Good afternoon Brazil, everyone, and thank you for waiting. Welcome to MAHLE Metal Leve for the third quarter of 2019 results conference call. With us here today, we have Dr. Christian Binkert, CFO, Chief Financial Officer, and Mr. Daniel Alves, Marketing and Corporate Communication 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 reach the operator. This event is also being transmitted simultaneously through the internet via 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 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 statements are based on the beliefs and assumptions of MAHLE Metal Leve management and on information currently available to the company. They involve risks and uncertainty because they relate to future events and therefore depend on circumstances that may or may not occur. Now, I will turn the conference over to Dr. Christian Binkert, CFO, to begin the presentation. Please, Dr. Christian Binkert, you may begin the presentation.
Good morning, ladies and gentlemen. Christian Binkert speaking, and welcome to the first quarter conference call. Really a pleasure speaking with you once again. If we come to Slide number two, the agenda. We will start as usual with the highlights for the first quarter and year-to-date numbers, the second numbers, and then Daniel will take over for the market overview and the net revenue performance by market. The last three topics, namely the P&L and EBITDA , the financial management, and topics in depreciation, then from my side, will be commented once again. Moving to page number three of the presentation. Sales in the quarter three 2019 was BRL 645 million, which represents a decline of 9% compared to last year, third quarter 2018. In the first nine months of 2019, the sales was lower of 1.4%.
We will see later the major reason of the decline of the 1.4% are export sales, while the domestic sales is increasing. Coming to the second bullet point, the original equipment market. In the third quarter, we had an increase of 10.4%, while the vehicle production was down by 3%, namely Brazil increased by 2.8% and Argentina went down by 37%. Lastly, the board of directors approved an interest on capital of BRL 70 million, which will be distributed in December 2019 and in line with last year's number. Looking a little bit at the key indicators. Once again, we achieved a sales of BRL 645 million, a decrease of 9%. EBITDA of around BRL 129 million giving a margin of 20%. Last year, the same period, it was 20.9%, so we could see a small decrease of 0.9 percentage points. The net margin, 10.7% compared to 13% last year.
Here to mention that last year, I will comment this further later on, in the third quarter 2018, we had a one-time impact, the hyperinflation accounting for the total year for the nine months, which did not happen as a one-time impact in Q3 2019. If you look on the right side of the column, now the nine-month sales is BRL 1.9 billion, - 1.4%. As mentioned, domestic markets are increasing, export is going down. The EBITDA margin 18.9%, slightly below compared to previous year by 0.5 percentage points. The net margin 10%, a drop compared to previous year of 1.4 percentage points. Coming to Slide number four, I would like hand over to Daniel.
Good morning, everyone, and thank you very much to be here with us today for the conference call. On Slide four, we have the markets overview. Brazil and Argentina vehicle registration production year-to-date September this year comparing to the last year. On the light vehicle Brazil, we have 8.8% increase, and for production, 3.6%. Comparing to ANFAVEA updated projection for the full year, the vehicle sales is 8.1% and vehicle production is 1.8%. Therefore, the numbers are very close to the year-to-date September with the full year updated projection of ANFAVEA. In Argentina, the light vehicle sales was down 48% and the vehicle production 34.9%. In this case, the full year projection, we have it around 45% declining on vehicle sales and - 30% on the vehicle production.
The combination of Brazil and Argentina on the vehicle sales for the year-to-date September this year against last year, it is 4.9%, and the vehicle production - 3%. Our full year projection for the year on the vehicle sales is - 4%, and the vehicle production - 4.5%. Looking behind in the old conference call we had, we lost two points. We had - 3% for vehicle sales and - 3.5%. Now, the updated MAHLE Metal Leve projection for the full year, it is - 4% for vehicle sales and - 4.5% for the vehicle production. Going to the medium heavy vehicle. On the vehicle sales for Brazil, we have an increase of 24.8%. In production, we have a 2.7% increase. The further updated projection for this full year, it is 22% increase for the vehicle sales and 2.6% increase for the vehicle production. Also very aligned with the year-to-date September numbers.
In Argentina, the same history. We have - 50% of vehicle sales and - 40% for the vehicle production. The combination for Brazil and Argentina on the vehicle sales, we have increased 8%, and for production, - 0.1%. In this case, our full year expectation for vehicle sale is 5%, and for vehicle production, - 2%. Now moving to Slide five. We have the vehicle production in the main markets for the export business of MAHLE Metal Leve for North America and Europe.
Going direct to the last column, we have in North America, light vehicle production, - 1.2%, and for medium heavy vehicle, 7.2%. The combination light vehicle and medium heavy, - 1%. For Europe, we have on the light vehicle - 3.9% for the vehicle production and - 1.2% for the medium heavy vehicle. The combination Europe, - 3.9%. Total vehicle production year-to-date September this year against last year, it is - 3.6%. The full year expectation for North America light vehicle, it is - 1.8%.
For the medium heavy, it is 4.2%. In Europe, the light vehicle full year projection, it is - 1.5%, and the medium heavy vehicle, it is - 1%. So in this case, also in the export markets, the volumes are going down. We have the trade issues, the global economy weakness. So many points that decline in the vehicle production. And for sure, impacting the heading of the MAHLE Metal Leve for the export business. Now moving to Slide six, where we have the third quarter net sales revenues performance by market. We have the Q3 2019, the volume price impact, the tax variation, the third quarter last year, and the comparison percentage. I will direct to the last column, where we have the variation.
You can see the original equipment, domestic 10.4%, and export - 24.6%. In this case, I will comment on the year-to-date September. The comments are very similar. Therefore, I will keep the comments on the year-to-date September figures. On the aftermarket, we have for the domestic sales, - 4.8%, in export business, - 14%, in the combining aftermarket, - 7%. The total revenue, it is - 9.1%. The tax impact, it is - 3.3%. The volume price impact, it is - 6.8%. Now moving to Slide seven. In this case, we have the year-to-date September figures this year against year-to-date September last year by market. So we have the original equipment domestic, an increase of 9.4%, despite of the decline on the vehicle production, which just saw a few minutes ago, the - 3.8% for the vehicle production.
Therefore, the MAHLE Metal Leve sales for the domestic market, it's much better than the market performance. The main reasons for that are share increase. We got some new business, a ramp-up for this business. Also, some export engines that we are participating on these engines, the automakers is exporting the engine, and the MAHLE Metal Leve is participating on this engine and this revenue, and also the service parts increase. For the export business, we have a reduction of 12.6%, and a tax impact of 6.6%, and the volume price impact, - 19.2%. In this case, the main reasons for this decline in sales is the market reduction, our inventory adjustment, also because of this market reduction, our last year spot buy, and some ramp-down programs, and also a higher competition. These are the main reasons for this decline on the net sales revenue.
Going to the aftermarket domestic, we have an increase of 5.3%, a tax impact of - 10.4%, and a volume price impact of 15.7%. It's important to mention this effect. In fact, it's mainly because of our business in Argentina, our evolved business in Argentina, so we saw this increase. In this case, this is the main reason for this decline. For the South America domestic market aftermarket, the main reasons for this increase, it's the mix of parts. For the export aftermarket, we have a decline of -3.4%, an effect impact of 5.9%, and the volume price impact -8.3%. In this case, the main reasons for the decline, it's the Turkey business, Chile, and also Paraguay. These three countries have impacted negatively in our revenues for the export aftermarket. We got some positive impacts for Colombia, Central America, and Ecuador, but the net is -8.3%.
The total aftermarket is 3.5%, effect impact -6.4%, and the volume price, it's 9.9%. The combination of original equipment and the aftermarket, it's -1.4%. The effect impact is zero, and the volume price impact -1.4%. Now moving to Slide eight. There we have the participation of the export business by region. In this case, no big change for the counts. So we have a similar path that we had on the last year. Now I give back to Dr. Christian Binkert the presentation. I will be available at the end for questions.
Thank you, Daniel. Coming to the P&L. As you can see from the chart, first of all, concentrating on the last quarter. As mentioned, we achieved the sales of BRL 645 million, 9% lower compared to previous year. The gross margin, 27.6%. Last year, the same period, we had a gross margin of 30.5%. I mentioned already we had last year a one-time impact due to the hyperinflation accounting, the so-called IAS 29 in Argentina, with a BRL 200 million amount. This really was the reason why we had a relatively good margin in the third quarter 2018. If you look now, the year-to-date numbers, BRL 1.93 billion in sales, -1.4%, and the margin dropped from 29% to 26.5%. Some of the reasons already mentioned. The social cost benefits, which we still got last year, we are not getting this year anymore.
I mentioned the last call already, the higher energy cost, not only in Argentina but also in Brazil. Also, as mentioned by Daniel Alves and myself, the decreasing export sales. Coming to page number 10. Looking a little bit at the SG&A and R&D side. In the selling side, we can see we have now in the third quarter, 6.5% achieved compared to the 7.1% last year. The same or similar trend year-to-date. The selling cost 6.2%, 6.7% it was last year. Here clearly, as well as for the admin areas, we have some productivity gains, some restructuring activities. As mentioned, the same for the admin area, 2.9% whereas was 3.3% the last quarter, 2019 and 2018. Year-to-date, we also can see a drop from 3.2% to 3.4%. So in overall, the selling and admin costs on a year-to-date basis dropped from 10.1% to 9.4%.
As we have better productivities via higher restructuring in our area. If we look at the R&D expenses for the third quarter as well, year-to-date, we see higher numbers. If we concentrate on year-to-date, 3% compared to 2.9% last year. Nine months, so 0.4% higher. That's really due to new innovations for new products and new patents for customers. Other operating results year-to-date, we have -4.6%. Last year, it was +2.1%. One of the reasons is the Reintegra program, which was finished in 2018. So we don't have this benefit in 2019 anymore. The export expenses or duties, which started in Argentina, I think, in 2018. Coming to the page number 11, the bridge between the EBITDA periods. First of all, the third quarter 2018, EBITDA of BRL 148 million with a margin of 20.9%.
We achieved now in the third quarter 2019 on the right side, BRL 129 million with a margin of 20%. Where are the major differences coming from? Selling and distribution expenses. Here, once again to mention the productivity gains, restructurings. The gain and losses on net monetary positions, that's purely the hyperinflation Argentina, the so-called IAS 29, the BRL 6.7 million. For the general admin expenses, the same comment as for the selling expenses, productivity and restructuring. On the right side, the gross income, the BRL -38 million. Here once again, the hyperinflation impact last year, the one-time impact from January 2018 to September 2018, a two-digit million BRL number was included. Now looking at the nine-month numbers, BRL 380 million year -to -date last year, which gave our EBITDA margin of 19%. Now we have BRL 364 million in EBITDA and our EBITDA margin of 18.9%.
Really, the reasons are nearly the same reasons as for the third quarter. I just would like to add some comments in regards of the technology, the R&D, and the new innovations, the patents, and for new products, we are spending more. For the gross income, in addition to the personal costs, the social costs, and then also the energy costs, which are increasing, not only in Argentina, the energy costs, but also in Brazil slightly. Coming to the page number 12, the financial management, the financial results. You can see here nine months, BRL -28 million compared to BRL -14.7 million to previous year, so we are losing BRL -14 million. Where is this coming from? First of all, the finance costs from BRL -1.7 million last year -to -date, to BRL -5.6 million, so BRL -3.9 million as a variation.
This is a combination of lower investment, which you also can see at the bottom of the table. Last year, we still had an average investment of BRL 93 million. Now we are BRL 73 million. In addition, we have higher average debts. Last year, BRL -195 million. This year, BRL -282 million, so we have higher loans of around BRL 90 million, then resulting mainly in the deviation of the mentioned BRL -3.9 million. The exchange rate variation, here really the major gap it is coming from. Last year, still a positive amount of BRL 60 million, and this year only BRL 1.5 million, so we have a gap of BRL -14.5 million. The main reason is Argentina. The devaluation of the Argentine peso for the same period of time last year was higher than this year. Therefore, the positive impact out of Argentina is going down.
Coming to the monetary variation, the impact of BRL 4.3 million is minor. Here to mention that the hedging rates in the market are in 2019 closer than in 2018. Once again, as a summary, BRL -28 million as a finance income compared to BRL -14.7 million to last year. Coming to the page number 13 already, our net investment. You can see the liabilities increased from December to September by BRL 103 million to a level of BRL 395 million. You see no major change in the distribution between short and long term. Also our cash position increased by BRL 93 million to a level of BRL 231 million. So overall, the net position, the net indebtedness, you can see a slight increase by BRL 10 million to a level of BRL 164 million, giving us a leverage of around 0.4x.
If you look at the below part of the presentation between the short- and long-term distribution, you can see as well in short term as well as long term, it is well distributed between the month and the year. Coming to page number 14, our financing structure. Also here you can see no major changes. We are still mainly financed with FINAME and ACC. Already coming to the next page, the page number 15. The net income and the benefits to the shareholders. I mentioned already the profit for the year for the first quarter, BRL 69 million. We achieved 10.7% income compared with 13.2% last year. The reasons for the drop, I already explained. If you look now on the year-to-date numbers, BRL 190 million with a profit of 9.9% compared to 11.5% previous year.
On the bottom, as mentioned, the board of directors approved our interest and capital payment last week of BRL 70 million, which will be distributed in December and is in line with the distribution last year, and the remaining interest and capital and also the dividend will be discussed in the year of 2020. Coming already to the last page of the presentation. Also here, very stable numbers. CapEx, BRL 57 million, now BRL 55 million. Last year, it was BRL 55 million for the nine-month period. The depreciation, BRL 17 million compared to BRL 68 million last year in percent of sales. Similar numbers, 2.9% compared to the 2.8% last year. If you compare it to depreciation, also very similar numbers, 80.6% - 80.5% compared to previous year. Thank you very much for your attention. Now, if you have any question, kindly let us know.
Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star key, followed by the one key on your touchtone phone now. If at any time you would like to remove yourself from the question in queue, press star two. Our first question comes from Marcelo Motta, JP Morgan.
Hi. Good afternoon, everyone. Two questions. The first is the company to comment a little bit more about the NBE2 business. Has it already contributed to revenues? What is the expectations in terms of profitability and contribution to results for next year? The second question is on the result. There is a line called provisions for environmental liabilities, around BRL 4 million that was booked this quarter under other operating expenses. Just wondering if the company could clarify what exactly it means. If it is like the amount of this could be higher or lower, just to understand what it means. Thank you.
Coming first of all, Marcelo, thank you for your questions. Coming to the NBE2, we installed two units in Namil. The operations are ongoing. The installation of the NBE2 equipment took place a couple of weeks. We are still analyzing at the moment. There is no sales included in the numbers of 2019. If we will have to include or if it will include something in the last three months, we will see. Will depend on many factors.
As you know, sugarcane, the season is nearly finished. Let us see if we can still include certain sales numbers in 2019. In regards of the environment, a very good and very valid point. This is due to former operations which we had in the city of São Paulo. We relocated the operation to our facility many, many years ago to Mogi das Cruzes, our piston plant. Now, it is not new for us. We did know that there is some environmental issues. Just as a precondition and precaution, we build up some additional accrual for this case. Did this answer your questions, Marcelo?
Yes. Thank you. Very clear.
Thank you.
Ladies and gentlemen, as a reminder, if you would like to pose a question, please press the star key followed by the one key on your touchtone phone. Again, if you want to pose a question, 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. Please go ahead, sir.
Thank you very much once again for participating in the call. Thank you, Daniel, for your contribution, also to the team here. Thank you very much. Looking forward to speaking, discussing with you in the near future, latest in the next call in March 2022. Thank you very much. Have a nice day.
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.