Good afternoon, Brazil, everyone, and thank you for waiting. Welcome to MAHLE Metal Leve for the first quarter of 2020 results conference call. With us here today we have Dr. Christian Binkert, CFO, Mr. Daniel Alves, Marketing and Corporate Communication Manager, Mr. Daniel de Oliveira Camargo, Executive Accounting Manager, Mr. Fabio Lopes Peres, Executive Finance Manager. This event is being recorded, and all participants will be in a listen-only mode during the company's presentation. After MAHLE Metal Leve remarks, there will be a question -and -answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to rate the operator. This event is also being transmitted simultaneously through the internet via the webcast and can be accessed through the investor relations website of the company, where the presentation is also available.
Participants may view the slides in any order they wish. The replay will be available shortly after the event is concluded. Those following the presentation via the webcast may post their questions on our website. They will be answered by the IR team after the conference is finished. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of MAHLE Metal Leve management and on information currently available to the company. Things have risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Now I'll turn the conference over to Dr. Christian Binkert, CFO, who will begin the presentation. Please go ahead, sir.
Thank you very much. Welcome from my side. Good afternoon, good morning, ladies and gentlemen. In this challenging time, welcome to the conference call of MAHLE Metal Leve, the first quarter 2020. Before we go to the agenda, I hope everybody on your side is safe and health. At least for MAHLE Metal Leve, health and safety of our employees is still on highest priority, as discussed in the last call already. Also to mention, perhaps you read this already in the press, we also started to produce our own masks in our filter plant in Mogi, which is really helping us to protect our people in addition. Also, operations in the meantime assumed again, really depending on the plant. Some plants more operational, in other areas, less operational.
An additional topic what I wanted to mention at the beginning is, we took not only in regards of health and safety precautious measure, we also introduced all available tools from the government, which are offered like layoffs, salary cuts, but also took, we will come to this later, the early stage additional loans, just to be sure that in this crisis mode, we will not run into difficulties. If we go now to the agenda, it's the usual agenda. We start with the highlights for the first quarter 2020, which was challenging. Then we come to the market overview by Daniel. Net revenues performance, the market would be the third point we will touch. I would then give a short summary about P&L and EBITDA.
Next point, financial management, including the net financial results and the net indebtedness, and at the end, a short overview of CapEx and depreciation. Of course, like always, if you then still have some questions, we are willing to answer these questions, meaning Daniel and myself. Moving forward to the highlights page. As you can see, our net sales dropped, compared to previous year, to a level of BRL 573.8 million. This represents a decline of 7.9% or BRL 49 million roughly. Where are the impacts coming from? Around -11.6% out of the 7.9% drop are from volumes. On the other hand, we have positive impacts out of the exchange rate, mainly driven because of our exports of around 3.7%.
In regards of the domestic original equipment market, MAHLE Metal Leve recorded a decrease of 8.9%, and the consolidated production of the vehicle fell by 15.7%, and the Brazilian market decreased by 15.9%, and respectively in Argentina, 13.6%. Daniel will comment this later more in regards of the sales slide. If you look at the key indicators, I already mentioned the sales drop. Net revenue decreased from last year, BRL 623 million, now to a level of BRL 574 million, means a decrease of 7.9%. Our EBITDA dropped from BRL 120 million to BRL 92 million, giving it EBITDA margin now of 15.9% compared to 19.3%. Where are this drop coming from? This is not a single factor. No, it's a couple of factors. The main drivers, of course, of the lower EBITDA absolute amount and margin is the lower sales amount.
The margin, the absolute amount in margin is dropping. That's the first important topic. The second important topic we will come to is also related, the other operating income. We had last year, reversal of accruals, which supported our income. This year, we had the opposite. We had to take small additional accruals in regards of labor claims. The third impact was the IAS 29, the so-called hyperinflation, where we had last year a higher positive impact compared to this year. This is purely driven that the Argentinian peso was devaluated last year in a higher extent than this year. Those are really the main drivers why the EBITDA and EBITDA margin went down. If you go one line below, we can see our profit for the full year, BRL 21.5 million, 3.7%, compared to the last year, 10.3% or absolute amount around BRL 64 million.
In addition to the impacts I mentioned in regards of the EBITDA, we will also later see the major driver between the difference of these two indicators is the financial results, which impacted the Q1 2020 results by around BRL 32 million. I give you more explanation as a full third at the moment, it's purely driven by exchange rate. Then we come to the next page, the market overview, and I would like to hand over to Daniel. Daniel, please go ahead.
Okay. Thank you, Christian. Good morning, everybody, and thank you very much for attending our conference call today. First of all, I hope you and your family are safe in this very difficult pandemic situation. Going to Slide four, where we have the market overview, Brazil and Argentina registration and production. I will start with the light vehicle, Brazil. We had a decline of - 8%, in Argentina, - 23.7%, and the combination of Brazil and Argentina, - 10.3%. For production in Brazil, we had a decline of almost 17%, in Argentina, - 14%, and the combination, Brazil and Argentina, - 16.5%. This vehicle production reduction reflects the customer plant shutdown, which started at the end of March. We had almost two weeks, shutdown. At least one week and a half with the plants closed. This reflects on the vehicle production.
In the medium and heavy vehicles, we had a decline in Brazil vehicle sales of - 6%, in Argentina, - 16.6%, and the combination of Brazil and Argentina, - 7%. For production, - 2% in Brazil, minus or zero equal in Argentina, and the combination of Brazil and Argentina, - 1.9%. In this case, for the medium and heavy, mainly because of the agricultural machinery, we had better numbers than the light vehicle, mainly because of they started the shutdown later comparing to the light vehicle. The total combination of vehicle production, it's - 15.7%. Now, I will give you some highlights about the April figures. The vehicle production, we had the release of ANFAVEA, Automakers Association, last Friday, and no surprises.
The vehicle production was very low, and the vehicle sales was better than expected, and also giving a parallel about MAHLE Metal Leve sales for April. We were better than the market because we have the aftermarket sales, so it's not related to the vehicle production in this case, and also the service parts, and also export business. Because in the other markets like Europe and North America, the shutdown period was different compared to the South America. We had turnover for this market. Regarding full year expectation, MAHLE Metal Leve, we are working with scenarios, and we are constantly evaluating these scenarios. And they are changing. In the last weeks, they are very dynamic. They are changing. This is the reason that I will not give you today any projection for the full year.
What I can say, it's we are working as much as possible flexible to adjust our resources to the vehicle production level in the industry. Now, moving to Slide five. In this slide, we have the vehicle production in the main export markets of the MAHLE Metal Leve. We have North America and Europe. For the light vehicle, North America, - 12% decline. For the medium and heavy, - 18.7%. For Europe, light vehicle, a decline of - 20.7%. For the medium and heavy, - 11.4%. The combination of Europe and North America total vehicle production for the quarter was - 17%. This is a global pandemic, and therefore affected the market the same as we are affecting on the domestic market. Now, moving to Slide six. We have the net revenues performance by market.
We have the first column, the Q1 2020, the volume -price, the FX variation, the first quarter last year, the volume -price impacting the percentage, and the FX impact the percentage. The last column, the variation between the periods. On the original equipment domestic market, we have a decline of -8.9%. This is a better performance when we compare with the vehicle production declining, I just mentioned in the last slides. The main reasons for this better performance, it's a localization project. We start this year, a big project with a local production. This was imported in the past. Now the customer is buying from MAHLE Brazil. This is important in the turnover effect. Also a share increase. These are the two main reasons for this better performance on the domestic market.
On the export sales, we have a decline of -5% with a positive FX impact of 9.5% and volume price impact -14.5%. This declining, it's aligned with the market declining of the export markets and also the FX impact. Even with this aligning sales performance, it's important to mention I start of a important project this year, which offsets a ramp-down project that we had. This start of a new project with ramp-up, it's offsetting a negative effect of a ramp-down project we had. On the aftermarket domestic sales, we had a decline of -7.4% with a negative FX impact of -2.5%. The volume and price impact, it's -4.9%. It was also impacted by the corona situation less than the OE market because we have, in this case, the vehicles repair.
In this case, we had in March, some customer put some orders on hold, but the performance was good in this situation, if you compare. In the export market, we had a decline of -20% with a positive FX impact of 90%. The volume price impact, it's -29%. In this case, in additional to the COVID effect, we also had some economic and political turbulence in the Latin America. This is the main reason for this declining on the export aftermarket. The combination of original equipment and the aftermarket.
We had a total net revenue of -7.9% with a positive FX impact of 3.7% and the total volume price impact in -11.6%. Now moving to Slide seven. On this slide, we have the export consolidated by region. No big difference. We can see a increase of North America and a decline of Europe. The main reason, or the main reason, it's because of the U.S. comparing to the Europe. This is the main reason about this change on the percentage of the values. No big change. Now I will give back to Dr. Christian Binkert to continue.
Thank you, Daniel, very much for your comments and explanations. Coming to the next page, the summary and P&L page. As mentioned, we saw the sales drop of 7.9%, driven by volumes -12% and positive impacts from FX by around 4%. We achieved the sales of BRL 573.8 million. The margin, I mentioned at the beginning also already, the absolute amount is going down because sales is going down. On the other hand, the percentage is going up from 27.1% to 28.2%, and that is once again, mainly driven by the exchange rate impacts, as we have quite a lot of export sales. Coming to the next page, the summary of P&L, a couple of highlights. First of all, the selling expenses, which we had last year, a ratio of 6.1%, and this year 7.5%, an increase from BRL 38 million to BRL 43 million.
This was not really one large impact. This increase has been various small impacts, for example, exchange rate impacts, where we get some invoices in foreign currencies, or some restructuring impacts have been included. In regards of the general admin expenses, we can see last year the percentage 3% to sales. Now, excuse myself, 4.4%, or from BRL 19 million to BRL 25 million. Also here, like in the selling expenses, no major one-time impacts. Several smaller factors there, like in the admin costs, restructuring impacts or inflation impacts out of Argentina. R&D expenses on a same level. Last year, 3.2% compared to 3.3%, and absolute amount in both years, around BRL 20 million.
In regards of the other operating income, I mentioned already the Reversal of provisions last year, labor provisions last year, and this year we had to take some labor accruals, therefore, the negative impact this year is higher compared to last year. Moving to the next page, the EBITDA page. The comparison first quarter 2019 compared to the first quarter 2020. We had last year the EBITDA of around BRL 120 million. This year, we achieved the BRL 92 million.
Where are the major changings coming from? Explain the gross profit, BRL -7 million, mainly driven by the sales drop. Selling admin costs, I explained, there are smaller impacts, not only for selling but also for admin costs. Technology, R&D expenses on a similar level. The other operating income, as mentioned, mainly driven here the labor claims. The remaining two positions, the monetary position. Sorry, I forgot the other operating income.
That is the labor claims, as mentioned, and the gain and losses. Net monetary position, that is purely driven by the exchange rate. The last position, the depreciation, slightly positive with BRL 2.5 million. Coming already to the net financial results on the next page. We can see the first item, the finance cost, last year BRL -1.7 million - BRL -1.2 million, so we do not have to spend too much time on these items. Nearly no change compared to previous year.
On the other hand, if you look at the next position, the so-called exchange variation and gain, we can see rather big movements. BRL 2.6 million last quarter, BRL -32.7 million this quarter. If we look in more details, we can see that out of exchange rate variation and exchange rate hedging, we have a positive deviation compared to previous year, BRL 25 million. Here, once again, purely driven out of exchange rates.
Really, as mentioned at the very early stage of the presentation, the negative impact here is coming from ACC exchange rate variation, meaning we have loans in euro, which have to be evaluated each month with a new exchange rate. Due to the devaluation of the Brazilian reais, we have this negative impact now in our P&L, but it will be partially compensated over the next couple of months, because we will have euro inflows from our export sales in Europe. If you look then on the monetary variation, the last position here, also nearly no big changes. Last year, we had - 9.8%. This year, - 6.7%. We have a slight improvement in overall our finance income, BRL -9 million last year and BRL -41 million this year. The lower part of the table, I think we do not have to go into details.
Just to mention once again, that we increased our loans structure at the early stage of the COVID-19 crisis of BRL 250 million in additional loans. I will explain this in more details in the next couple of slides. Coming to the indebtedness, the part number one page. We are moving forward. You can see that the net position, nearly no change, BRL 188 million, compared to this year, BRL 183 million. If you then look into the details, you can see that our cash position increased to nearly BRL 560 million. An increase of BRL 353 million compared to last year. Also our loan position by BRL 348 million. Here, one major increase was the mentioned additional loan taken at the very early stage of the COVID-19 crisis of BRL 250 million. At the bottom of the page, you can see our normal distribution.
No major changes, what we discussed in the past. Just on the first chart on the very right bottom of the side with the maturity of March 2021. Here included the additional loans, which I just mentioned, of BRL 250 million . Going forward to the next slide, the part number two, indebtedness. We can see how are the loans, what is our structure. Also here, some changes, but no major changes, what we discussed before. First of all, our portion with ACC is around 39%. This Law 4131, the foreign currency loans, around 34%. FINAME and BNDES, respectively 17% and 10%. You can see our overall interest cost is 4.26%, 4.3%. Coming already to the last page before your questions. You can see a CapEx reductions. It is a combination of two factors. We started reducing CapEx at very early age.
Then we already had some indications about the Corona crisis, but also what Daniel mentioned before, the plants have been shut down, so there was not even a possibility to invest. So in the first quarter, we invested BRL 4.9 million. Total depreciation is slightly higher compared to previous year, BRL 25.6 million . If you look at below ratios, the CapEx in percent to sales 0.8% now, and the depreciation 19% compared to respectively 2.8% and 75% in previous year. That was it already from my side. Looking forward to your questions or comments if you have any. Thank you very much.
Ladies and gentlemen, we will now begin the question -and -answer session. If you have a question, please press the star key followed by the one key on your telephone now. If at any time you would like to remove yourself from the questioning queue, press star two. Our first question comes from Gabriel Rezende, Bradesco BBI.
Hi. Good morning. Thanks for the presentation. I just would like to understand a little better the 29% year-over-year drop on the aftermarket export volumes, compared to a smaller drop in the original market. You mentioned some political issues in some countries. I was just wondering if there was something else behind it. My point is, we should expect the aftermarket to be less volatile and more defensive under COVID-19 scenario. I was just wondering how you are perceiving this evolving in the next quarters? If I may, a second question. How do you expect these stricter sanitary measures to impact margins from now on, considering that productivity at your plants could decrease? Thanks.
Gabriel, this is Daniel speaking. I will answer the first question regarding the aftermarket. Thank you for your question. In the aftermarket, in this case, the main impact was the COVID, the coronavirus on the aftermarket exported. This was more difficult to get, in this case, the orders to send this aftermarket for the exporters. But the main impact was even the pandemic. Okay?
Gabriel, in regards of your question, Christian speaking. Margin, as Daniel mentioned before, we are working in scenarios, and even systems are very dynamic. Not only in regards of plants are communicating open, close again. You also heard perhaps news in Germany, Volkswagen opened, but already stated they will close some lines again because there is no demand for certain lines in Volkswagen group. It is really dynamic. I also have to mention, I am now here four years in Brazil.
When somebody would have told me the euro-real exchange rate would go up to 6.4, I would say I never believe it. Now it is reality. Some people told me one month it will be maximum 6.1. So really dynamic, challenging times. I cannot give you, as Daniel also said, any prediction for the future. We are working in these scenarios. We are trying to adopt as much and as fast as possible. Always also under the consideration that the health and safety of our employees is most important. I cannot give you a clear projection because the situation is too dynamic at the moment.
Just to give you, Christian, an additional info, we can get also some opportunities with this situation. I just mentioned some localization projects, so even if some competitors have a high effect for the FX, some opportunities also can come in from this situation.
Thank you, Daniel, for the additional input. Thank you.
Okay, thanks. That-
The next question comes from Marcelo Motta, JP Morgan.
Hi. Thank you for the opportunity. Two quick questions as well. The first also related to margins. Just wondering if you guys could provide what is the utilization capacity of the overall plants today, and also if there is any update about the MBE2 business. Now with the crisis, the oil crisis, a lot of things are changing very fast. So just wondering if the company plans to continue to invest on it, especially after the announcement together with the fourth quarter results early this year that the productivity, the results were not as good as expected initially. Thank you.
Thank you, Marcelo. It's Christian speaking, for your questions. In regards of the first one, the utilization, it really depends per plant. As mentioned at the beginning, if you look at aftermarket, coming to a more normal operation. Really, if you look from the shutdown till now, April was still a challenge, as Daniel has mentioned, but now May picking up. In other plant areas, we are still down by 40%-50%, but it really depends. We would have to look in the individual plants and also often depending which exports share the plant has because, for example, in Europe, some plants, as discussed, started already, so we'll be picking up in exports. On the other side, domestic market is still down. Coming to the second question regards of the NB2, the tests are running. We expect some results the next couple of weeks and months.
You asked, do we stop investing or looking the technology at the moment? No, we are not. As previously said, we are doing our test runs, and test runs means not in a small scale, really in a mill. We are doing this at the moment, and we will have to see. As you know, the crop season just started for sugarcane. So we will only have a couple of cycle runs with the NB2 technology the next couple of days and weeks. We will have to see what kind of productivity we will get out of this technology. But at the moment, we are still operating, we are still running, and let's see the results the next couple of weeks and months. Did this answer your question, Marcelo?
Yes. That was very clear. Thank you very much.
Thank you very much, Marcelo. Thank you.
As a reminder, if you would like to pose a question, please press star one. This concludes today's question and answer session. I would like to invite Dr. Christian Binkert to proceed with his closing statements.
Thank you very much once again, ladies and gentlemen, for participating this call in this challenging times. I am really looking forward to speaking with you soon in the future once again, yeah. But most importantly, kindly stay safe and healthy. Take care and have a nice day, nice afternoon. Thank you very much. Goodbye.
That does conclude the MAHLE Metal Leve audio conference for today. Thank you very much for your participation. Have a good day, and thank you for using Chorus Call.