Morning, everyone. Welcome to the video conference to discuss the results referring to Iochpe-Maxion's first quarter 2023. I'm Rodrigo Caraça, Investor Relations Manager, and will lead today's conference. Today at this conference will be available after the presentation in Q & A with Mr. Marcos Oliveira, CEO of the company, and Mr. Elcio Ito, CFO. We inform that this video conference is being recorded and will be available on the company's website. Also, presentations will be available. If you need simultaneous interpreting, click on the globe icon on the lower portion of a screen and select the language of your choice, whether it's Portuguese or English, they are both available. For those listening to the video conference in English, there is the option to mute the original audio in Portuguese by clicking on mute original audio.
For Q&A, we encourage you to manifest yourselves via Q&A icon. On the lower portion of the screen, there is a button that says Q&A. By default, your names will be announced so that you can ask your questions live. At that moment, you'll be requested to activate your microphone. If you need any other clarification during the conference related to the business prospects, projections, and operational and financial goals, they constitute beliefs and assumptions of the board of Iochpe-Maxion S.A. Information is currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions as they refer to future events. Therefore, they depend on circumstances that may or may not occur. I would like to now give the floor to Mr. Marcos Oliveira, company's CEO. Mr. Marcos, you may proceed.
Good morning, and welcome to Iochpe-Maxion's earnings release video conference for the first quarter of 2023. This year's first quarter was still characterized by a scenario of global economic and geopolitical uncertainties. The high interest rates and inflation levels, they signal a cooling trend in several countries. From an industry standpoint, bottlenecks in the supply chain occurred less frequently, signaling a gradual improvement. In Brazil, the production volume of trucks was negatively impacted due to the change in norms on the emission of pollutants for diesel engines, Euro VI. On the other hand, regions such as Europe and North America have been surprisingly positive with productions levels above the initially projected for the year. Global production of light vehicles, excluding China, according to IHS consultants, grew by 11.8% this year's first quarter compared to the first quarter of the previous year.
The commercial vehicle segment showed growth in global production, excluding China, of 2.1% in the first quarter of 2023 compared to the 1st quarter last year, according to LMC consultants. The company's operating margins were negatively impacted in the first quarter of 2023 due to some temporal factors. The lag between the cost of raw material inventory compared to selling prices, as we observe greater stability in raw material prices. This impact has a downward trend in the volume of commercial vehicles in Brazil, impacting operational efficiency and the remaining impacts of inflation in all regions. We continue to work to reduce the impact of cost variations, and we expect margins to recover and return to normal over the course of this year. I will now follow the slides of our presentation.
On slide number two, we have the global forecast for light and commercial vehicles in IHS and LMC. In light vehicles, we observe a forecast growth of 4% in vehicle production in 2023 when compared to 2022. The industry reaching a level of 85 million vehicles produced worldwide. In the commercial vehicle segment, we see a 6% growth in commercial vehicles production globally when compared to 2022, reaching approximately 3.2 million vehicles worldwide. On slide number three, we have the main highlights of the company in this year's first quarter. The company's diversified business model contributed to mitigating regional impacts, as observed with the drop in commercial vehicles in the Brazilian market.
We had a net revenue of BRL 4 billion in the first quarter of 2023, a decrease of 6.5% compared to the first quarter of 2022. We reached a gross margin of 8.5% in the first quarter of 2023, a reduction compared to 14.3% margin in the first quarter of 2022, and an increase in 7.8% margin for the fourth quarter of 2022. We had a net debt to EBITDA of 2.77 x in the first quarter of 2023, compared to 2.06 x in the first quarter of 2022, and 2.26 x in the fourth quarter of 2022.
We had a reduction in net debt of BRL 74.1 million in the first quarter of 2023, compared to the first quarter of 2022. Our total liquidity of BRL 3,104.7 million in the first quarter of 2023, compared to BRL 1,286 million in the first quarter of 2022, reaching a liquidity ratio of 1.54-fold . We also announced a partnership with a company called Forsee Power to develop products and solutions for vehicles with electric propulsion. Slide number four. Looking at the company's consolidated operating revenue. We reached BRL 3,998 million in the first quarter of 2023. A reduction of 6.5% compared to the first quarter of 2022.
The lower production volume of commercial vehicles in Brazil, the reduction in the price of raw material reflected in prices, and the negative exchange rate variation of BRL 118.6 million impacted operating revenue in the first quarter of 2023. Looking at the revenue per region, we can see an important growth in Europe's share, reaching 36% of the revenue of the company. A drop of 26% in South America, mainly impacted by the reduction in the production of commercial vehicles in the Brazilian market, and stability in the participation of North America, which represented 29% of the company's revenue, and Asia and other markets that accounted for 9%. Slide number five.
Looking at the breakdown of the company's net operating revenue, we can see the revenue per product with growth in sales of aluminum wheels, mainly in Europe, and the share with aluminum wheels growing from 26% in the first quarter of 2022 to 31% in this year's first quarter. In revenue per segment, we can see the effect of the reduction in the share of commercial vehicle segment due to the lower production volume in Brazil. Commercial vehicles representing 48% in the first quarter of 2022 now represent 44% in this year's first quarter. In revenue per division, we also see a reduction in the share of the structural components division due to its greater exposure to commercial vehicles.
Structural components accounted for 26% in the first quarter of 2022, and now in the first quarter of 2023, they account for 24%. Slide number six, revenue per customer. We see the variations impacted by market dynamics, stability, and a slight reduction in the segment of trucks, commercial vehicles, and a slight growth in customers who are more exposed to the segments of light vehicles worldwide. Slide number seven. Looking at the operating performance per region, we can see a reduction of 14.2% in South America's net operating revenue, reaching BRL 1.026 billion in this year's first quarter. The drop in the production of wheels, chassis, and cross members for commercial vehicles impacted by the change in motorization from Euro 5 to Euro 6, had an important impact in South America.
On the other hand, the increased production of steel and aluminum wheels for light vehicles supported us in this region. When we look at the performance of the Brazilian market in terms of produced vehicles, we can see an increase of 11.3% in the production of light vehicles in Brazil in the first quarter of 2023 in comparison to the first quarter of 2022, and a decrease of 28.9% in commercial vehicles in the first quarter of 2023. Slide number eight. The operational performance in North America showed a drop of 13.9% in revenue for the first quarter, reaching BRL 1, 146 million, which was impacted by the reduction in the price of raw materials, which were also reflected in prices, the negative exchange variation of BRL 7 million.
On the other hand, we had an increase in the volume of cross members and stamped products, and an increase in the volume of aluminum wheels for light vehicles and steel wheels for commercial vehicles in North America. When we look at the North American market, we can see a growth in light vehicle productions of 9.8%, and a growth of 13.8% in the production of commercial vehicles in this year's first quarter compared to the first quarter last year. Slide number nine. Looking at the operational performance in Europe, we can see a 10.2% growth in the company's net operating revenue, reaching a revenue of BRL 1,452 million in the first quarter of this year.
The growth in the volume of aluminum wheels for light vehicles and steel wheels for commercial vehicles supported this growth in operating income in Europe. The exchange variation negatively affected the results by BRL 73.7 million in this year's first quarter. Looking at the market performance in terms of the number of vehicles produced, we can observe a growth of 23.7% in the production of light vehicles, and 12.6% in the commercial vehicle production in Europe in the first quarter of 2023 compared to the first quarter of 2022. Slide number 10. Looking at Asia and other markets, we can see a reduction of 13.6% in the company's net operational revenue, reaching BRL 374 million in the first quarter this year.
The reduction in the price of raw materials reflected in prices and the negative exchange variation of BRL 37.8 million affected the company's net operating revenue in the first quarter of 2023. On the other hand, the increase in the volume of aluminum wheels for light vehicles and steel wheels for light and commercial vehicles in India positively supported the company's performance in this first quarter. We look at the numbers of produced vehicles in the two main regions where the company operates, we can see a growth in the production of light vehicles in India of 9.4%, and a decrease of 11.2% in the production of commercial vehicles in the first quarter of 2023 compared to the first quarter in 2022 in India.
In Thailand, we see a growth of 3.3% in the production of light vehicles that are produced in that region. On slide number 11 now. Now looking at the company's gross profit, we reached a gross profit of BRL 341 million in the first quarter of 2023, compared to BRL 611 million in the first quarter of 2022. When we compare the first quarter of this year with the fourth quarter of 2022, we see a 5.3% growth in the company's gross profit and a gross margin of 8.5% in the first quarter this year in comparison to 7.8% in the fourth quarter of 2022.
Raw material inventory with sales prices and low, and lower operational efficiency due to the drop in commercial vehicle production in Brazil and the impacts of inflation in all regions affected the company's results and gross profit in this year's first quarter. Slide number 12. Now looking at company's EBITDA, we reached BRL 287 million in the first quarter of 2023, compared to BRL 548 million in the first quarter of 2022. When we compare the first quarter of 2023 with the fourth quarter of 2022, we can see a 1.5% reduction in EBITDA between these two periods, and a growth in gross margin from 7% in the fourth quarter of 2022 to 7.2% in the first quarter this year.
The main non-recurring effects in the first quarter of 2023 were the recognition of the gain from the exclusion of the ICMS from the PIS/COFINS index calculation base in the amount of BRL 11 billion and an expense of BRL 6.7 million with restructuring in Brazil to the drop in commercial vehicle productions in the region. On slide 13, we see a net loss of BRL 60 million in the first quarter of 2023, compared to a net profit of BRL 160 million in the first quarter of 2022. When we compare this year's first quarter BRL 60 million loss with BRL 141 million in the fourth quarter of 2022.
Slide 14. We can see investments of BRL 91 million in the first quarter of 2023, compared to BRL 81 million in the first quarter last year. The main investments in the period were related to the increase in capacity to meet demand in the vehicle segment, sales in North America, and also the construction of our new plant for aluminum wheels for trucks in Europe. Slide number 15. We can see company's financial leverage. We reached net debt to EBITDA in this year's first quarter of 2.77 x compared to 2.26 x at the end of 2022. We had a reduction in net debt of BRL 74.1 million compared to the first quarter of 2022, and the reduction of the last 12 months is the main factor for the increase in leverage.
In slide 16, we can observe the liquidity ratio of the company reaching 1.554 fold in the first quarter of 2023, compared to 2.65x in the fourth quarter of 2021 and 0.69 x in the first quarter of 2022. We obtained a total liquidity of BRL 3.1047 billion in the first quarter of 2023, compared to BRL 2.787.1 billion in the fourth quarter of 2022, and BRL 1.386 billion in the first quarter of 2022. In slide 16, we can observe the indebtedness of the company and the gross debt breakdown. In different currencies, where EUR represented 38.7%, BRL represented 45.6%, USD represented 13%, and other currencies represented 2.7%.
When we look at the indebtedness between short-term and long-term, we can see that there was a growth in the long-term debt from 64.4% to 70% in the first quarter of 2022 to 70.9% in the first quarter of 2023. We achieved the gross debt of BRL 6,942 million, variation of 22.0% compared to the BRL 5,545 million in the first quarter of 2022. In the next slide, we can see some of the new launches in the first quarter of 2023 in different regions. We had the launch of aluminum wheels for light vehicles with Mahindra in Asia. We had Aluminum Wheels in light vehicles with Porsche in Europe.
We had a partnership with Aluminum Wheels with Toyota in light vehicles, and also Steel Wheels for commercial vehicles with Wabash in North America. Slide 19 shows us some of the partnerships with Forsee Power, some of the details about this partnership. It is an integrated solution to accelerate vehicle electrification. Forsee Power is a French company, which is a European leader specializing in smart battery systems. We also have the participation in the capital increase of Forsee Power in the value of EUR 5 million. Slide 20 shows us some of the ESG highlights regarding Sustainalytics. We had the maintenance of the low-risk rating, which is the best level on the scale. We had an improvement of approximately 5% over last year's score. This ranked us in the first quartile among all companies and in a competitive way inside of our segments.
Regarding the Science Based Targets Initiative ( SBTI), it is a scientific and legitimate methodology to reach the target of the Paris Agreement, which limits global warming to 1.5 degrees Celsius. IMSA formally committed itself to the SBTI. We are now working to approve our goals. Now I would like to open the floor for our Q&A segment.
Now we will begin our Q&A segment. We ask you please to ask all your questions in the Q&A segment. You can ask all your questions at the same time, and the button is found in the lower portion of the menu. Your name will be announced so that you can make your question live. We will ask you to activate your microphone. Our first question is from Andressa Varotto, an analyst from UBS BB. We will turn on your mic now, please.
Good morning, everybody. Marcos, Elcio, thank you for the opportunity to ask a question. I have two questions here. First, I wanted to understand the expenses with restructuring because of the subsidiaries here in Brazil. If you expect this expense, do you expect more expenses of this type in the coming quarters? I also want an update in what you expect for the commercial vehicles in Brazil. My second question is. It's still in the same line, but about images. Could you give us some details about the operational efficiency because of the lighter because of the smaller performance, does this affect our image? We are still seeing this effect. It should improve over the next quarters. These are my two questions. Thank you very much.
Andressa, good morning. It's a pleasure to answer your questions. First, regarding expenses with restructuring. Observing the reduction in the production of light vehicles, which was greater than we had anticipated for the first quarter of 2023, we began some restructuring of our operations, especially in our operation in Cruzeiro, where we produce wheels and structural components for commercial vehicles. We also announced recently an agreement with the union and our collaborators to reduce the workday and the salaries in this period of reduction of demand. This is an agreement that we renew every 90 days, in truth, according to the demand of that period, of that scenario. Obviously, we will continue monitoring the trends, and if necessary, we will make some other adjustments. We believe that the necessary adjustments, the main ones, have already been made in the beginning of this year of 2023.
Now, with this agreement, regarding the workday and the reduction of salaries, we can manage this trend throughout the rest of the year. We are always paying attention, and we will react according to market trends. Our perspective in terms of the reduction in the production of light vehicles for the year, this is around accumulated reduction of 20% compared to last year. Remembering that the first quarter, this reduction was close to 30%. It went from 29% in truth to the same period of the last year. We believe that there will be a gradual improvement in this demand for commercial vehicles, trucks and the like throughout the year and the second and third quarter of this year. Regarding the lack of operational efficiency, of course, the reduction in the demand for trucks, this has been negative.
When we look at the results of the first quarter, it was very consistent with what we were projecting for this year already. In function of the conjunction of factors that were affecting the transition between 2022 and 2023, we still had a mismatch in the cost of raw materials and in the variation of the price of these raw materials in terms of sales. This has begun to stabilize now at the end of the first quarter and the beginning of the second quarter of this year. We also see stability and even a slight increase in the price of aluminum wheels that will be passed on to the customers at the right time. The world crisis that affected the operational efficiency, together with this scarcity of raw material and inflationary aspects worldwide that are gradually being passed on to our clients.
This allows us to forecast and count on a recovery and normalization of our margins throughout the year. We have begun to observe an improvement in our gross margin to 8% in the first quarter of this year, and we count on this gradual and sequential improvement throughout the second quarter and the second semester of this year.
All right. Thank you very much.
The next question is by Gabriel Rezende. He is an analyst from Itaú BBA. Gabriel, we have opened your mic so that you can ask your question, please.
Thank you, Rodrigo. Good morning, Marcos. Good morning, Elcio. I'd just like to follow up Andres' question and confirm the understanding that at first, that all the factors that weighed on the margin in the 1st quarter, they should have a lesser impact on the other quarters. By what Marcos said, the trend in the commercial vehicles is still a reduction, but a smaller reduction. In the last quarter presentation, you said that there's a lower circulation of cargo than in 2022. I want to confirm the understanding that we should understand that there would be a lower working capital in the second quarter and perhaps a better margin in the second quarter.
The second point, talking about Europe, which has called my attention in a positive way. I'd like to say that perhaps there's an expansion of 5% between 2022 to 2023. Does this incorporate the scenario that is surprising you positively? If you observe the revenue in Europe comparing the quarters, you align this with the fact that prices are falling, it seems that the volumes are above what IHS is projecting. I want to know if there's still space for IHS to be changing these projections throughout the next months.
Thank you, Gabriel, for your question. Your understanding is correct. We do expect a substantive change in the margin throughout the second quarter, improving throughout the year because of these factors that you mentioned and that we also mentioned beforehand. The prices of the raw materials with the pricing of the products and the stock products that are already at very normalized levels at the end of the first quarter of this year.
This combination of factors and the stability in volumes, this allows for our margins to accelerate based on the second quarter of this year. Regarding Europe, the scenario is more positive than we imagined, and we see a growth of two digits in sales in Europe in the first quarter of the year, in light vehicles specifically, but also among commercial vehicles, which is positive. It is superior, I would say, to the initial projections that we had made of the IHS. With this trend and with the maintenance of the level of global growth could be even superior to the global growth projected for the IHS for the year. We see Europe in a positive light.
The Brazilian market, despite all the concerns and all the variations regarding the segmentation between direct sales, retail, wholesale sales, we see a growth of 4% in light vehicles that is accumulated in the first quarter of 2023. This is a good sign. It's not a two-digit growth, but it is significant growth. With the stabilization and gradual improvement in sales and commercialization of our trucks, we believe that the commercialization in Brazil will be more positive throughout the year of 2023. In North America, the commercial vehicle segment is very strong. It continues to be very accelerated. For example, 2022, in terms of commercial vehicles in North America, it was very strong, and 2023 also begins in a very similar fashion to last year at a very high level.
The forecast and the indications of our customers is that this scenario must maintain itself throughout 2023. We continue producing structural components and wheels at North America. We count on this performance, I would say solid performance, throughout the year of 2023. In Asia, India continues to have very good performance, has a growth in light vehicles. It's still very positive growth. Commercial vehicles had a small reduction at the beginning of this year, in comparison with last year, it's still very strong compared to 2022. We believe that they will have very interesting performance throughout the entire year of 2023. China had a year of strong... a more shier demand of light vehicles. 2022 begins to show improvements.
The economy in China begins to show stronger indicators in 2023, which is very positive. Globally, I would say that the segment of light vehicles is performing well along throughout the whole world, except for in Brazil because of the transition to Euro 6, especially in the 1st quarter, because the plant still had a lot of trucks in their inventory. Now that this inventory is being emptying with sales, we expect growth in the production of commercial vehicles. Although the light vehicle segment has a lot of concerns with geopolitical issues around the world, light vehicles are showing interesting growth, which will be superior to the projections of 4% and that IHS had been counting on for the year of 2023. Thank you, Gabriel.
Thank you, Marcos. I thank you. Thank you for your details.
Our next question is by Fernanda Urbano, analyst from XP. Please, Fernanda, you can ask your question.
Good morning, everybody. Thank you for allowing me to question. It'll be a follow-up regarding margins. I think that despite this expectation throughout the year, it's still below historical levels. I'd like to know how this is related to leverage. What is your expectation for the next quarters? Do you think we will be able to reach the EBITDA higher than 3 x by the end of the year?
Thank you for your question, Fernanda. Just to reinforce that the topics regarding time are negatively impacting our margin over the last few quarters.
The dephasing of the price and raw material, if we look at the history of the prices regarding monthly values, there has been a reduction in the last few quarters, and this effect going through inventory, this starts to be more balanced starting in the second quarter. This transitory effect is already starting to have a very substantive reduction and improvement, and it's going to depend on the prices of commodities from here on. We have an improvement in the prices of aluminum and sometimes an increase in the steel market. We will have a more relative improvement in the next few trimesters. The impact of Euro 6 was very strong, and it can also impact the second quarter, and we will have an improvement in the production of commercial vehicles here in Euro 6. Inflationary aspects were also strongly impacted here in the first quarter.
They are also going towards a negative trend because slowly we are recovering with our clients, and there are also inflation events. If we remember long ago, the crisis of energy in Europe, we always mentioned this, the cost of natural gas reached almost EUR 350. Now it's going back to EUR 30-40. Very much lower levels, and this reduces inflationary pressure over our costs. All the main factors that have been impacting in a transitory and temporary way, slowly they are leaving the scenario, and we should see an improvement based on the second trimester going to our potential margins that have not changed.
I think it's important to remember that this entire issue of volume that is very important for our business and our margin, this recovery of our, of our volume with some ups and downs that we've had, this is the beauty of our business model. When our sales fall a little bit, then Europe surprises us positively and North America as well. This is a factor of our business model that gives us resilience regarding this process. There's this transitory nature of the factors that have been impacting us. It has a larger impact in what we observed here in the first quarter, but the forecasts are improving and trending towards normalization throughout the year. We expect a much better recovery in EBITDA over the rest of the year.
Let's remember that in the third quarter and fourth quarter, we have lower comparisons because the second semester of last year, that's when we started to observe the time impacts in our production. We did not have strong increases in these third and fourth quarters. Comparisons will improve now that we will go back to normality, which will be the leveraging at the end of the year. There are a lot of ecosystems of performance and markets and exchange rates. It's hard right now for us to know what will happen by the end of the year. All the aspects regarding to operational improvements and margin, it continues strong in terms of capital, whether with CapEx or our working capital. They're still very strong so that we can continue in our trajectory in improving our leverage, which we have been seeing for various trimesters.
That was very clear. Thank you.
Next question is from Rogério Araújo, sell-side analyst for the Bank of America. You may proceed now.
Hi, good morning, Rodrigo, Elcio and Marcos. Thank you for the opportunity. I have two questions. One is in regard to energy cost. In the last call, we heard a little bit about a slight reduction in the second semester, but we haven't really felt the impact just yet. Making all the math in regard to the cost, it really presents 5% of the revenue, which was 4.4% in the last semester. The normalized level was around 3%. Do we think we can expect an improvement in the next semester regarding margin? This is the first question. The second question is a confirmation in regard to the drop in revenue for North America, in which the pro-vehicle production has been affected due to raw material. Do you think this is reset? Is there any loss in share and volume?
Thank you. Rogério, good morning. Thank you for your question. In regard to energy cost, it is definitely dropping, and it's now at levels that are below EUR 40 per megawatt-hour in Europe. It is a good indicator, because before it had reached EUR 330 in the second half of last year, so it's dropping. In the first semester it also dropped from January into March. I believe we are now going to see lower representativeness in this regard for this year. There are two factors. There is, for example, the drop in energy costs and also a drop in participation in regard to raw material, because we've mentioned that before, remember? There is this factor. I think that they are in stable conditions, whether energy or raw material, both. This percentage is going to get back to the traditional levels we had before, which are close to 4% according to our cost structure. I believe in the second or third quarter you're gonna see this being reflected.
In North America, the main impact was the variation in the cost of raw material, the price of raw material, it started happening last year, especially the second half of last year, and it's been dropping. There is this time lag in transferring to customers and this is affecting, and it's impacting for sure our participation in North America. There's also the exchange rate, which also impacts revenue in North America. Also there's this one particular client we have in North America in this segment, not in OEM, but trailers. They had a significant drop according to their segmentation, and it really affected our sales during the first quarter. It's not a drop in market share, but a specific segment of wheels for medium vehicles that we have in North America.
In view of the performance of that segment, of that particular client in that segment. The main factors are related to the variation in raw material, because volume as a whole was good in North America in the first quarter.
Perfect. Very clear. Thank you, Marcos. Have a good day, everyone.
Our next question is from Victor Mizusaki, sell-side analyst for Bradesco BBI. Victor, you may proceed.
Hi, good morning. I have two questions. First one, now let's get back to leveraging. Although you haven't given any guidance on that. On your side, in regard to budgeting, when are we going to see leverage peak? Is this going to be in the middle of the year? What quarter would that be? If you can let me know. I think it's gonna help us a lot. The second question is to Marcos. If you could please comment a little bit on what was Turkey like in regard to revenue last quarter and this quarter. The trend in Turkey is different because of this current political scenario. Thank you.
Victor, in regard to leveraging. First of all, I have to say that it's difficult to tell you about the peak in leverage. We had some increase, as we've mentioned during the presentation, but there is an operational improvement that is really going to show in the second semester. There is not a sequential impact that we have in refers to cash and net indebtedness, especially because of seasonality. This is going to consume a little bit of capital during the fourth quarter, in which we have lower levels of activity.
In terms of this increase of the fourth trimester last year to the first one this year, we have no such thing as that seasonality and there is no drop between the first and the second quarter. It's important to emphasize, and I believe this has been said about all the previous quarterly presentations. From the fourth quarter to the first quarter, something that is very natural to any industry when we understand the number of days in regard to the first quarter. Remember we had a reduction in 15 days if you compare year over year, and from 19% to 15% drop in revenue. Year over year, we are really showing substantial improvement. When you compare fourth to first trimesters of each year, we don't see a significant change considering the days.
There are many positive aspects in this sense for the second quarter. There are of course, effects we cannot control, and there are some other that are going to determine our leverage for our second quarter. Considering structural components and also wheels, it's going to be difficult for us to give some guidance on that.
Victor, now in regard to Turkey, we see an improvement, which is also gradual in the results. As a reminder, we still have a phenomenon that is interesting this period, which is the inflation increase. In view of the economical situation, they have a very high inflation at the moment, impacting our local costs and certain stability with the Turkish currency, which has been happening since mid-last year and this year. Inflation is increased and their currency is not increasing in value.
There is a mismatch now between currency exchange rates and inflation. Most of our production is exported to other parts of Europe. Temporarily, we see this thermometer of stability of their currency and an elevated inflation. Historically, we see this is the reality. Idea is that they are going to normalize in time, then everything is going to be adjusted. Inflation and currency with a devaluation. This is all going to be equalized, economically speaking, considering inflation of course, exchange rate. Turkey is now entering their electoral period, not this coming weekend, the next one after that. We've been really following up close the current events in regard to political and economical aspects.
It's hard to tell what's going to happen, but I believe it's going to be a transition, as we've seen historically, in which the exporting trade is really good in Turkey. Of course, in view of the attraction of strong currency and employment generation and export. The automotive export is always looked into close so that it doesn't suffer geopolitical effects or political effects that may occur within that country. We do believe elections are going to occur when whatever result that is, there will be a transitional moment from the economic perspective, and exports are going to keep on performing adequately. We believe that this mismatch between the inflation and the currency, they tend to normalize as years go by, as we've seen historically in the last 12 years since we started our operations there.
Okay, thank you.
Our next question is going to be asked by Andre. Andre Mazini from the Citi sell-side analyst. Thank you. You may proceed.
Hi, Marcos, Elcio, Rodrigo. Thank you for this call. My question is in regard to the partnership with Forsee Power. If you could please elaborate a little more on what the partnership is going to produce. If your Iochpe-Maxion is going to be working with the battery cradle and if that part is going to be placed on the top of the bus, for example. If you're going to work with batteries and stacks exactly. Also a bit more on electrification in Asia. There is a lot of revenue coming from Asia in this sense, and the electrical mobility frontier is out there. China is ahead of everyone else, and not only with hybrids, but the 100% electric vehicles are in their hands. Let's talk about the products. Do you believe you're going to work a little bit more with Asia, considering they are much ahead of us in regard to electrification? Thank you.
Andre, thank you for this question. Partnership with Forsee Power utilizes their experience, their know-how, and also ours, and everything's very well integrated and combined. They have a large experience in Europe and in development of battery packs and battery modules. We do have the experience in the integration of that type of solution in chassis and battery cradles of trucks and buses in South America and North America.
It is an integration and a cooperation that is very interesting, and it's going to add value to our clients because we can develop a solution that is going to be more efficient energetically speaking. It's going to use the structural composition of the vehicle better to carry modules that are required for vehicle electrification. Whereas battery cradles or the application of all the modules in the chassis of all vehicles once they are assembled, we believe that this combination is going to add value, and it's going to be very interesting for our customers. Forsee Power's focus historically has been on battery packs and battery modules. We have interesting knowledge in the production of components, meta-mechanical components that can be utilized in this type of production.
As time goes by, we see this partnership is going to develop, it's going to grow, and it's going to pose great opportunities for both companies so that we can meet the clients' needs. In regard to Asia, you are right, China is much ahead. There's large focus on the electrification in the Chinese market, and happily, our presence with structural components and wheels is very relevant in the segment of electric vehicles. We've initiated a ramp-up of our wheels plant for Aluminum Wheels in China. We are already serving two OEMs of electric vehicles. It's interesting because when we launched Aluminum Wheels in China, they were made for electric vehicles over there. The Voyah and the electric vehicles from Dongfeng, they are the two initial launches. The growth in application of Aluminum Wheels in India as well.
We are increasing our production capacity of our aluminum wheels in India. This is going to allow us to meet clients' needs of electric vehicles in China, India, in Thailand, where we also have capacity production for aluminum wheels, and which will be applied for electric vehicles. Our goal is to keep on growing in Asia, is to keep on increasing the participation of Asia in our consolidated revenue globally. We believe that our positioning, offering both types of wheels, they are both present in electric vehicles and also electric components in Americas. They are also present in light vehicles and electric vehicles and trucks. This is going to be great opportunity for us to increase our portfolio and really flourish within the segment of electric vehicles as in the next years to come, as the segment is growing. Thank you, Andre.
Thank you. Thank you, Marcos.
We still have time for one more question. The next question is coming from Jonathan. Jonathan is from JP Morgan, and he's an analyst. You may proceed.
I'd like to get back to the volumes in Europe. It's clear it was difficult. With better cost of energy, this may improve. I'd like to understand why larger volumes over there in this regard. What is the availability? Is there any other factor that hasn't been mentioned? Thank you.
Thank you. Thank you for your question. In regard to growth, I would believe they happen for many reasons. One is the unmet demands for the last four years due to lack of semiconductors and due to the limitation in capacity of production of the OEMs, due to the unavailability of some semiconductors and some raw material.
This has created an unmet demand in 2021 and 2022, and it's now gradually being met now. There is also the transition of internal combustion vehicles, and this makes it so that there is a renovation in the fleet of light vehicles and eventually commercial vehicles, but mainly in light vehicles, which makes it so that customers start seeking the transition from internal combustion vehicles to electric vehicles. The combination of these factors, the reduction in the cost of energy.
Improvement in the inflationary pressure, which has been reduced gradually. It's at elevated levels, but it has been reducing gradually. This shows that growth in Europe can be more optimistic growth than what the IHS has been pointing to since till today. The first quarter was positive, and we have the expectation that it will be kept at very interesting levels throughout the entire year of 2023.
Perfect. Thank you so much.
Now we end the Q&A session, and we'd like to pass the floor to Marcos Oliveira for the final considerations about the company.
As presented today, we are working to reduce the impacts of cost variation, and we count on the normalization of the margins starting on the second quarter of 2023. We are still paying attention to the changes in the market, inflationary pressures and variations in our clients and geopolitical factors, always seeking to adapt in a very timely fashion to the eventual impacts of these factors. We are focused on gains in productivity, operational effectiveness, launching of new products, the development of advanced engineering, digitization, innovation, and strengthening our balance so that we can continue creating value in a sustainable way over time. Thank you, everybody, for the participation and for your questions throughout this meeting.
The video conference regarding the first quarter of Iochpe-Maxion is closed. We are available to answer other questions and issues. Have a very good day.