Afternoon, ladies and gentlemen. Welcome to MAHLE Metal Leve's video conference to discuss the results for Q3 2023. This video conference is being recorded, and the replay can be accessed on the company's investor relations website. The presentation is also available for download. Please be advised that all participants will only be watching the video conference during the presentation. Then we will start the Q&A session when further instructions will be provided. Before proceeding, I would like to emphasize that forward-looking statements are based on the beliefs and assumptions of MAHLE Metal Leve's management, and the current information available to the company. The 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, to the segment, and other factors could cause results to differ materially from those expressed in the respective forward-looking statements. Present at this video conference are Mr. Nathan John Quye, Chief Financial Officer, Mr. Daniel Brasil Alves, Marketing and Corporate Communications Manager, Mr. Fábio Peres, Executive Financial Manager. I would now like to give the floor to Mr. Quye, who will begin the presentation. Please, Mr. Quye, you go ahead.
Good. Thank you very much. Good afternoon, ladies and gentlemen. Welcome to our conference results to talk about Q3 of this year of 2023. Before starting, we wish you all to be safe, specifically now with all the heat around the country. At the end of this presentation, we will be available for the Q&A session. Moving to our presentation. On slide 2, we have the agenda. We start with the highlights, then we have the market overview with Daniel. Then I will talk a bit more about the net revenue performance and summary of results. Then Fábio will talk about financial management. Then we'll have time for questions and answers.
Before starting the results for the third quarter, I would like to show and talk a bit about the follow-on offering that we've had in the past two, three weeks. We all know w e have the disclosed material facts at the CVM, and we've confirmed the distribution of dividends a bit. Well, BRL 100 million, BRL 711 million, and at BRL 5.54 per share paid last week. And it's important to confirm the follow-on offering, finalize with one of primary and secondary distribution. And all of this is confirmed that has been actually filed at the Brazilian Securities Commission or CVM. Okay. Now, we will talk about the performance of Q3.
Overall, it was a quarter a bit below the previous quarter for some things, specifically sales. The quarter was mixed regarding various segments of sales, but we continue with a very complicated situation here in Brazil with the sudden changes of Euro 6. The market continues well below production, almost 40% below last year. That is why the sales that we have are a bit complicated at the moment. Thus, this quarter, we have a compression in comparison to last year, the second quarter, it was below. Overall, all the markets of BRL 1.6 below. We have the aftermarket for export continues down. Those are all the countries in Mercosul and the part of Brazil and Argentina. To continue with the domestic aftermarket, strong here in Brazil and Argentina, well above last year. In the nine months now, we have 22% above in this specific market.
In total, the nine months of this year, 7% above last year. Clearly, this is due to domestic aftermarket and obviously original exports, too. On the right bottom we have actually BRL 590 million. What we have and what has been paid in dividends, BRL 559 million. It is the top right paid this year regarding last year, and the two other points, BRL 711 million regarding dividends of the part on follow-on offering. The third was approved on the 7th of November to pay interest on equity, BRL 88 million regarding the period from January to September this year.
The main indicators below, as I said, sales a bit below last year considering the things that have been mentioned, but specifically due to original equipment domestic with heavy vehicles. EBITDA due to sales was a bit below regarding last year, and also compared to Q2 this year, specifically due to a mix within sales and clearly sales of more heavy vehicles was better than light vehicles and the margin was a bit below. But with this we have net profit above second quarter and also above Q3 last year or the past nine months. This has generated a net margin above 18.2%, a bit over 1 percentage point above last year and above second quarter. I'll turn over to Daniel's words to talk about sales.
Well, thank you very much, Nathan. Thank you all for taking part of our video conference of results, MAHLE Metal Leve for the third quarter. Starting on slide 5 where we have sales and production for the Brazilian, Argentina market and also North American, Europe, the main destinations of exports of the company. Starting with sales nine first month of 2023 against the first nine months of 2022. Brazil, we had a growth of 9.8%. Argentina we had a growth of 13.5%, adding Brazil and Argentina with 10.4%. We have an expectation for Brazil to close the year between 8% and 10% growth in sales, led strongly by direct sales. Well, heated sales for the direct sales. Half a year we had the incentive and the value to acquire vehicles by the government.
This effect is diluted for the whole year, so we have 9.8% for the year. Argentina, despite the whole crisis, the inflation in the country, was an increase in light vehicles of 13.5% as a way of protecting property. So we have elections coming on also in the sales of light vehicles, 10% of growth in heavy vehicles as mentioned too by Nathan. We had a drop of 9.8% drop in the first nine months. In Argentina drop of 5.2%. Brazil plus Argentina, 9.3% drop. Actually, Euro 6 has an increase in the price of vehicles of about 15%, 20%. This has impacted agribusiness also regarding prices of commodities. The crop moving sideways. There's slight reduction in crops and this impacted the market of heavy vehicles sales, especially of trucks. This reflected in the production of light vehicles, so growth of 3% in Brazil.
In Argentina, 18%, in Brazil plus Argentina, 5.9% growth. We have a performance in the production of light vehicles slightly below compared to sales. We have an effect of exports. Some Latin American countries had a reduction in the sales of vehicles and part of it of imported vehicles coming into this calculation highlighted by ANFAVEA and this week we had the return of import taxes coming back for hybrid and electric vehicles. It will start as of January next year and gradually until 2026 reaching similar levels to traditional vehicles. This being applied to electric and hybrid vehicles. In the production of heavy vehicles, a drop in Brazil of 38%, in Argentina 5.5%, in Brazil plus Argentina 36.7% drop. As you can see, the absolute volume of 92.95 vehicles is below the sales volume of 105.9.
Usually the production of Brazil, Argentina is higher than the sales market of both markets because the two countries export, especially Brazil, outside the Brazilian, Argentina market. However, the inventory we had last year. Late last year, not only late last year, but in Q3, we had sales leads this year of vehicles Euro 5 until March. This continued. Well, this is being exhausted, but this is the main reason for this drop, and we expect a recovery, in other words, a growth of this production. Even maintaining daily sales currently that we believe will be improved, I will produce what I had in terms of inventory realized in the first quarter, I have no more. Only that will bring me an increase in the production of heavy vehicles for 2024. So we believe in a recovery for this market that is part of our sales.
As to the export market production of light and heavy vehicles, Europe, light vehicles a growth of 14.7%, and heavy vehicles 12.8%. North America, light vehicles 9.7%, and heavy vehicles 14.7%. Combined of both markets, 12.3% in light vehicles and 13.7% in heavy vehicles. This favors exports of the company. Slide number 6. I believe everybody can see page 6. We have the net revenues performance by the evolution of market. You have Q3 2023 against Q3 2022. The highlight here to original equipment, domestic with a drop of 12.6%. As I commented, we have a market with a drop close to 40%. In addition, the effect of last year, pre-buy last year. The OEMs, they are speeding up to get vehicles of Euro 5 for the following year.
This generates the reduction in the third quarter, but I am going to highlight here the nine first months of 2023 against the first nine months of last year. In this case, as to domestic original equipment, a drop of 3%. This performance, despite being negative, it is better than the market, considering the participation in sales of heavy vehicles and the total revenue of the company. If we have weighted analysis, the drop would be higher. We have smaller drop compared to the market due to gains in market share and some export projects of our customers that acquire here in the domestic market and export the end product, the engine or the vehicle. Original equipment exports a growth of 9.4%. I have just shown you growth for Europe and North America. The growth in the market totaling for original equipment, 3.2% growth in revenue.
For the domestic aftermarket, growth of 22%. Here we have market share gain in a more heated market. Important stake of sales, Argentina contributing to this domestic aftermarket. For exports, a drop of 24%. Here we had a lot of instability in the countries, especially Colombia, Ecuador and Peru, countries with certain turmoil that impacted the export and the aftermarket, and we are working for the recovery for 2024. Totaling aftermarket to 12.4%, and total revenue 6.9% growth with BRL 3.3 million in sales. I turn the floor back to Nathan. I will be available at the end for Q&A.
Thank you, Daniel, for the words on sales. Now we have a few more details regarding the results of the quarter, including the nine months. We start with the sales cost for the nine months has been significantly lower than the previous year, as we have shown in the first semester. Continuing the trend that we have for the six months as improving margin due to aftermarket sales. As Daniel mentioned, the aftermarket is well above last year. We also have certain things in here regarding Argentina. The sales that we have in the aftermarket there are much better than last year. On the contrary, the third quarter was a bit above with the cost of sales and compressed in last year for the third quarter.
This is specifically for this thing for the market and heavy vehicles as the introduction of Euro 6 and the mix in the cost of sales a bit worse in this quarter compared to last year. The growth result seems to be in this quarter a bit less than 30%, a bit worse, but this growth result is much better than previous years in terms of growth profits. Below growth profit, we have expenses with sales and distribution a bit above last year's for the nine months period and specifically Q3. As I commented previously, this is specifically regarding publicity in relation to aftermarket and also more freights related to aftermarket sales and also exports to Europe and the United States of original equipment. Our general and administrative expenses were slightly above last year in terms of percentage of sales.
The main increases are in personnel costs because of inflation, and also we have higher maintenance costs and some additional costs related to global IT projects. As to technology costs, as I have mentioned in the previous call, above last year, and this is specifically regarding new project that we have for MAHLE for North America in relation to filters. All those services are sold to them as related party transactions. So the cost increases, but we also have net revenue with those sales. Other operating income expenses. So this was the timing expenses, the provisions regarding certain labor costs. So we do not have extraordinary impact, just the timing in the third quarter. If you look at the nine months, to the right, we see a lot in this number in the quarter because of a timing question.
I am going to turn over to Fábio, as usual, to talk about financial results.
Good morning, everyone, or good afternoon, everyone, actually. Just talking a bit about net financial result, as Nathan said. Looking at quarters, we have the Q3 2023, well above what we had in 2022, BRL 46 million, BRL 45 million against BRL 10 million. Well below, right below we have exchange rate fluctuation. So we had 16.8%. Last year we had almost BRL 11 million and the variation or the foreign exchange net effects, we have quite an improvement from 12.7- 18.3. So we have results of derivatives and monetary variation. We have in the Q3 2023, BRL 49.6 million against BRL 16.3 million. In other words, an improvement of revenue of about BRL 33.4 million.
Looking at the accumulated more to the right of the chart, we have net interest, an improvement of 60.9 and the accumulated is the past nine months. We have exchange fluctuation accumulated 10.7 and the net finance income of 14.8 or variation, actually. The increment of revenue of BRL 86.4 million. If we analyze the chart here, most of the amount comes from net interest, the investments that we have in Argentina. On the next slide, we talk about indebtedness, where we have BRL 505 million in cash on December 31, 2022, so net position of BRL 91 million. In September 30, 2023, cash is practically stable. We had a slight increase in the part of funding deriving from the interest rates in the period. We have a net debt of BRL 68 million.
Moving on to Q&A. I, Nathan, and Daniel Brasil are available to answer your possible questions that you may have.
Good afternoon, and thank you. We will now start the Q&A session for investors and analysts. If you would like to ask a question, please click on Raise Hand. If your question is answered, you can leave the queue by clicking on Put Your Hand Down. Our first question comes from Philippe Lenz from Citi.
Good afternoon, Nathan, Daniel. Congratulations on the results, even at such a complicated period. I have two questions. First one is the company in the long term. People talk about useful life for combustion engines, so lots of things can be linked to electric cars. Could you give an estimate of electric vehicles, which vehicles produced by MAHLE can be adapted to the equipment and MAHLE could be adapted to hybrid vehicles? And then the market share company, you open on the yearly report. You have certain things, 50% of the first and over 80% in the remainder. Can the company give some color on its market share in other products and regions? Thank you.
Well, Philippe, I can start the answer, and then Nathan will complement. First question. When you talk about future strategy, you have to analyze the market separately. I actually recommend, I don't know if you have seen it or not, we have some material on our website, which has been our meeting with investors. The material is available. If I'm not mistaken, that was held in early April. We have revenue broken down by market. That occasion was the closing of 2022, just by heart, 40% of the sales for the aftermarket. And then we break down exports, the light vehicles and heavy vehicles to European, North American, and domestic market.
This penetration of electric cars or vehicles, we understand as a solution, we will have not only one solution. We will have various solutions to serve that market. For example, Europe, we have greater electric car penetration in countries like Brazil, India. Our understanding is that applications like biofuel will play an an important role for some time for decarbonization. The question is not so simple to be answered in a short period of time. We would need more time to be able to follow the rationale regarding that. I recommend you check this presentation, and then later we can clarify any questions you may have regarding this topic. As to market share, as it's been mentioned, we have the main components. You've mentioned some of them.
I don't know which would be missing there to be presented. The main products have been listed there as leaders in the part of engine components and a relevant part of leading role in the part of filters, components for filtering, which is our current action as a company. I don't know if Nathan has anything to add. Nathan? No. Thank you.
I have nothing to add. Thank you.
I think that has been the correct answer to that. But Philippe, if you have questions later after looking at the materials on our website, please get in touch with Luis for further details if you have further questions. This presentation actually shows future scenarios. We actually unfold revenue in these markets, in the aftermarkets. It is interesting presentation to understand the positioning of the company and future positioning. It is a material actually that I recommend you have a look at it. There is a video of the presentation and also the material that was used, the PowerPoint. I don't know if I have answered your question.
Yes, sure. I will have a look. Thank you very much.
Okay. Our next question is from Marcelo Motta from JP Morgan.
Good morning, everyone. Thank you. Well, a bit more long-term question when we think about capital investment and positioning of MAHLE. It has always been high payout, 95% of profit is being worked in a more deleveraged way, if we look at the post-COVID period and past years. When we see this offer and we see the size of dividends interest on equity, if we do not get it wrong in our maths, the company that should work with a level of net debt a bit higher than what we have seen or perhaps something what the company was in 2010- 2020.
I would like to understand a bit if it makes sense to think that MAHLE will actually work with a more leveraged structure from now on, and that means that the payout should be kept at the current level, or it should reduce payout to actually work on the leveraging of the company. Thank you.
Thank you, Marcelo, for your question. As we have mentioned, with all the information that we have and the CTO regarding follow-on offer, MAHLE Metal Leve, it is very clear what has been the reason to have the follow-on. As we have mentioned within it, we have nothing planned to change regarding dividends. You mentioned that MAHLE Metal Leve every year has 100% or 95% payout. We have nothing planned to change that.
Perfect. Thank you.
We remind you that if you wish to ask a question, you just click on Raise Hand. The question and answer session is closed. We would like to give the floor to Mr. Nathan Quye to make the company's closing remarks.
Thank you very much once again. Thank you all for your participation in our meeting today with the results for the third quarter. We are available afterwards. As I have mentioned, Luis is available if you have further questions. Once again, thank you very much for your participation and thank you, the whole team, to actually make this call able and active.
Good afternoon. The MAHLE Metal Leve conference is now closed. We thank you for your participation and wish you a good afternoon.