidance. You mentioned the company is prepared, but we have seen many manufacturers, OEM, a lot of consequences in the U.S. market, especially. They're afraid of recession. I know that parts in Mexico are USMCA, but I know this affects Mexico.
I want to understand what are the policies for mitigation that you have under this league to work with the tariff scenario, the capacity of Brazil, changing customers from one place to another, what they have of options to offset the tariff scenario, especially North America. That's the topic. Thank you.
[Foreign Language], Lucas. Thank you for your question and for your wishes. We're very happy also to, with the current situation at the company, continue the good work that the executives hold or do. This change of CEO and President just reinforced what we have as a company to have the best strategies, and the results clearly show that we have got it right in a very positive way and affected the growth. The topic is broad, and Emerson can add. In fact, the United States is a very relevant market. We have an Alabama factory since 2008.
We have used this factory to service a good part of what we do. The possibility of new business is linked to being able to produce in the U.S. In the last three years, we did good investment. One of the best equipment that we have for brake pads and heavies is in Alabama, and it's being ramped up at the beginning of production. We have some business here being analyzed, and we're going to announce them soon. Important businesses for the future. This is why we made the investment. We are going to have more content made in the U.S., and this is relevant. From Brazil, there are some tariffs, heavy line, 10%. What is good is that there isn't capacity in the U.S. to serve the volume that they buy.
Since friction material for heavies, we have our main customer, Meritor, a partner for many decades, and a market leader in the United States. Together with Meritor, they have around 70% of aftermarket, 45% for OEM, the small increment of tariffs. We are comfortable that they will not reduce our size. What is happening is that the impact in the economy as a whole. There's a retraction with heavies in the United States. This impacts the aftermarket. The freight levels have gone down 10%-15% first quarter. This impacts some of our businesses. On the other hand, we have increased the search of new customers there, and it's not from today. We have increased for some time now. And as a coincidence, last year, we have evolved very much with some customers that we used to work.
We do not notice the decrease because our customers, new customers, are entering the base, and this is very promising, not only in the point that we are today, but going ahead because there are many businesses being discussed with our sales team there. It has been for us with DACONSA, with the possibility of producing closer some items in the light line in the United States. We think that the impact will not be big. We see a lot more the horizon of opportunities than the horizon of threats regarding demand. We have our exposition to a way is important, but the protection we have with aftermarket and new customers offsets any loss in production or demand from the customers. Anderson, would you like to add anything?
Lucas, thank you for your question. The topics were covered well already.
Our biggest product, more relevant for us, is a brake in the United States, produced massively in Brazil. I know tariffs are there, but we produce brake pads in the United States in the past. We've had, we produce for Mexico. We're getting to know the dynamics in Mexico, but the volume that's necessary, the market buys a lot of brake pads. Their volume is meaningful and intensive in terms of capital. The footprint change is the short and middle term. It's very difficult. This change would happen in a very long term. We haven't, there is installed capacity to supply the product. We know when we operate brake pads in the United States, the difference in cost is brutal, 40%-50% more competitiveness in Brazil or similar geographies, more than producing in that market.
It's hard that we open a position of an item that's not so attractive globally. The other markets look more competitive than the lowest valuation. In your evaluation, it represents small content, small price for the truck. It wears, it's associated to the truck on the road. The American market can have a recession. They have still to be on the road. People will continue to consume. We see a lot of possibilities looking at the Brazilian footprint compared to the Asian footprint. We can rebalance our supply chain, having more supply in geographies that are more pro-Asian, and look at our capacity, review our capacity in other markets with a premium price because the tariffs and the opportunities of the market can present.
Unfortunately, Brazil, depending on the sales trade relationship they have with the U.S., could have a huge advantage if Brazilian industry could have the capacity to cover a good part of that market. As Emerson said, we see more opportunities. Mexico, over 95% of the revenues in Mexico associated to Mexico's domestic economy, Mexico is very much linked to the United States economy when the local economies get risk. We see a small decrease in aftermarket. It won't affect the guidance. Lucas.
[Foreign Language] . Have a great day.
[Foreign Language], Lucas. [Foreign Language] . Next question. [Foreign Language] , Gabriel. You may ask your question.
[Foreign Language] .
Good morning. Thank you for the space. Two questions on my side.
First one, for manufacturing, can you talk about the evolution you have had with time? I want to understand how you're looking at the future, what we can expect, and the entrance of DACONSA. How is this journey? You mentioned the organic side, the growth coming from share, Nakata, Bramac's growth that will come from the substation potentially. Can you comment more? How has been the evolution of Controil and this related to manufacturing linked to the previous question?
Gabriel, good morning. Thank you for your questions, for participating. I'm going to share together with Anderson the answers. Talking first about manufacturing, it's the main initial driver of the synergies that we have designed. DACONSA already used an import model, good suppliers, most Asian.
To add to their sales, to complement their sales, we have some product lines in Mexico like water pumps, complementing the joint parts related to the motor. [Foreign Language] . We used a different model. [Foreign Language] control of vendors like we have, for example, established in Brazil. We ended up buying from suppliers, first line suppliers, very good in terms of quality, support, technical support, suppliers of OEM, which is great, which gives you security. On the other hand, they're not the suppliers that bring the best competitiveness exactly due to the structure they have to sustain the level of quality control of the products. We have developed suppliers of the same level of quality and support, but more adequate for aftermarket.
Aftermarket operates in reference to products that are different from the OEM market. OEM, if you do an exchange com veículo usado, a gente cita o exemplo of a used vehicle, we mentioned the example of oil pumps. If you put it in a new operation, you can have a leak in the joints because it's not adequate for 100,000 km motor. Aftermarket is different in terms of product, not necessarily disconnected to what we offer in OEM due to competitiveness many times, product features, other things that aftermarket demands. We have made adequate in a model that we have of manufacturing design, the product aspect, the standards. Potentially, we have developed this decades ago, connecting also to the model of Nakata. It's not easy to do. It's not simple. There are several part numbers, etc.
What we have seen, the biggest opportunity to increase the levels we have mapped, the products show the giant opportunity we have of combining our vendors of co-manufacturing to the importing vendors. We continue with the strategy of complementing products and developing the partners that many times manufacture over half of their production is due to our global demand here. This will continue and will be important in terms of synergies for DACONSA and also for our present units. One item that we're debating here, 3% in price reduction comes with the increase of volume. It's not a benefit only for DACONSA, but the competitiveness and the margin of Fras-le Mobility as a whole. That to me is maybe one of the areas that we're going to grow the most and expand as the core of the company based on development in Asia more than we have currently.
Regarding organic growth, I'm going to leave it to Pontalti. He's going to talk about Controil and the connection that we have with manufacturing of some items to expand to the Americas with Controil items.
Thank you, Hemerson and Gabriel, for your questions. Specifically, Controil, we have since last year the tragedy of the floods in Rio Grande do Sul. We already had a plan of increased availability to increase the offer of Controil on the market in Latin America. The focus is no longer Brazil. Controil launched their new brand due to what we reached here. We understand that the portfolio of Latin America is wider, more complex, and we need our partners of co-manufacturing to be able to supply these markets. Nakata didn't have this developed neither with Controil. We had it, but we decided to use the process, the means that we have in Fras-le Mobility.
We started to develop partners for these product lines. We are accelerated very much due to the floods that I mentioned, to the extent that in the end of the year, we had an offer of level of service very adequate for the Brazilian market. We are supplying the market very well. Controil always had difficulty to supply regularly like our other companies because the product line took two to three months to be manufactured. The market does not have another company like Controil in our market. In some moments, we could not supply, and now this does not happen anymore. We gained market share. A company that has a revenue of BRL 21 million in monthly revenue has a potential of growth, especially in geographies in Latin America, more specifically Argentina and Mexico.
It's a market that we will explore, but the good thing is we have a chain developed that gives us speed to reach markets and offer to these markets. Controil is a company that produced 100% of what they sold, and it will be a company that will produce 60%-70% of what they offer, of what they sell. We can navigate other geographies and have more speed with great level of service. We're very happy with the future. The footprint is more robust to serve the market with Controil. It's not going through Controil. Controil brand is produced someplace in the world, and we supply all of our distribution operations worldwide. It's very positive for us. We didn't ship to mature markets. There's a lot of space in Latin America. Let's think about Latin America, closer market where the brand is better known.
We had some experiments in the past with us. It's easier to enter once we have this robustness in Latin America. Important volumes with manufacturing. We can think about going to more mature markets with purchasing power together with the partners. I would like to add here. We have gained important strength in the light line market in ads and friction material. The last years, we grew 5 percentage points, sustaining the best position we might have had in history. This moment, we're launching strong with the Fras-le product line, ceramics, that has organic growth, also good initiatives in different areas. You mentioned many times our dream of having leadership in shock absorbers. We have advanced consistently with this, being cautious to have quality margin, invested heavily in the manufacturing in Estrela for shock absorbers.
We brought support of raw material purchasing that we have connected to Randon Corp and with the leverage. This brings an advantage that other competitors do not have.
[Foreign Language], Emerson. Thank you.
Thank you. [Foreign Language] . Question from Luísa. [Foreign Language] . You may ask your question.
[Foreign Language] . I would like to understand better the margin, gross margin, composition, the decrease we saw. What was the biggest impact? There was a stop for one week in Argentina. I want to know how much this affected and the other reasons that we saw the decrease. That's what I had on my side. Thank you.
Luísa, first of all, thank you for your question. The decrease in the gross margin is very much connected to the mix of products that we're selling currently.
There isn't something outstanding that we saw that we could bring a difficulty. We do have the higher competitiveness in heavy friction area or sector. It has been one of the areas that is more competitive. We didn't give up in price, but we have tried to seek many ways more competitiveness, more intensely in production. It's one of the most automated lines we have. We have one of the biggest manufacturing plants in the world of this product. We're competent and competitive, but this is one of the markets that has the tightest margins. There's a regular dynamics of markets. Some items, especially Nakata items, this quarter, the beginning of February, might have an impact in margin. Talking about structure, there aren't any points, a red light that could say this is a trend. It was the impact related to the product mix that we sell.
I can add also, if you allow, thank you for your question. A margin dynamics that's more regular due to the market being more open. If we look at gross margin today, the Fras-le Argentina is where we have a reduction of margin. Remember, we had speculative sales in the past. Opportunity to become profitable. We needed to protect stock and keep the market serviced. Now the market is more regular, the competition is more open, and the business dynamics is closer to a regulated normal market. As a consequence, the game changes and the margins accommodate. Remember that Argentina, a good part, almost all, we have margin on margin because a good part of what is sold there is produced worldwide. So the combined margins are always healthy, but it's a market that brings margins to a different level than we have navigated, and this is happening systematically.
We're increasing revenue, we increased volume, but the margin level is a more normal margin level, a regulated market margin level.
Okay, great. Super clear, guys. Thank you.
[Foreign Language], Luísa. [Foreign Langauge] . Q&A session is finished. I pass the floor to Anderson for his final words. Thank you, Mônica. Thank you, everyone, for being with us.
The quarter is very strong. We continue strong. We're optimistic regarding the future. Da Nakata in the beginning, juntos. Of the stock together. A promising future. It will take some time to see the results in the balance sheet. The stock is still high there. We're developing the product portfolio, designing the routes in 10 work groups to create value. We will see more in the end of the year, but a highly high likelihood that we will have good benefit in a good year for 2026.
I thank you for your participation. Have a great day.