Good morning. Welcome to the video conference of Frasle Mobility for the Presentation of the Results of the Second Quarter 2025. Before we begin, we'd like to go through some important notifications. This video conference is recorded. After we finish, it will be made available on our website, ri.fraslemobility.com. We have simultaneous translation into English. To access, just click the button "Interpretation," represented by the icon of a little globe at the bottom of the page. By the end of the presentation, there will be a Q&A session. Questions may be asked in two ways: via audio, showing your interest through the "raise your hand" icon, or in writing through the Q&A button. In addition, we'd like to stress that the information addressed in this video conference is not a guarantee of performance, as they involve risks and uncertainties because they are about future events.
Therefore, they depend on circumstances that may or may not happen. We'd like to thank you for joining us in another video conference of results. Here we have our Chief Operating Officer, Anderson Pontalti , the Director of Business and M&A, Hemerson de Souza, our IR Manager, Mariana Guimarães, as a guest, IR and Finance Director Esteban Angeletti. Now we'll hear from Hemerson, who will start the presentation.
Good morning, everyone. It's a privilege to be talking to you today about the result of the second quarter in the first half of this year of Frasle Mobility. We had a lot of positive things that had an impact in a significant way to our business. They are future bridges for us to continue advancing and growing our businesses, among which we'd like to highlight that we completed the substation of energy of Fremax in Joinville.
This investment that started some time ago brings to this unit 25% of additional capability. Therefore, it is extremely important for our plans to continue offering brake discs for the domestic market and for other geographies. This is ramping up its production, so in the following months, we're going to have full capability being used because the demand for this product is pretty heated. As a subsequent event, we also finished the purchase of the equity interest of Frasle Mobility Sorocaba. It used to be called Jurid do Brasil. It was a joint venture. In this context, we bought the remaining equity interests of 19.9% for a symbolic amount. This was widely communicated. We took on some contingencies since its acquisition in 2017. It was an important purchase because we are advancing in the OE market through the availability of this unit.
In this context, we also, in addition to the planned, we took another plot of land, two plots of land, practically 77,000 square meters in a very privileged region. Another point that I'd like to highlight is this unit is strategically located in the municipality in the heart of São Paulo, where we may, of course, change this into a hub for other products for manufacturing and distribution in a consumer center such as São Paulo. This movement definitely has a goal to strengthen our production, so we become more and more independent, and we get closer to the OE market because we're making quotations, and this has been one of the lines of organic growth. Moving on to the next chart, we had a subsequent event.
We concluded on the 15th of July, the third follow-on of Frasle Mobility, the most recent one where we issued, we offered BRL 400 million, out of which almost BRL 250 million was primary offering with a clear objective to have more liquidity to our company because we suffered. We kept the liquidity, that it's enough to access investors in a different range of spheres, so we can back up our shareholders with a liquid company and to give the opportunity for new shareholders to access our company. This also enables us the admission of resources, and we still have in our pipeline an agenda of acquisitions that is pretty active. We are not about, we're not going to do anything right now, but we're always ready for that.
This has been a year of dedication to the synergies that we're looking for and realizing in the context of Dacomsa, which I'm going to address in a minute. Of course, we're concentrating this journey to internationalize the company more and more. We consider this a movement that is pretty strong as a company. Unfortunately, the market conditions right now are not stable enough. They end up highlighting, being a highlight in the market, and they impact the performance of the company right now. Therefore, it's not there in the value of our, but it's temporary because our business is continuing in a very positive way. This is what I'd like to share with you in the presentation today.
In this movement, we also had some shares that were sold by the controller as a secondary offering that are going to be allocated as the purchase of a private purchase that was already done, informed to the market by Random Corp. Moving on to the next chart, let's talk a little bit about our agenda, our market agenda. On the 18th of November, we're going to be with our universe, Frasle Mobility, in São Paulo this time at MZ Arena. You know this at Alameda Vicente Pinzon. We're going to share our business executive agenda for the coming years, but also analyzing the current businesses and the possibilities that are real, possibilities for growth in our company.
I'd like to invite you all, here's the date, save this date, November 18th, São Paulo, in a very clear, transparent way, as we always do in relation to the agenda of our businesses. In this next chart, I'd like to invite you to take a look to understand the dynamics of the first semester as a whole. We really have a new year, let's say, in the size of revenues. Of course, this is promoted by the relevant acquisition, the most relevant acquisition we've had in our history, Dacomsa. We're growing about 50%, 47.8% to be precise, compared to the first semester last year. This has a component of organic growth around 11%, which is quite positive considering the micro conditions that we operate our businesses.
To be pretty straightforward and frank and candid, no matter how much we try to explain the results for this quarter, greater pressure for competition in some of the countries where we operate, this is not a new event for us. We've always dealt with this, with competition in a very efficient way where we operate in any geography. Especially in the domestic market, this year has been suffering in a clear way in relation to the cost of capital in Brazil and this dynamics as a whole. This does not interfere with the sales dynamics among our clients. The sellout of our customers is still very positive in all geographies: Brazil, Mexico, Argentina. These are major countries for our production. The sellout dynamics is pretty positive. What has been is a waiting or adaptation format in terms of inventory levels because the capital costs are higher.
This impacted some markets in terms of our sales. As the inventories are consumed, they need to be filled, refilled. This explains the beauty of this aftermarket, which does not suffer from this. Right now, it does not suffer at all when you compare with other industries that have a more direct relationship with trust or with credit that may have ups and downs. Our market is still relatively stable. Of course, the opportunities for growth are concentrated in the efficiency in terms of room for market share and maintenance and growth of market share, efficiency to research for new businesses in the geographies where we are and to consolidate the processes of M&A that we have. Remarkably, we have growth in the U.K., the introduction of new lines in the U.K.
We're going to use this privilege in Mexico as we introduce new product lines and as we give more competitiveness to the lines of products that Dacomsa already has because this will back up our process of sales and competitiveness. Now, going back specifically to our revision of guidance, we had a small adjustment. After six months, we noticed some of the movements we had in the geographies where we had. This is a subtle revision process to be as fair as possible with the market. This is a reading that the market had that they forecast already as the months went by and that we published our revenues. They had an idea. We refined this and we have a forecast of an extremely good revenue for this year. We're going to have the best year of our company.
Of course, concentrated on the movements that make it unique, the acquisition and resilience of the aftermarket. Right now, 93% was aftermarket, converging towards what we said that the acquisition of Dacomsa we're going to reach 95%, which is towards a much more supportive and resilient market in relation to the ups and downs of the market. The numbers that you see here going down a little bit in relation to the publications from early this year in relation to the follow-on, this is concentrated, it's refining this concept. Likewise, the margin we refined this, we know that the interval, the longer interval, the shorter interval is not going to happen again.
We're sure that we're going to keep good levels of profitability of Frasle Mobility for the following quarters, for this quarter, where we show the effects of a small drop because of the lack of stability, the tariffs imposed by the U.S., which impacts the dynamics of our clients. Just to give you an idea, we have sales of OE to the U.S., and the heavy vehicles here go down by 30%. We have an impact from that because we have in the aftermarket, the freights in the U.S., we have strong sales to heavy vehicles. They're going down by 15% or 20%. This does impact our sales marginally because today around 6% of our sales is to the U.S. market, but does not impact dynamics and the consistency of these markets where we operate. These are specific impacts. We adjusted this a little.
Why didn't we adjust the foreign market? This is the range that we expect. We have growth in Argentina, in other countries in Latin America. We can advance some business lines in Mexico this year, especially those connected to heavy vehicles. We have good performance in some European countries because of Juratek. In the general context, with a few exceptions where we have more competition, heavy vehicles in Brazil, the shares that we lost due to the floods in Controil Brazil, all the other markets are still resilient with a bias towards growth, growth bias, with the competition dynamics that has always been there. We always did pretty well by using the tools and the strengths of our brands and our company as a whole, and the service level, product quality, efficiency, with our dealers being close to the applications.
We're sure that we're going to continue the same level of business that we've had historically. The guidance, like I said, for the foreign market has grown 75% in relation to the first quarter last year. It's still the same. We have not changed the interval. The investments, we have an investment that is higher in the first semester because we finished the process of stabilization of the substation of Fremax and other derivatives. We had new installation of equipment in Brazil to improve productivity in the heavy lines for disc, brake discs, brake pads. We did not change our guidance interval. Moving on to the next chart, to be more specific, let me tell you about some of the highlights of this quarter. BRL 1.4 billion revenue is a record. We never had this before. Of course, leveraged by a relevant acquisition, but I'd like to repeat this.
Acquisition is part of our core business at Frasle Mobility. It will be part not only of this period of evaluation, but the following ones as well. As we move on, we notice the domestic market that is heated. We grow our market share. We lost some others. It's true. Controil, like I said, the floods one year ago, they hit the state of Rio Grande do Sul. Controil suffered from this. It could not continue with some of the dealers. When our competitors get this market share, it takes time to take that back. We are fully targeting this, and we're going to take this back again. We have competitiveness. We have room for improvements and a number of things to offer through control. We have availability. Right now, we have lower inventory levels with our clients.
This is because we had a hard time last year with the floods, but we are recovering this. Pretty soon, we're going to have better results. In Brazil, the heavy lines are being more competitive because of the freights and other aspects that we know here. In the foreign market, we're operating cautiously, certainly due to the tariffs environment at the moment. We have some orders that have been delayed, but we're consistently growing. We're keeping our position in all geographies where we are, especially Argentina, where we're growing due to the additional offer of products that was not possible in the past due to the restrictions that we had for exports and imports. Just for you to have an idea, we expanded 10 times the amount of pads that we sold there. We sold 10,000, and right now, 35,000.
Dacomsa, we never had such an integration that was so positive like we had right now. We have a number of rounds of work, types of work. As we realize this, I'm going to give you the details. It's not the moment right now. We have $11 million or $12 million of synergies awaiting for us in the fifth year. We have a possibility to reach this in a year and a half, but we have around 20% of synergies that are already implemented. They come from raw materials that we use. These are two or three that bring this analysis. Manufacturers, supply chains, in an intense round of negotiations, very positive. It is possible in the first quarter next year, we're going to have this. As we realize our inventories, as we have new products, we're going to grow our market share because of our competitiveness level.
We'll have better results like we had with Nakata, Fremax, and other acquisitions. The first semester, moving on to the next chart, we had growth of 47.8%, notably coming from the acquisition of Dacomsa, but we have 11% of organic growth in this quarter, in this semester as a whole. A dynamic recovery in the quarter due to this decoupling of the good sellout, higher inventory level. Clients are reducing their inventories as well. We notice a service level that gives the client the opportunity to buy in a segregated way. They don't need higher volumes because we have fast delivery, and the service brings them encouragement. As they sell their inventories, they refill their inventories, and this brings regularity to the market.
It's important to say the advances of the revenues are connected more to the domestic market at the moment because we have stability with our workshop service levels. We also have the exchange rate and other things, but we do not have problems with price. We're selling more volumes, and our product mix sometimes does not reveal this, but we are selling more volume. The results here show very clearly how diverse our portfolio is and the fact that we have diversified geography. We have the discipline to keep the coherence in the margins and the offer of products. We don't want to lose our market share. We don't like this, but we always prefer to keep our position than recovering this position.
As opposed to what some of the reports have been saying, we do not have competitiveness with the Chinese we always had, but what we see right now is Chinese products not for the aftermarket because they're in all geographies. This is no news. It's just a continuity. We are clients of Chinese. We operate with partners, Chinese manufacturers. What we have seen is vehicles, new cars, new Chinese cars in geographies like Argentina, Mexico, Brazil, getting more relevance. Here, this translates into an opportunity for us because we're always the first player to offer solutions in a quick way. Remarkably, we have a strong offer for Chinese cars in Mexico, Argentina, and Brazil. Right now, the volumes are still small. Here, we can see how the revenue breaks down.
The second quarter, we had 93% of revenue coming from the aftermarket and 78% coming from the light line, where we can see service level at a very good level and good profitability for the geographies where we work. I understand that the flow of cars is very positive. It enables us to grow in the domestic market. 13%, 13.6%, it's organic growth. There was no acquisition here. Quarter- by- quarter, we have almost 14%. The adjustments in the clients they expressed negatively are the performance. As we adjust the inventories, we have the recovery of sales. In the foreign market, of course, we have a relevant acquisition, but we also have all this growth of sales that we had in the geographies where we operate. In the U.S., in general, we had stability and some drops.
When we talk about offers of OE products, there was a relevant drop that impacts our sales. There's no scenario change right now because the industry itself is still awaiting the sanctions and impacts from the U.S. economy. It's performing well, but does not reflect the moment of the heavy products in the U.S. because it's an industry that takes some time to react. The bias here is slightly positive. It's not very positive, but it's slightly positive because the inventories are sold for new products. They need to produce more trucks for the sales. Mexico, like I said, we had growth year by year of Dacomsa. As you can see in the reports, from 3% and 5%, basically, this is volume. There are a few lines we expanded the price.
In Mexico, we can see something new, which is engines, because the market of engines has a demand of aftermarket, of spare parts. It's not going to go through the ups and downs, but there is a scenario of crisis where there is maintenance, where within a scenario of crisis, it takes longer. For delivery, it takes longer for delivery. Some clients always say this is normal. The demand is here. Some clients still, instead of having maintenance this month, they wait two or three months. Usually, the second half is much better. We understand this as a learning curve, but in the brakes, in the industry of brakes, we grew a lot in the lines in a way that we have a growing operation at 3% - 5%, basically in line with what we expected for this year.
In the second half, we're going to recover some small differences that we have. I tried to address in a clear way. I'd like to stress the competitive dynamics that are present in our industry, in our market. Of course, we had years that were favorable to sales. This brought to us some confidence in what we do, and we got a lot of room. This doesn't change, but for a year, we've been talking about this. We have some regular sales, but they're part of our course. We don't have this intense level of sales that we had three years ago that enabled us to go through such positive moments. We're still going through some good moments, but with lower sales. As we deal with, it's not like we don't have parts or logistics difficulties. These days, it's much more stable, much more regulated.
It's part of our everyday work. We're ready to deal with this. I'd like to sell this optimism that we have about our business from now. Now we'll hear from Mariana about the dynamics of the results of the company in a number of other aspects. Mariana, over to you.
Thanks, Hemerson. In slide 11, we see the EBITDA with a margin of 6%, and 2 points below 1T, showing the EBITDA. The gross margin is stable. It's still a small drop in relation to the cost of adaptation of the labor and more pressure for discounts. The expenses with sales, with Dacomsa and maintenance of their distribution center, and also had more spending with freights due to the volumes that are exported to Argentina. The administrative expenses reflect the consolidation of Dacomsa. In addition, the M&A expenses are BRL 1.3 million. There were no one-off effects in this trimester.
In the next slide, slide 12, we can see the main lines of variation in the operational cash flow, which closed the semester as a negative number at BRL 602 million. The financial result was impacted by the variation of financial revenues due to the availability of cash flow, reflecting the stability of Argentinian currency and the silica. In relation to the variation of the capital workflow, it comes from Dacomsa that operated at higher levels compared to Frasle Mobility, which we are addressing right now with the synergies after the acquisition. Comparing to with G25, we had a reduction of 11 days, reflecting the efforts that were executed for credit for the funding and our clients, especially with the inventory mix.
In slide 13, we can see that the company closes to G25 with a net profit of BRL 49.7 million, with a net margin of 3.7%, impact coming from the financial expenses coming from that level. The effective rate of income tax was 27.3%, 14% points smaller than 2024, especially the impact of the restructuring of Fanaseed. In relation to EBITDA, it's 2.2 times our net EBITDA. Considering the EBITDA pro forma adjusted in the last 12 months, because of Dacomsa, the company would finalize the quarter with 1.9 times of leverage. Now we'll hear from Anderson to talk about the perspective of the next quarters.
Thanks, Hemerson, Mariana. Good morning, ladies and gentlemen. Surely, the question about tariff will come up, and I'd like to address this already in a more specific way, how we see this moment, the snapshot.
We know the volatility, the uncertainties, and the trajectory changes that are necessary. 6.6% of our revenues, our exports, in fact, are part of our revenue. It's a relatively small business. We have two main products: friction products, generally lining, brake lining, and brake pads, heavy brake pads, and light brake discs. We have the amendment 232, which overlaps. It's over the current tariffs, on top of the current tariffs. It's attributed to cars, light vehicles, steel, aluminum, and auto parts. Here we have 27%. Right now, our vision is competitive advantage because China does not have the possibility of 232. Therefore, they're a great supplier, a major supplier in addition to other markets. It generates more opportunities, more orders, which is in line with our investment recently made in the substation in Joinville of Fremax.
When we talk about lining produced in Caxias do Sul, exported on longer contracts, it's important to bear in mind the incoterm. The incoterm is FOB. Those that collect the tax is the customer. The customer collects the taxes. The impact will be on them. We look at the possibility of producing this in a competitive way in another geography. We understand that Brazil, India, and China, when we look at the cost, the FOB or ex-works costs in each geography, these are most competitive geographies because they have scale, they have ores, and it's hard to get the same competitive level without considering tariffs. These are investments that demand time and CapEx to produce at the demand level that the U.S. market needs. It would be too long for a change of supply chain here. Given the volatility, of course, we're not sitting right now too comfortable.
We're always looking at possibilities. We have a plan in India and China. We have possibilities in Mexico and even Alabama. We're looking at dynamics, but we believe with the tariffs of 50%, and yesterday confirmed the tariffs for India, 75% for China, which makes it easier for us. We become a little more competitive than China. This is important. We have a contract in force. By talking to our clients, we have a very close relationship with them. We have no intention to have migration studies. What we have is our proactive work to bring alternatives to the table for our clients there. We have an alternative, which is accountant based on accountability to minimize, as long as accountability and tax law enables us to have lesser profitability in Brazil, to have higher profitability in the U.S. The import cost would be lower and the tariff would be lower.
This is a temporary competitiveness that our competitors can also have. They could also do the same thing. Right now, we're protected. The volumes are lower, reflected in this quarter and reflected because of the American dynamics. The American economy is stressed there. It's slower. Every month, we see things are deteriorating in terms of demands there, around 20% - 30% of the original market. In the aftermarket, 5% - 10%. We gained a lot of market share there in the past year. We're still strong. Next slide, please. Now talking about in a wider way, how can we see the outlook of the company? Hemerson pointed out that demand is a safe ground for our business when we talk about aftermarket. 93% of our business is aftermarket. We may cut here your appetite inventory for capital cost. You may postpone maintenance, but the demand is there.
It may not happen here. It will happen in the future. The greater decision makers for spare parts and aftermarket, it's with the brands. We're investing every time and our perception of brand is growing. Brand is really a certification of good repair from the mechanic standpoint. We have a good timing here. We get market share. We get penetration because of that. Because the market is more limited and we have more geographies, we can use our dealers that have healthier status and they get market share in relation to smaller dealers because we are number one supplier in Brazil, in Argentina, and in Mexico. Right now, the demand may be soft, may look soft, but there is always sun after the rain. I'm not talking about a storm because there is no storm. It's just a softer demand because of the uncertainties.
Every time we had this in the past, we had positive results upcoming. It's a matter of a change of perception about risks and dynamics in the market. The pressure for costs is historical. It's been with us forever. I usually say we sell a lining here for the same price in dollar that we sold 10 years ago. This is competitiveness. This is looking for being better every day. We're very happy with the leadership of Hemerson, with Dacomsa's team. What we have found in terms of possibilities of synergies in that geography is awesome. Surprisingly, we're going to be able to get all our promise of synergies in sourcing and in raw materials and business without considering an increase of volume in product lines due to the competitiveness, not even mentioning supplementary lines.
This makes us really positive and optimistic about the future results of the company, especially when we capture this late this year and early next year. Of course, we're investing heavily in people and structure so we can capture this at a higher level. We have a lot of people spread around the world talking to our chains, developing chains, getting sales leverage, and so on. The horizon is very positive. The quarter is a record quarter in terms of revenues, pretty favorable compared to last year. Without dark clouds in terms of tariffs, at least right now, we continue being strong. Our main goal is Dacomsa, to integrate Dacomsa. It's still strong. We also had structuring movements like our follow-on, like the substation, and the 100% of Frasle Mobility Sorocaba with the equity interest that were bought. We're still strong. Now we'll hear from Monica again.
Thanks, Anderson.
Now we're going to have the Q&A session. The first question comes from audio by Gabriel Tinem, his Santander analyst. Gabriel, feel free to ask.
Thanks, everyone. I have two questions here. One's more connected to the guidance. We noticed that compared to April, that was the range of foreign market is still the same when you look at dollars. When you look at the consolidated revenue, the range had a drop. I'd like to understand this effect. Was it dollar or is it since April you were more conservative with the foreign market? If you could share also the domestic scenario, competitiveness, and the behavior of dealers. The second point, more focused on labor, if you could comment on the adjustments, the one that had an impact on the gross margin. Also provisions, contingencies, if there was a relationship.
I'd like to understand this movement and if there's going to be an impact in the future. Thank you.
Gabriel, first of all, thanks for your questions. We're going to take your question together. If you can talk about the wages, adjustments, and so on, that would be great. In fact, we had a performance that is more positive than we expected in the first quarter in the foreign market. There are many things that converge. Exchange rate that is more favorable, businesses of Dacomsa that added in an anticipated way, let's say. We didn't know when we were going to incorporate Dacomsa. We had a movement of materials in the first quarter that was very positive. Even though the sales went down, we have our subsidiary there, our dealer in the U.S. that ends up doing this dynamics of client control.
We have growth in a number of other geographies like Argentina, the U.K., Europe. In general, we have been growing in the foreign market. Therefore, we do not touch the range. It was more conservative when we published, and this is our forecast for the foreign market within the range that we published. When we look at the total, there is no division there of foreign or domestic. We do have there the dynamics of exchange rate and the movements that may distort this a little, but it wouldn't make sense to change the range because of perception. There's no direct link between these two things. We keep it like that because it's favorable. The first quarter illustrates this. We don't wait for significant drops in the second semester. We're just adapting in our guidance these movements that have a more direct impact.
The movements that have to do with our clients' inventory levels, the exchange rate, you have an average stock exchange that is weakened for the second half and the hardship from the dynamics that was promoted by the tariffs, promoted by the U.S., led by the U.S. that impact the local market on heavy products. The economy is going well. That's why we don't have these differences here. There is no scenario in terms of saying that the competition is harder here in Brazil. No, everything's part of the regular business, business as usual. The dealers, we have a KPI here that we say is the workshop service volume. It's growing 2%, 1%. It was not such robust growth, but there are no drops here. The workshops are still working. The parts are still being sold. They've informed the sellout. The sellout is pretty positive.
We're getting even market share in some lines. The point is that the clients are buying less sellout because they have lower inventory level. They have good service. There's no problem of shortages. In other cases, the clients, they continue buying as usual because it makes sense. They expand their units, their offices, their dealers. Generally speaking, as we regulate this, we understand this is regulated. The sales flow will continue as usual, except the industries that have a harder time, the heavy vehicles in Brazil, the control lines that we are aware of what we're going to do, and we are doing this. We can see every month the sales going up little by little, but we have room to advance outside Brazil. When we talk about this range, I think this is the explanation. Now we'll hear from Mariana, perhaps, on labor.
Oh, I just would like to comment something here. Everybody talks about competition. Competition, no doubt, is higher. It's more abundant in terms of products. We have two or three protections that are very relevant. One is brand. Another one is availability. The scope of our portfolio is pretty robust when compared to any player in this market that could impact us. We have a lot of room there. We have the main dealers across the geographies. This combination is very powerful, where you can have economic cycles, but you do not have structuring movements. You can reduce market share to be attacked in a very specific way to lose market share. It's good to keep in mind that, structurally speaking, it's very hard to attack Frasle Mobility from its share level. We have not seen this, which is hard not to see because of the tools that we have.
We can respond very promptly to ensure that the levels, the volumes are good enough. When the market wants to buy more, we can really benefit from this in terms of volume and margins.
Thanks, Anderson. Now, Gabriel, a little bit about gross margin. We had costs connected to raw materials with higher imports of manufactured products from Nakata with increase of sales of Nakata. BRL 3.1 million, this impact quarter- by- quarter coming from restructuring of labor, adaptation of headcount based on the revenues forecast, and elimination of low inventory turnaround, BRL 13 million, in addition to the expenses from raw materials. How about the contingencies? We're updating this constantly about health conditions. This may advance, and it will be positive for the company in the future. We're sure. Obviously, it's going to take time, but there's nothing that is not healthy in our operations that could have an impact.
We're going to update this. This is perhaps the main point in terms of contingencies. The rest is business as usual.
Thank you.
Our next question comes as an audio from Fernanda Urbano, sell side of XP Investments. Fernando, feel free to ask your question.
Good morning, everyone. Thanks. We have two questions here. First, I'd like to know about the competitive dynamics. You talked about some pressure, price pressure. I'd like to understand if the effect of Chinese vehicles coming to our market and the auto parts, what is the effect of cars and auto parts coming to our market? In relation to this, can you comment a little better about the categories of products that have some changes in the competitors and market share level in Brazil and Latin America? This is the first point to understand better the competitive dynamics. The second point is about profitability.
In this quarter, we saw lower leverage in revenues that were postponed that had an impact on the margin. You're at the lower range of the new guidance. I'd like to understand, looking ahead, volume mix, product mix, and synergies of Dacomsa. What would be the main driver for the second half to take this margin to the middle or high end of the guidance?
Thanks, Fernanda. Let me answer the first part, and then we'll have Anderson answer the second part. First, I'd like to tell you all, all with us, more Chinese vehicles means for the aftermarket more opportunities. It's not actually a competitiveness that is, it's not different, it's no different from support of the demand of a car made in Brazil, in Europe, or in India. It's the same. What it brings about is a future component. It changes the product mix.
You'll have to develop this product and so on. We are very good at this. We're always the first one to adopt and to offer this. We know some other markets in Latin America, Mexico, for example, 18% of the sales of new cars are Chinese. This is relevant. In Argentina, this is growing. I don't have the figure right now, but this is also growing. This brings us the opportunity of selling parts for a category or a population of cars that's not part of our portfolio today. We have developed some parts for them. Of course, the product takes some time for maintenance. For example, brake discs and pads. We have a majority of models sold in Brazil and Mexico. We're evolving pretty fast there because they have premature engine deterioration. This is an opportunity. We need to consider auto parts, spare parts.
The Chinese operate in all markets around the world. They provide the supply to many of our competitors and to ourselves. In Brazil, Nakata, 75% of market share business is co-manufactured. Some partners are Chinese, and they offer at very unique conditions so we can continue advancing. We have not seen advance in direct offer by the Chinese. They don't have brand. They don't have service, and this is really important for the aftermarket. How can you deal with any competitive advancement? It's the strength of our brands. It's the service level with credit support, offering the whole product range. It's very complex. Otherwise, we would have too many new competitors every month, and it doesn't happen. It takes long to get to this level. We grew as Frasle Mobility when you compare to other countries. It would take long to develop this kind of dealership and intelligence.
There's no room for them to grow in this sense. Of course, on the other hand, the main competitors that we have in some markets, some are stronger because of their commercial strategies. They want to take market share just like we do in other geographies. This is a push and pull kind of game, right? It's normal. There's no stiff competition with the Chinese. They've always had their room, their space, and we have a good relationship with the Chinese that makes us competitive. In some lines, we are even more competitive than the Chinese. We talk about this sometimes. We're a relevant player in heavy friction, very relevant of pads, of dampers. We have very competitive levels here compared to the Chinese. We buy part of their product range with them.
This hasn't been a problem with us, and we advanced market share in some suspension products, in dampers. In Mexico, we advanced market share in brakes. We did not lose our market share in relation to other product lines, except for the only one is control items because of the floods. There are two months and a half, almost three months that we did not produce, and the market cannot wait. If the car is there waiting, they're going to buy from a different seller, and this takes some time. I'm not talking about too long. I mean about a drop of 15%. Instead of the company of BRL 230 million sales, every month we're getting better. We're recovering, and to do better, we need to improve supply, to have some promotions, offer special offers. This is all connected.
The heavy industry, which is more competitive, it is always harder in Brazil and outside Brazil because of the uncertainties. Right now, I don't see that the competition has changed. No, the competition has always been there. Today, the level of offer and demand, supply and demand, is not items that are privileged higher inventory levels. In the field, there is still buy-in. The cars are still working, and the aftermarket is very good. With a small delay, we're going to profit from this in a direct way. I don't think that growing 11% organically is any bad. The growth in revenues, even though the margins have not reflected this way, I mean, it's biased. The levels where they are are pretty positive. It's very positive due to all we do. Overnight, we cannot have a strategy to move a new tariff with the U.S. market.
I mean, it's not done overnight. There's a whole dynamic for some products that we need to deal with. It's not a movie. Okay? This is not the reality. This is a movie, not just a snapshot. The snapshot is just a moment. Being close to the customer to promote our brands, this is favorable. It's always been, and it will continue to be so. It will be a stronghold. Would you like to answer about profitability?
Definitely. Yes. This is our commitment, like you said. We want to continue with the volumes. Therefore, we had to make some concessions. Even though we had inflation pressure, Fernanda, we guess we touched some prices. Even though we know that our cost, because of the spike that dollar had earlier this year, it would mean that we would have inventory levels that were higher.
That's why we say that we wait for better profitability for these products in the next periods. As much as we observe, in some commodities, we have some retraction that may benefit our cost structure. The second quarter was marked by a specific restructuring. We adapted our headcount based on the American demand that is not so strong. Two points of drop of our domestic market. This adjusted our working capital, and we adjusted this working capital. We adjusted this in the leverage of the company from 2.6 - 2.2 in the quarter. It's without considering the capital, the follow-on capital. Dacomsa has been with us only for 4-5 months, and it already has a very favorable leverage.
We are protecting ourselves, making sure that we're using the right tools so that when the market has better expectation, more of a buyer expectation, and less speculative expectation, we're going to take off again. As we can see in Argentina, Argentina is in a very positive cycle right now in terms of market dynamics. I can share with you this. We sold 4,000 dampers every month before Meyle because we could not import more than that. The demand was repressed. Now, in the past month, in July, we sold 39,000 dampers and this repressed. Our brake pads, we're selling 60,000, 60,000 very positive growth. The markets that are taking off, we're benefiting from them. The foreign revenues are not going down. The guidance is going down a little bit. It's about dollar exchange rate and the American market.
Basically, that's what's reflected in our future perceptions without cutting the conversion that we committed even from the initial guidance.
Thank you.
Our next question is audio from Gabriel Rezende, Southside Itau. Gabriel, go ahead.
Thanks, Monica. Good morning, everyone. Two quick follow-ups from the initial presentation. I'd like to understand, confirm one point about the updated guidance that incorporates this premise of the tariff, of the new tariff on the U.S. at 27%. I think Pontalti mentioned, so the tariff would be 50%, but there is a clause that overlaps that could mean 27%. Is this part of your new ranges for the guidance? The second point, Hemerson mentioned, integration of Dacomsa that has been very good, maybe better than expectations, better than expected. I'd like to hear from you an update about synergies, about the integration for the second half. Any updates in relation to that?
Thanks, Gabriel, for your questions. Very quickly, 27% applies. We have $60 million exports to the U.S. 27% is for $10 million of these $60 million related to brake discs that benefit from, based on the explanation that Anderson gave, steel product and foundry products. The other $50 million, the brake lining, we're going to have to pay 50%. We're having a number of movements to mitigate this for our client. Yes, we have competitiveness that is better than China and India. Our products are trusted. We're looking for other alternatives for mitigation, such as margin composition between Brazil and margin because we sell to our unit in the U.S., and then they can sell to our client to reduce the taxes. The 27% is only for the $10 million. The rest takes on 50%. Now, Dacomsa, yes, we are extremely positive there.
I don't have more specific data because it's still very recent. As we update this, like we did with Nakata, we have the temperature checks. Here's the thing. We promised BRL 300 million over five years. If we divide this by five, at BRL 60 million , $11 million, we captured 20% of that already, $2.5 million. Of course, it's going to be realized in a year. You don't capture this right now. It's over a year, right? The perspective, the outlook is really positive between today and a year ahead. We're going to have all this amount and only a few lines, a few product lines without counting operational efficiency and so on. It's definitely very positive integration. It's going to continue being so. We're going to share more data so that you know more about this, but it's well managed. Company at a margin level that is very good.
It has a hard time growing because it has reached this limit and needs competitiveness in these lines. What we're giving it is this competitiveness so it can grow revenues, volumes, and to give more results. In terms of engines, however, we have more market share. It's harder because they had 50%, 60% market share, but we're going to improve the productive, the manufacturing processes to recover the margins so nobody gets our market share. We know how to defend our market share. I hope I answered your question.
Thanks, Anderson. That was great.
The Q&A session is over. All the questions may be submitted to the IR email. Now we'll hear from Anderson for the final remarks.
Thanks, Monica, and all that were with us.
Another quarter, a historical quarter in terms of revenues for Frasle Mobility within the guidance with structuring things that were done with the positive outlook. Regardless of this turbulence, I think the company has a model that is protected from the exposition because it's based on the aftermarket. It's more related to the GDPs. Geopolitically, it's pretty protected as well with a strong presence in all America. It's contributing very positively to the foreign market. It's a very seasoned, experienced team that understands that it needs to make fewer adjustments to fine-tune so that any threat does not reach us. We're pretty successful in this. We hope that all this volatility will end or will be reduced over time as policies are applied and implemented, and we're going to benefit from a more optimistic market in the near future, hopefully.
As Hemerson said, regardless of sunny weather or cloudy weather or right wing or left wing, we have a model, a business model that's pretty resilient to any market condition. Thank you all and wish you a great day. Thank you. Bye-bye.