Ladies and gentlemen, welcome to MAHLE Metal Leve's video conference call to discuss the results for the second quarter of 2024. This video conference is being recorded, and the replay can be reached on the company's investor relations website. The presentation is also available for download. We would like to let you know that all participants will be in listen-only mode during the company's presentation. We'll then begin the Q&A session, when further instructions will be provided. Before moving on, I'd like to emphasize that the forward-looking statements are based on the beliefs and assumptions of MAHLE Metal Leve management and the current information available to the company. These statements may involve risks and uncertainties, since they relate to future events, and therefore, depend on circumstances that may or may not occur.
Investors, analysts, and the general public should take into account that events related to the macroeconomic environment, the segment, and other factors could cause results to differ materially from those in the forward-looking respective statements. Today, thus, we have Mr. Cláudio César Braga, Chief Financial Officer, Daniel Brasil Alves, Marketing and Corporate Communications Manager, Fábio Lopes Peres, Executive Finance Manager, and Everton Lopes, Director of the Technology Center. Now, we're going to hand the call over to Mr. Braga, that will begin the presentation. Mr. Braga, you may go on.
Good afternoon, everyone. Graziele, thanks for the intro. I have to admit that the video always moves me. It is always very pleasant to see the overview of our units and all the potential and synergies that we have. Very cool!
Well, let's talk about the results of the second quarter 2024 compared to 2023. Two very different years, if you think in macroeconomics, especially in Argentina and MAHLE Metal Leve itself, in terms of bank credit and leverage. And also compare the first half of this year against the first half of last year. We start with an overview and some points that we consider very representative and important for MAHLE Metal Leve. Then, we are going to go into highlights. One of them that was announced to the market one or two days ago. A bit also about the summary of the MOVER program. Everton is going to give you some color on that. And then a market overview, performance of the net revenues.
Daniel is going to talk a bit about how we are in the market, in Brazil and overseas, and also revenues broken down the different market segments. Then I come back to talk a bit about our profits and loss in the periods I mentioned, and then I turn back to Fábio to talk a bit about financial management, expenses, leverage, and et cetera. And in the end, as usual, we are going to be available for any questions or clarifications that you might have. Okay? Well, as Graziele mentioned, in addition to myself, we have Fábio Peres, Executive Finance Manager, Daniel Brasil, responsible for Marketing and Communications, and Everton. As we have been doing, usually, we always bring a special guest to give you some color or broach some topics that we think are relevant for the company.
Well, so the highlights, what I would like to draw your attention to, you did see in our financial statements, we closed the year with BRL 2.1 billion in revenues, slightly lower, about 2% lower than the first half of last year. And we included here an observation about operating profit. Despite the loss of 2% in revenues, when we compare operating profit, both gross profit and net operating profit, after overhead expenses and other financial expenses of about 18%-19% of revenues, going back to previous years, we see this number quite consistent and, even, slightly above what we saw before. So I think this has to do with part of your questions, the lines that we have below operating profit.
Another highlight, and you can see in research and development in the company's pipeline, we call it expenses, but we consider it investments of BRL 29.4 million. You see that we are united in the technology center in Jundiaí. Everton is going to give you a bit more color on that, but it is the Americas Center for the Development of Filtration Products, a segment that we have in Mogi das Cruzes, and in plants both in Mexico and in the United States. And also, as released some months ago, some of you had the opportunity of coming to visit Jundiaí, where opening of the Biomobility Center. In research and development, we have more than 150 employees. And another highlight that I think is important to mention...
is that we have CapEx approved of about BRL 120 million for the year of 2024. But two other projects came up after we talked to the market about the product lines expansion of the existing product, with an addition BRL 15-16 million. So the total CapEx planned is BRL 136 million for this year. And in the facilities that you saw in the video that we have in South America, we employ about 7,100 employees. As for the notice to the market on August 13, I've just. I'm going to be very brief, but this is a subject in which numbers are confidential.
As we mentioned, in the last bullet, this is still being under the analysis and approval of the Brazilian Antitrust Agency, CADE, so we cannot give you too much more color. But anyway, after the meeting of the board of directors, we entered into the share purchase and sale agreement. It still was a minority stake, one-third of the capital stock of Arco Climatização company that is located in Rio Grande do Sul. Our idea with the operation is to keep agility and flexibility and ensure the success of Arco's the success that it has been enjoyed since it was founded. And with our knowledge and capacity to negotiate with customer, suppliers, and our efficiency in logistics, admin, and financial areas, create synergies with Arco and really leverage the company's situation, both for MAHLE Metal Leve and for Arco itself.
This move is part of a broader move that we are going to be talking about in the coming quarters, but it's very strategic for MAHLE Metal Leve, because with that, we can strengthen our presence in thermal management, specifically with Arco, in air conditioning solution for buses, both existing buses and also future fleets, both with fuel fossils and electric engines. Well, can we go to the next slide? Just as I mentioned on the previous slide, the main market of operation with the partnership would be bus body manufacturers, especially, where we have a production in the 7 months of 2024 compared to 2023, with an increased volume of 47%. It's not an increasing volume that we can consider consistent year after year. This is a move that we see that can be cyclic.
It happens every two years, basically, when you have public tenders to renew bus fleets. But in addition, there is an extension of the adoption and even of the passing of laws to demand air conditioning in public transportation vehicles, and this can also leverage the partnership. I think we can move on to the next slide. Thank you. The second highlight, again, research and development, so I'm going to turn to Everton.
Thanks, Cláudio. Good morning, everyone. I bring to you a bit of an overview of our new program that is connected to the local automotive policy. It's called MOVER. It is an evolution of the Rota 2030 program that the market's very much aware of, but this is a more expanded product.
The objective is to develop technologies in the local market, innovation as an important point connected to technology, increasing global competitiveness of the Brazilian market, particularly the automotive market, but not less important, is also working with sustainability and decarbonization of mobility. Very important topics, and if you remember, we've been talking about that for some time with actions in the tech center in Jundiaí of MAHLE Metal Leve Group. So the idea is to have decarbonized mobility. There are important pillars in this program. First, benefits, clear incentive for sustainable vehicles and even OEMs in Brazil, they are going to have obligations of developing less polluted vehicles, reducing CO2 emissions. And at the same time, they will receive tax incentives to be able to sell these vehicles in the market in an affordable manner. Also, incentives for research and development activities.
Later on, I'm going to talk about this impact for us, which is quite positive, because in a way, it encourages activities developed in Jundiaí, and there is support to local production. So a clear indication of localization nationalization for the regional market. And all OEMs of automotive products included MAHLE OEMs, everyone involved in the program, raw material suppliers, input suppliers, but there are requirements, the most important being a minimum requirement in R&D. And, MAHLE Metal Leve is compliant with this requirement, vis-à-vis the amount that we invest in research and development, as Cláudio mentioned. So it is a program to really support technological development for the region. And the history of, MAHLE Metal Leve at MOVER does not start today.
We had an active participation in the building of the program in 2021, 2022, through associations, particularly with Sindipeças, of which we are a member. We work together with the government, and it was quite interesting because we supported how the policy was being built through the pillars we mentioned. In the end of last year, it became a provisional measure, and in March 2024, the program was open for enrollment. Companies enrolled, of course, complying with all requirements, but also starting process of incentives, especially in research and development. And MAHLE was one of the first companies to apply in April 2024, and we had the confirmation of the Ministry of Industry and Trade that MAHLE is inside the MOVER programs, has been since April.
Between 2024 and 2028, we will have support and benefits to develop technologies, focus on sustainable mobility, supporting initiatives with the Biomobility Center that we mentioned before, and also other actions related to national engineering. Next slide, please. The opportunities that MOVER brings to us, as I mentioned, not only auto parts, but OEMs, automakers are also in the program. In addition to requirements in R&D, they also have requirements for products. So in the coming years, OEMs will have to comply with requirements in terms of higher energy efficiency, reducing fuel use, increase the use of recyclable materials, and also have the labeling, that is, reporting to consumers the most efficient vehicles in the market through labels. So all these requirements demand new technologies.
So auto parts are going to require new technologies. OEMs, we have to be compliant, and that will generate a cycle of development technology. Not only these four things, the source of energy, ethanol, propulsion technologies, carbon footprint, that is how much the vehicle emits in terms of CO2, ethanol, hybrid flex. All these technologies are clearly referred to in the program as mandatory points that will certainly bring benefits to OEMs as well. How are we prepared for the opportunities? Many of you had the opportunity of visiting our tech center in Jundiaí, the second largest in motors-engine development in South America. We are very much focused on sustainable mobility with biofuels, recyclable materials, with the Biomobility Center, our engineering center for the Americas, not only in Brazil, but also working with the whole of the Americas.
In North America, we are anticipating demands. OEMs know very well MAHLE's tech center. They provide engineering services in our region, increasing our penetration in the market, and today we have 150 employees working in Jundiaí, prepared to seize opportunities. Next slide, please. So to conclude, the MOVER program is a clear evolution of the Rota 2030 program, but it has a broader scope with sustainable mobility, which is a clear opportunity for the next 10 years. So MOVER is very effective, is going to be very effective until 2030, 2032. So we have very clear directives in terms of technology. MAHLE Metal Leve was part of the development of this program. That benefits not only MAHLE, but the whole Brazilian production chain.
And through our R&D activities, the Jundiaí Tech Center has all conditions to be enrolled in the program. And so we did. And that will really ensure that we are going to develop new technologies for the company. Mandatory requirements, technologies, this is good for us, for the auto parts industry. Technologies have to be domestic. That helps us in the sense. And MAHLE Metal Leve's R&D structure is prepared for technological development, and we are paying attention to market moves, not only associations, discussions with the government, but also very close to our customers to seize opportunities to come. Well, this is my message about MOVER, and then I'm open for your questions. Thank you very much.
Muito obrigado, Everton. Thank you, Everton. Good morning, everyone, and thanks for attending our conference call for the second quarter 2024, the first half of 2024.
We are almost like 13 now, where we have sales and production in Brazil and Argentina, and also, North America and Europe. So starting with the upper part, we have the sales of light and heavy vehicles in the Brazilian market. So in Brazil, we had growth in the half year of 15.4%, 1,078,000 vehicles sold. The expectation of Anfavea was updated up, so it was 5.7, and it went up to 10.9%. So, the sales of vehicles is doing very well. In Argentina, 162,000 units, a drop of 21.7%. Argentina in 2024 is going through economic adjustments after the election of the new president. And, all the adjustments, to curb inflation, and that impacts the automotive market.
In the case of Argentina, for the whole of 2024, we have an expectation of -15% to -20%, so we are not expecting a huge recovery in the second half. Brazil and Argentina together, we're having light vehicles, 8.7% increase, 1.240 million units sold. Then the expectation in terms of projection for the whole of the year is to close between 4%-6% growth in vehicle sales. As for heavy vehicles in Brazil, growth of 2.8%. Here, it's always important to remind you that last year we could sell buses and trucks with the previous law, Euro V, so there was an excess inventory.
So the first half of 2023 was very much driven by the sale of these cheaper vehicles cheaper than Euro VI trucks, and therefore a growth of 2.8. The expectation for the whole of the year in 2024, for Anfavea, is 10.9% as well, exactly as light vehicles. In Argentina, as in light vehicles, we had significant drop, 29.9%, 5,600 units of buses and trucks. Projection for the whole of the year, also around that, a drop of close to 20%. Brazil and Argentina together for the first half of 2024 against the first half of 2023's, growth of 0.1%, 71,000 units. The expectation for the whole year of 2024, with heavy-duty vehicles, is growth from 5%-7%.
So both light and heavy vehicles with close to 5% growth for the whole year of 2024. Production, we're starting with light vehicles in the Brazilian market. We had a drop of 1.5%, so we did see a mismatch between sales and production. That is, sales increasing by 15% and production decreasing by 1.5%. Two effects are important: an increase in the share of imported vehicles. You should be following the scenario, Anfavea is highlighting the issue. Import taxes for imported trucks for electrics and hybrids is up now. In last year, it was zero. Just as an example, battery, it started with 10% and now it is at 18%. Remember that import taxes of fuel vehicles is 30%.
So in the month of July, we already see, quote, unquote, "an accommodation in the sale of imported vehicles." So you have increased taxes that do impact sales. And the second effect, to explain the mismatch, is a drop in exports. So the main markets Brazil exports to, Chile, Peru, Colombia, also are having drops of two digits. We had an improvement in July for the indicator, so we have to monitor that, but currently, that's the impact. A production of minus 1.5%. Projection for the whole of the year by Anfavea was also adjusted. It was a projection of a growth of 4.8, and now it is 3.4%. So not a major recovery for the second half of the year.
There is a bit of the impact of the tragedy in Rio Grande do Sul that happened in the second quarter, but the projection is to close the year with growth of 3.4 in Brazilian production. In Argentina, as I mentioned, sales impact obviously impacts production because of economic adjustments, drop of 26.7% in the half year, and the projection for the whole of the year 2024, between 15%-20%. Argentina and Brazil together for light vehicles production shows a drop of 7% year-on-year. And here, the expectation is to close at 0%. That is in line with the production of 2023, at least, stable. We might have a positive surprise, but the current expectation is to close Brazil and Argentina just stable with the same production of 2023.
In heavy vehicles, in Brazil, growth of 39.4%, also because of last year. Remember the year of 2023, but we had inventories of the Euro V legislation. So in the first half of 2023, we had low production because we were selling the inventory, and then consequently, we have this increase of almost 40%. The expectation of Anfavea is for the year close of 32.1%, so they kept the projections for production. Argentina, an important drop, -26.4%, and the expectation of -20% for the whole of the year. Brazil and Argentina together, growth of 35% and projection of the whole of the year between 20%-30%. So, heavy duty market as the trucks, we have the Path to School program, the government program for buses to school.
So this is what we have for Brazil and Argentina. North America and Europe, we have production of the first half of this year, as first half last year. In Europe, light vehicles production -3%. The projection is to close between -2% to -3%, so a drop in the European market. In North America, growth of 1.5% and a projection between 1%-2% in the whole of the year. Together, Europe and North America, drop of 0.9% and projection of closing the year between 0%-1%. So again, closing the year, stable comparing, to the previous year. North America is slightly better, Europe with a drop. Heavy-duty in Europe, 0.6% growth. In this case, the outlook is to have a two-digit drop, that is between -10% and -15%.
That's projection for heavy vehicles. That's a market that grew by two digits in 2023, so very strong in 2023. So 2024 shows, the reflex, in production compared to previous years. North America, year to date, -3.7%, and for the whole of the year, the estimate is -5% to -10%. Altogether, -1.6%, and for the whole of the year, -10%. Now we are going to go to slide 14, where we show our net revenues, performance. And you see again, the second quarter 2024, second quarter 2023, first domestic, for original equipment, exports, and then aftermarket, domestic and export. In the quarter, we had a drop of 4.6% altogether. In original equipment, a drop of 6.6%, mainly driven by exports.
I'm going to give you a bit more color in the half year, because these are similar events that did impact the second quarter and the whole of the half year. In exports, a drop in the aftermarket, mainly because of Argentina. We see the sales in aftermarket. We have an important sales in Argentina that includes domestic. So in domestic, you have sales in Brazil and in Argentina from our unit in Argentina, sold in the local market. So it is domestic, it did have an important drop, and the Brazilian market partially offsets the Argentinian drop. You see that in the half year, we have a drop of only 1%. So a strong impact in Argentina, that the Brazilian market also always, almost completely offset.
In exports in Argentina, the aftermarket, I'm sorry, an increase of 15%. Last year, we had many uncertainties. This year, a new commercial policy was defined, and we have a dedicated sales in Colombia, Peru and Chile, and that helps leverage and provide customized services for the aftermarket export. In the quarter, a drop altogether of 1.9%. Now, explaining the half year. Original equipment domestic, a drop of -2.1%. In this case, and I just showed you, a drop in the production of light vehicles. However, in light vehicles, company revenues was offset by new businesses. So drop of revenues was not in light vehicles, although the production of light vehicles dropped, if you consider Brazil and Argentina.
The main effect of the drop in revenues is that we had sales to customers in Brazil, and these customers exported engines, motors or equipment or components. So although it is original domestic equipment, you supply to a domestic customer, and they export components or motors. So we had a spot sale. The market was very strong last year, North America and Europe, so the demand was heated. This year, I showed you the market. It's going to have a reduction, and therefore, we see a drop for original domestic equipment. In exports, a drop of -8.6% for two things. First, because of the heavy duty market. I showed you the market going down, both in North America and Europe, and that brings revenues down.
And also, a one-time business of a valve that we exported to a light vehicle customer. But most, the heavy market, all together, a drop of 5.6% in original equipment. The domestic aftermarket, as I mentioned, a drop of 1%. The justification here is the Argentinian market that had substantial drop. However, last year, customers did have inventory. They knew that there would be an exchange to devaluation, so customers stocked up products. We knew that that would impact to 2024, but in the Brazilian market, we're almost able to offset this effect. And in exports, as I mentioned, last year, a bit weaker, and improvements in commercial policies, dedicated teams, leveraging sales.
Aftermarket ended with growth of 1.9, and altogether, a drop in revenues of 2.5%. So, Cláudio is going to talk about the gross profit and operating profit being maintained despite this drop. So I'm going to turn back to Cláudio, and I'm going to be here for your questions in the end. Thank you. So, the company's profit and loss in the last three columns, we are comparing the first half of 2023 against the first half of 2024. In the central columns, we are more focused on quarters. Again, quarter 2023 against quarter 2024. But the first line, I don't think that I have to say much because Daniel was very clear about revenues. But we have two very important indicators because this is the main line of our P&L.
A drop, comparing half year, a half year of 2.5%, in the second quarter, we see a drop of 4.6%. However, when we take a look at the cost of products and services sold, we see a very stable number, 69%-70% of revenues. So I cannot say that this is independent, but we work very much with synergies between production areas, procurement, logistics, and production, and sales areas. Regardless of, one-time increases in commodity, labor, raw material, together with the sales department, we can make sure that gross profit continues consistent at about 30%.
Going down, talking a bit about sales, administrative expenses, likewise, we are always at 10%-11% of our revenues, are quite consistent, and a topic that we always like to highlight is our investments in research and development. Despite we saw an absolute number slightly more expressive, we still have room to increase our investments today, about 1.5% of our revenues. Other operating income and expenses, a bit less significant, the number that you see is quite incipient. Operating profit, that is what, at the end of the day, is easily managed by the company's leadership, always at a level of 18%.
We are going to exclude 2020, which is the year of pandemic, but from 2021 to 2024, operating profit and gross profits are being maintained or even increased. What draws our attention, and probably you noticed that, which is below those lines. So the next position is the net monetary position in foreign subsidiary, which is basically Metal Leve in Austria and Argentina. And Argentina, as you have been following, has been facing for some time now high inflation, and that has an impact in consumption of our customers, as Daniel mentioned in previous slide, but also adjustments in terms of exchange rate, accounting adjustments because of hyperinflation. So we see quite substantial numbers. When you take a look at the first half of 2024, you will remember the previous call.
In the first quarter, we had about BRL 65 million in the half year, and now we have BRL 51 million. It's only 3.4% of sales. The amount continues to be substantial, slightly above last year in the first six months of BRL 58 million. Here, it's important to understand the maxi devaluation of December last year. That impact is the result of the first quarter. So this is a topic that we also talked about extensively with investors and on our live calls. Now, considering the second quarter alone, the number goes down. So we do see a movement, and in our expectation and of some partners that analyze the situation from closer in Argentina, we start to see a bit of an accommodation or stabilization.
I think that the movements were quite right for the medium long term, to start seeing Argentina a bit more stable in the future. And the adjustment for hyperinflation, now that we have a bit of a more controlled inflation, there are discrepancies, but at least most of the institutions we talk to in Argentina do not expect any major devaluations in the coming twelve months. But we saw the BRL 65, 64 million of the first quarter to impact our results. So in the quarter, we have 22% against 18% in the second quarter. And what I think is important for us to draw your attention to is that accounting adjustments for hyperinflation, they don't have an impact in the company's cash flow.
Accounting adjustments for hyperinflation generally take place in recent years, more strongly in the first half of year. So, we saw that difference between the first and the second quarter. Another line that draws our attention, in my opinion, it's not really a noxious line, but it is a change in the strategy of the organization. When you think of MAHLE Metal Leve until the third quarter of last year, between financial expenses and income, we had more one of the other. We had also the payout of dividends of the company that is generally made. So historically, what we saw was the company taking credit to guarantee the payment of dividends in May, and that was normalized by the end of the year.
We are going to talk a bit about that in the end of the presentation. But comparing the financial indicators of MAHLE Metal Leve to its peers and, a bit more focused on leverage, I think that this number is extremely healthy. But it is a number for those that are used to following, MAHLE shares, it draws a bit attention. So you see a positive BRL 23 million to a negative BRL 38 million. And only focused on the quarter, I'm not talking about the half year, but the second quarter of last year compared to the second quarter this year, we see an inversion of financial expenses, from financial income to financial expenses.
You probably remember this movement of follow on that we had in the last quarter of last year, and the payout of dividends and reserves that were very strong in the end of the year. Obviously, that involved an increase in indebtedness, and that has a financial cost. We are going to talk a bit more about that on next pages, but I think it was a phase, and this is something that we are working very much on to improve. Likewise, I think it's quite comparable to market peers and quite healthy. Now, in terms of income tax, another number that draws a bit of our attention, but nothing new in terms of absolute volumes, quite consistent.
What drew our attention, and perhaps yours, when you take a look at the P&L, was an increase in the second half of this year of the effective tax bracket. For those of you that read details, we had evolution of a process that we had, a tax lawsuit that we had, that is no longer at the judicial branch. We are just waiting for the precatories. So we reduced the provision and the reversal of the provision in the second quarter of this year has changed the calculation of the effective tax bracket. When we exclude the number, we see the normalization of what we saw before. So in theory, it was an atypical quarter because of this reversal. And also, this is public information, we had an increase of provisions directed to the environment, soil decontamination, relatively old plants.
We worked very strongly and proactively with the company and public agencies like CETESB in São Paulo and others in Rio de Janeiro and Minas Gerais, for the decontamination of soil. We are working very much, very much in line with our strategy and policy of sustainability. But all that carries a cost. It's not cost-free, and therefore, we updated our provisions in the second quarter of the year. So in short, it was a reduction of provisions for the tax lawsuit of about BRL 38 million, and for environment, about BRL 29 million. All that impacts the net income for the year, for the period. And if you think of the effective rates, we have a bit of impact from the Argentinian hyperinflations and the provision reversals that we mentioned.
Now, going from a profit for the period of BRL 8.3 million and 13.8 million for the half year, we have a bit of 21, 21% along the years, quite stable. I believe that we can now go to the next page. In this quarter, I wanted to draw your attention. We are always very much focused on results. Of course, results are very important for any organization, and this is also public information. You have access to that. This is also historical data, but it is the evolution of our cash flow. I think that you, as investors or representatives, probably pay very much attention to these numbers. We started the year with a cash and cash equivalent of BRL 383 million. We closed the second quarter with BRL 427 million.
Basically, these are the movements that took place in the period. We had a new loan, and the new loan, and you see in the second column, BRL 249 million to our cash, mostly used for the payment and amortization of short-term debt, working capital, mostly. And also part of this money, because of a generation of extremely positive operating cash, generated, or made it possible for us to pay dividends of BRL 240 million and interest on equity in the second quarter of this year. Payment of taxes is an outflow, and the BRL 130 million that I mentioned as the main highlight, almost BRL 40 million were already paid in the first six months.
Historically, most of the payments that we have for CapEx takes place in the second half of the year, even more so in the last quarter. So we expect to see this number growing, based on our plans. I think that now I can turn to Fábio. Fábio?
Good afternoon, everyone. Thanks, Cláudio. Let me talk a bit about financial management and reinforcing that the loan that was raised in May this year in the amount of BRL 249 million, as Cláudio mentioned, was basically to roll out our debt, so that short-term debt turned to long-term debt, with maturity in March 2027. So we extended our debt. Talking about financial management, in the first part of the slide, we talk about our net financial results. In the first half of 2023, in net interest, we had BRL 49.7 million.
You have to consider that in December 2023, there was a reclassification of bonds yield. All the amounts were being allocated as the line, and then in December 2023, there was a reclassification for the exchange variation of about BRL 37 million. So when we exclude the BRL 37 million, you have an amount of approximately BRL 12 million in terms of net interest. Then we had two events. The first is that the interest rate in Argentina in the first half of this year had a substantial drop. In the beginning of the year, it was 110%, and now it's 36%. So all the funds applied in Argentina suffered reduction because of the interest paid by Argentina. And as a reflex of that, in Argentina, we had a reduction of the net interest.
In terms of net monetary variation, we had BRL 5.5 million in 2023, and when you have the reclassification of BRL 37 million, you have BRL 43 million positive against BRL 57 million negative. So in the same line, in the second quarter 2024, we have BRL 77 million, which come from the loans and exchange variation of loans indexed in euros, about BRL 153 million. The rate in March was 5.3979 against 5.9547 on June 30. So a devaluation of the real of 10.36%. So when you get to the nominal amount and you apply 10% devaluation, you have the exchange variation of BRL 77 million. It's also worth mentioning that this is an accounting effect. We had no disbursement of this amount, so no cash effect.
Because although, indexing is in Europe, the amounts are going to be paid in future exports, according to our budget for the coming years. So because the company will make the payments with exports also indexed in euro, vis-à-vis a loan indexed in euro, we are not going to have, the exchange variation in our cash, because exports are going to follow the same rate in which, loans are going to be paid. Third line is, net monetary variation. As, Cláudio mentioned, we had a reversal in the second quarter of about BRL 20 million, the impact of, financial income and expenses. And a result of all that, we have a net finance income of BRL 44.2 million in the first half of 2023, and in the second half of-- in the first half of 2024, BRL 38 million.
So a change between the periods, BRL 82 million. Remember, EUR 77 million come from what I just explained about loans indexed in euros, foreign currency. The bottom part, the second table, we have the amounts in our cash. Cláudio already talked about the bridge between BRL 383 million to BRL 427 million, and the extension of maturity. Credit, we have BRL 839 million in the long term, and the effective cost of these loans is 5.1% for the period of 2024, and in 2023, the costs were 4.5%. Slightly up because of the funds raised, as Cláudio mentioned in the previous slide, and the rollout of the debt that we had in May this year.
Bottom line, net debt to EBITDA ratio, we closed 2023 at 0.51x, and in 2024, we are at 0.63x. Again, because of the loan raised in May this year. Now, we are going to open for your questions. Cláudio, Daniel, Everton, and myself are available to answer any questions you might have and that we can clarify. Thank you very much.
We'll now start the Q&A session for analysts and investors. If you want to ask a question, please type Raise Hand. If your question is answered, you can lower your hand. Our first question comes from Jonathan Koutras from JP Morgan. Mr. Koutras, you have the floor.
Good afternoon, everyone, Cláudio, Daniel, equipe. I have and team, I have two questions on my side.
First, still talking about the Arco air conditioning, but we would like to know how relevant the acquisition is in terms of size and how much it can contribute to your results. So that would help a lot. At least a range. And how does the valuation of the company compares to the valuation of MAHLE today? Just for us to have an idea of capital allocation. And second question, Daniel mentioned the deceleration in the quarter, especially with exports. So how do you see the remainder of the year? You had a quick devaluation of the exchange rate, but you had a pickup. So do you think that revenues is a new running rate for MAHLE, or should expect an acceleration for the coming quarters?
Thank you very much. Can I start? Thank you. Thank you, Jonathan, for your question.
You always ask very interesting questions. As for the partial acquisition of a third, again, minority stake at Arco, this is quite relevant to us, regardless of amount. I cannot give you too much color, with regards to valuation, but very soon we are going to have an opportunity to talk about that, perhaps even with the larger group of people. But for now, we have to wait for the CADE approval. But this is a company that has two individuals as partners, MAHLE now being the third partner, and we do not want to expose anyone, so the numbers are quite reserved. But regardless of valuation, it's not value that we are going to see immediately of the acquisition in sales, because it is a minority stake, so it is more of an investment.
But for the future, it will impact us in terms of future dividends. This is to see. But right now, if everything is okay, and if we are able to increase our stake, this is going to be something different. But this is for the future, it's not for now. So regardless of the valuation, Jonathan, the main focus is the strategic approach. This is a company that works very strongly with bus body manufacturers, a very good relationship with these customers, and that for us, MAHLE Metal Leve, they're having the synergy with products that we have, such as what you realized in the video in the opening, and even a chance of us leveraging more sales in the future. And also lots of synergy with regards to customers, suppliers, supply chain, and to in financial management.
So a bit further on, Jonathan, if you have the patience to wait, we are going to come back and give you a bit more color. For now, I really can't. But I'm going to turn to Daniel to try and talk a bit more about Arco, the second part of your question. ...
Thanks, Cláudio. Jonathan, good morning.
Well, revenues for the third quarter, I cannot mention revenues for the third quarter, but we can analyze the market. I showed you the half year. We are talking about light vehicles, a drop in production of 7%, and to close the year at 0%. So you have an improvement in the production of vehicles, for light vehicles. Argentina was quite impacted to this half year because of financial adjustments.
In July, we start to see some recovery, slow, but it is a light in the end of the tunnel. And even Brazilian exports to other countries, July was a better month. As for heavy vehicles, at a very strong pace year to date, 35% growth in production, and I mentioned that we expect to close the year between 25% and 30%. So a strong market. In exports, likewise, as I mentioned, this, the half year with a drop of 1.6 in heavy vehicles, outlook of 10, and light -0.9 and at break even. So in the domestic market, that is Brazil, Argentina, we do see some improvement for the second half of the year compared to the first half of the year.
In exports, light vehicles, a better second half, but in heavy vehicles, a worse second half. This is what I can talk about the second half of 2024.
Okay, very good. Thank you very much, Daniel and Cláudio.
Thank you.
Our next question comes from André Ferreira from Bradesco BBI. You may go on with your question.
Good morning. Thanks for taking my question. Congratulations on your results. I have two questions. First, about margins. Although there was a slight drop in the EBITDA margin, it was still very strong. I'd like to understand your mindset, how the margin is going to behave for the remainder of the year, and 2025 as well. And the second point, I apologize, is, the provision for environmental liabilities. In the second quarter of 2021, there was a similar, non-recurring item. I think it was, the refurbishment of a plant in São Paulo. Now, a new provision. I'd like to understand first, if it's the same process, the reason for such, for you to have this new provision, and if you assessed other regions, other plants, if you have a potential for something along this line, or if you have a lower risk.
Thanks for your questions and your knowledge of results. I agree with you, I think it was quite good. As for projecting it for the future, it's a bit hard. I would say that there are some macroeconomic factors that can have an impact. The evolution of the exchange rate, that will be better for us in terms of exports, obviously, but as a counterpart, we have two factors. We have imported products as well, and when the exchange rate goes up, you know, it's always like this, it's better for one side, but not for the other. Another factor that Fábio mentioned is indebtedness that we had in the last quarter of last year. When the exchange rate goes up, we have higher financial expenses. Fábio said that this is reflected in our books.
We do not see a problem with that because, you know, well, this is important because we have the exports, the debts are extended, most of it with maturity just for 2026 and 2027, so it's not something that we should worry in the short term. There's lots to happen, situations can change. But anyway, exchange rates, this is what we see. And, regarding, you know, the operational part, another factor that we see that has impacted our results, and you know, because you have been following us, is Argentina. So you consolidate everything in MAHLE, you see that. But this is an accounting adjustment that we have in our assets and liabilities.
But basically, in this line that you have, gains from monetary positions of the subsidiaries abroad, then basically you have a summary of everything that I mentioned and also the updates of, you know, of prices compared to inflation. So when we try to think about the future, there are two items that are quite unpredictable and less manageable by companies that operate in Argentina. So it's very difficult to measure. But as I tried to mention when I was explaining the slides, when we talk to Argentine economists and experts, they do not expect another maxi devaluation, but we cannot know for sure. So there are two important factors for the profit and loss that you have been following.
Operating profit up, and I do not expect any news, at least nothing operational that can impact our results. So what I have seen, based on our history, again, not projecting, future labor, raw materials, sales is working very well with a good customer base. Gross profit, quite stable. To be honest, I joined the company a few, a while ago. We see, you know, it's even going up. It is a positive evolution that we see with these numbers. Operating profit with overhead, expenses already included, also very consistent. So, talking about a bit, I do not see any major surprises. We, of course, can always have a second pandemic or something, but nothing that is in our mind. It's, of course, that would have, a, a macro, impact.
As for your questions with regards to the environmental liability, and I thank you for your question. Yes, this is slightly related to what you mentioned. That was a plant that was deactivated in São Paulo. It is in process of decontamination, a huge process, not only of MAHLE Metal Leve. I don't know if you follow other companies that were located in the same region of São Paulo in the past. This is for everyone. It's not only for MAHLE Metal Leve. This is an area close to a river, the aquifers, and so this is a process that has a very long decontamination process. So part, yes, is still related to that. It doesn't mean that it is recurrent, recurring. So that was disclosed to CETESB, so I'm not talking about anything that is conven-- confidential.
But all this, the company proactively hired special consultants for all our sites where we are based or were based in the past. So it took a long time, and we are verifying them all. In addition to specialists looking into them all, we hired a second opinion. So you have companies that are very well-recognized in the market, but we also hired a second opinion, and they covered everything of MAHLE Metal Leve. Existing operations, operations already shut down, this is our responsibility, and a group of attorneys, very strong. So it's a very strong process. The provisioning the second half of...
In the second quarter, most of it is connected to this region of São Paulo, as I mentioned, but not only. We have something being developed in Minas Gerais, in our plant of Itajubá, and also something in Mauá, another plant that was already shut down. But the land is occupied still today. We are the owners of a third of the land, and then Santo Amaro, and then a bit in Minas and in Mauá. So non-recurring, but it was a time to update information based on the expert reports that we received. I hope I have answered your question.
If not, just ask me for further clarification. No, very, very clear. Thank you very much.
Thank you.
As a reminder, if you want to ask a question, just raise your hands. Our next question comes from Niels Tahara from Safra . Mr. Tahara?
Good afternoon, everyone. Congratulations on your results. You have been delivering in recent years a very consistent gross margin. I suppose that part of this comes from an increase in your share in aftermarket. But what else do you think would be a main reason for this gain in gross margin? Is it efficiency? Is it commercial management? Is it raw materials management? And if you could give us a clearer breakdown for your cost line, because you have a line that is others. What is exactly involved in your line of others? Because it was a relevant portion of your revenues, and it did grow a bit year-on-year. So these are my questions.
Thanks, Niels, for your questions.
I think the first part of your question, you know, I'm smiling, Niels, because what you asked is basically the answer I had to offer. So when you think it's a combo of everything you mentioned, so you have consistency, you have efforts, very good work developed by the sales areas, trying, you know, to have pass-throughs to customers and increases in raw materials and anything that can happen to the company. So that is partially explained by that. Then, of course, there is synergies between different companies, departments, and areas. You talked about aftermarket, and I would say we are suppliers to the automotive industry, and we cannot deny that OEMs are in Brazil, they are quite strong.
But the replacement market, the aftermarket, both in Brazil and Argentina, is huge when you think of, you know, fleets in Brazil and Argentina, new vehicles and OEM, is one part of that. But then you also have the existing fleet that needs tune-up services, and that is aftermarket. So aftermarket, undoubtedly, is a contributor for the company's success. So Niels, I think that, it is a tripod. We have exports that has a bit of a life in its own, United States, North America, depending on what cycle they are going through, what trends, Europe. So tripod, exports would be one, part. Then we have the local OEM market, and I'm going to turn to Daniel. Maybe he want to talk about that, but it's a very important pillar. And the third pillar is certainly aftermarket.
The combo of the three generates a healthy balance. It's not always that everyone is doing well, but fortunately, if they are doing well, the better for us that manage the company. But if one is not so well, we counterbalance with the other. And just to see if I understood it clearly, when you're talking about the others line, are you talking about the cost of products sold? No, I'm-- yes, the cost of products sold. Okay. These are substantial numbers, you are right. I have a cheat sheet on my side, but when you get to the years of 2024 and 2023, comparing the first half of each one of the years, the most relevant in the two periods is the adjustment for hyperinflation.
So BRL 102 million that are included in this line for the first half of this year. Hyperinflation of Argentina, BRL 29 million. Last year, BRL 94 million. And the other number that is also embedded in this line is the cost of services. You may see some enthusiasm on my part when I talk about research and development, but it's sheer admiration by the team that's not only in Jundiaí, but mostly in Jundiaí. And you saw Everton talking about the whole work, because in addition to products, we sell services. So in the tech center, and Everton is here, he can also talk about this. But in addition to the products that we develop, and adapt and make it better to provide more specific needs of aftermarket or customers. You have facilities for tests. We work with OEMs, and the products are sold.
In the first slide, when I talked about highlights, as you know, a center for the Americas of filtration products, these are services that we provide. You see revenues in the first line, and you have a cost for this line. Niels, I would say that these are the two things that draw most of my attention. And you can talk to me now or further in the future to give you more clarification. I hope I have answered your question.
Very clear. Thank you very much.
Thank you. Once again, to ask a question, just click on Raise Hand. The Q&A session is now closed. We are going to turn the call back to Cláudio Braga for his closing remarks.
Well, thanks for coordinating the event. I think it was very nice. I think that some colleagues were able to show their faces, but we have an army here to try and answer questions, and it's always a pleasure to be here to talk to you. We have been intensifying our closeness to the market, I think, past the six months of adaptation of the company. Now we want to be closer to you with closer contacts, and we are here for you.
Any questions you might have, requests for clarification of everything we showed today or in our P&L, just let us know, and I hope to come back for good news. You know, setbacks happen in Argentina, in Brazil, in the macroeconomic scenario, but we have to deal with it as well as possible. Thanks for the recognition of our results. Some of you voiced that. I share your view. I think the results were quite consistent, and I hope to see you soon. Thank you very much.
MAHLE Metal Leve's conference call is now closed. We thank you very much for joining us, and wish you a very good afternoon.