Good morning, and welcome to WEG's conference call on the results of the third quarter 2021. We inform you that we are broadcasting this conference call accompanied by the slides on our investor relations website at ri.weg.net. After its conclusion, the audio will be available on our IR website. If you need support during the conference call, please request assistance from an operator by typing star zero. Any estimates contained in this document or any forward-looking statements that may be made during this conference call about future events, the business perspectives, the operational and financial projections and goals, and the potential for future growth of WEG constitute mere beliefs and expectations from the management based on the information currently available. These involve risks, uncertainties as they refer to future events, and therefore depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, industry conditions, and other operating factors could affect WEG's future performance and could lead to results that differ materially from those expressed in such forward-looking statements. We would like to remind you that this conference call is being conducted in Portuguese with simultaneous translation into English. With us today in Jaraguá do Sul are André Luís Rodrigues, Chief Financial Administrative Officer and Investor Relations Officer, Wilson Watzko, Controlling Officer, and André Menegueti Salgueiro, Investor Relations Manager at WEG. I would like to turn the call over to Mr. André Rodrigues, who will start the presentation. You may proceed, sir.
Good morning, everyone. It's a pleasure to be with you once again in this earnings call to discuss WEG's results. We start with the highlights for the quarter, with the first being net operating revenue, which grew 29.1% compared to the third quarter 2020. The positive performance in all business areas was key to this result, reflecting the improvement in industrial activity and the positive demand for our products and services in the markets where we operate. In Brazil, we see continued good demand in all business areas. In the foreign market, we have posted revenue growth in the main markets where we operate.
Another highlight in the quarter was our EBITDA, which grew by 23.3% and reached BRL 1.1 billion. EBITDA margin closed the quarter at 18.5%, down 1 percentage point compared to last year, a movement that is already expected due to the increases in material costs and also due to the mix of products sold.
Throughout the presentation, André Salgueiro will give more detail about this performance. Finally, we had another quarter of ROIC evolution when compared to the same period of last year, as we will see in detail on the next slide, which grew by 8 percentage points over Q3 2020, reaching 31.3%. The consistency of this indicator in the recent quarters reflects the improvement in our operating performance, demonstrated by the combination of revenue growth and expansion of EBITDA margin, together with a good management of the working capital in the past 12 months. I now turn the floor over to Mr. Salgueiro for him to continue the presentation.
Thank you, André. Good morning, everyone. On slide five, I show the evolution of our business areas in the markets where we operate. Starting with Brazil, where demand in the area of industrial electro-electronic equipment showed another quarter of evolution. We had growth in sales of short-cycle products such as low-voltage electric motors, gearboxes, and serial automation equipment, especially in the agricultural machinery and equipment and water and wastewater segments. Sales of long-cycle equipment such as medium-voltage electric motors and automation panels also grew, mainly in the oil and gas, mining, and water and wastewater segments. In the TTD area, we posted growth in all our businesses, highlighting the good demand for distributed solar generation, which has picked up again in recent months, and the growth in sales of wind turbines and alternators.
The TD business presented another quarter of evolution driven by the deliveries of transformers and substations for projects linked to the transmission auctions, together with sales of distribution transformers and transformers for renewable energy generation farms. In commercial and appliance motors, sales volumes remained high, with the food and beverage segments, agribusiness, and durable consumer goods contributing to this quarter's growth. Demand in coatings and varnishes also continued to be strong, especially in the segments of road implement, aluminum profiles, and agricultural implements. As to the international market, in the industrial electro-electronic equipment area, we observed an acceleration in the pace of economic recovery in all regions where we operate.
Relevant segments such as mining, oil and gas, and water and wastewater are among those that most demanded our products. Long cycle equipment presented an evolution in sales, confirming the signs of recovery reported in the previous quarter with an improvement in sales and also in order entry. In GTD we posted another quarter of evolution in the T&D business with relevant projects being delivered in Mexico, Colombia and also in South Africa. In the area of commercial and appliance motors we saw significant growth in demand for products, a move explained by the acceleration of economic recovery and gain in market share especially in the United States and Mexico.
Applications such as pumps and compressors were the highlights for the quarter. Finally, in coatings and varnishes we presented an advance in sales in Latin American countries driven by exports from Brazil and from Mexico where we started the operations of our new plant at the end of 2020. Slide six shows the evolution of EBITDA in Q3 2021 where we presented growth of 22.3% in relation to the same period of the previous year. As the margin closed the quarter at 18.5%, down one percentage point compared to the third quarter 2020 confirming our expectations.
The challenges in the global supply chain and the resulting increase in raw material costs together with a change in the product mix mainly due to the resumption of revenues from wind generation projects led to a small reduction in operating margins this quarter. Finally, on slide seven we show the evolution of CapEx investments. In the third quarter 2021 investments reached BRL 225 million, of which 59% were earmarked for Brazil and 48% for units abroad. Proceeding with the investments in our factories in Brazil, China, U.S. and India thus confirming the increase in investment expected for the second half of the year. With this I finish my part and give the floor back to André.
Thank you, André Salgueiro. Before moving on to the question and answer session, I would like to mention some of our recent achievements and comment on our prospects for the remainder of the year. Regarding our achievements, I would like to highlight three events. This quarter we completed the construction of our fifth transformer plant in North America, the third in the United States in the city of Washington, Missouri. The new plant is part of our strategy to break into the industrial transformer market as well as increase our capacity to serve the markets of large sized utility companies and transformers for renewable energy generation farms. We also announced the acquisition of Balteau Produtos Elétricos in the city of Itajubá, state of Minas Gerais, a traditional manufacturer of equipment for measuring and protecting low, medium and high voltage electrical systems.
We remind you that this transaction is still subject to the Brazilian Antitrust Authority's approval. We also highlight exclusive partnership for the supply of EV charging stations for large automakers in Brazil such as Renault, Fiat and Peugeot. Finally, about the prospects for the year, improved order entry in important segments such as oil and gas mining and water and waste, wastewater signals continued growth in the foreign market. In Brazil, the good long cycle order backlog especially in GTD is likely to continue supporting our growth. On the other hand, the combination of increase in raw material costs and the change in the mix of products sold especially due to the higher sales from wind projects as of the fourth quarter 2020 should continue to pressure operating margins.
Finally, the impacts of the pandemic on the global supply chain are still of concern and do not signal normalization. However, we believe that our business model based on vertical integration allows us to have greater flexibility and availability of products taking advantage of revenue growth opportunities with a gain in the market share across all regions. I end our presentation here. Please, operator, we can proceed to the question and answer session.
Ladies and gentlemen, we can now begin the question and answer session for investors and analysts. To ask a question, please press star one. To remove your question from the list, press star two. Our first question comes from Mr. Lucas Barbosa with Santander.
Hello, good morning, André. Congratulations on your results. I have two questions. The first is related to CapEx. You had BRL 25 million of CapEx. We saw a reasonable acceleration. I know that you expected something of the sort. Could you make some comment on the dynamics about the investment? I know that there was a little delay on deliveries because of the pandemic and some of the things were pushed to the future. Okay, so this is my first question.
Hello, Lucas. Thank you very much for the question. This is André Rodrigues speaking. Okay, here we go. Let's talk about the CapEx performance. We have already told you that we had the expectation of an increase in the CapEx in the second half of the year. In the first half, we also said that we had some delays, and some of them were continued in the second half of the year because of the pandemic.
There were some delays in the equipment that had been purchased, and also the plant that was being built in India that was affected by lockdowns and the number of people at the plant that was restricted. We had some delays in the process. The expectation of CapEx was about BRL 1 billion reals. What we're seeing now is that for the fourth quarter, we are going to have something very close to what we had in the third quarter, and we will deliver this year investments of BRL 750 million, and the remainder would be carried over for the following year. We have no plans to cancel the investment. We have to make adjustments to the execution due to the pandemic. Part of the investment is going to be used next year.
Most investments only to complete for the third quarter. We had some investments in China, where we expanded the plant of electrical motors. In the United States, we completed the industrial transformers plant, and we have already started expanding one of the plants where we have in the United States in the T&D area. In Brazil, we have investments connected to gains in productivity and improvement in processes, basically.
Okay, perfect, André. It was so clear. Thank you very much. Can I ask another question related to working capital? When we look at days, you had a substantial decrease in the days for the receivables. I would like to understand if there was any change in the policies of deliveries for the payment or the deadlines for payment, anything related to working capital. That would help us a lot.
Lucas, talking about working capital, I think it's important for us also to remind you that along this year, the working capital reached the best levels when we compare working capital over revenues. Maybe the best ratio happened in the second quarter this year. We had told you that the expectation was that along this half of the year, we would have an increase in working capital. I think the main reasons for that is that first, is related to the level of activity. When we talk about working capital, we have to understand the level of activity increase, and this influences the working capital. We also had a drop of some of the performance indicators. Basically, this increase has been happening in the part of the receivables from clients and inventories.
As to inventories, for example, the turnover of inventories was about 5 times. It dropped to 4.8. We have considered that along the year. We had something important related to inflation affecting the inventories, and we also recomposed some of the inventory levels which were lower compared to some other months when we look at our branches, where the demand from our products from abroad was stronger, so we need to recompose the inventories. We also had an anticipation of purchases of some of the components. To provide some more comfort in terms of inventory volumes, especially related to raw materials. We have to consider the volatility of the supply chain. When we talk about receivables, we understand that this is more connected to the mix of products.
This half of the year, we have an increase of the transformers, the smaller equipment, which are transformers that are used in the grid of boats, and in some cases, they're even serial equipment. The deadline for the receiving the amounts is a bit longer. It was something related to the mix of products when we talk about receivables and also the inventory levels that are influenced by inflation. We increase our inventories in order to provide some guarantee and also when we needed to furnish the levels of inventories.
Okay, thank you. Just another question as a follow-up question. I know that the third quarter we saw some worse indication in relation to the previous quarter. We saw that there has been an increase in working capital when compared to last year. Was there any change in your policy, in your strategies?
Lucas, this is a little bit about what I mentioned. We had suffered some degradation in some of the indicators, and the life cycle business helped reduce the working capital. Once again, I would like to point out that the amounts that were announced, especially in the first quarter, were the best ones when compared to the last 10 years. It's just natural that we are going to expect a little increase for the future.
Okay, thank you. That was very clear.
Have a good day. All right. Our next question comes from Lucas Laghi with XP Investimentos.
Good morning, André Rodrigues, Salgueiro. Congratulations on the result. I have two questions. The first is just a follow-up on the previous question, thinking about CapEx.
It was clear when you mentioned the working capital, when the inventories and the increase in the raw materials costs. When we look at CapEx, especially when we saw in the third quarter, we can see that the delays also influenced, but there was an increase in prices that we see in industry in general. The second question is more specific. Thinking about taxes, we saw that there was an increase, relevant increase in terms of taxes paid. We had a difference in the rates due to the international market. I would like to understand those factors in relation to the third quarter, just to understand if this was something specific. Do you think we're going to see changes in the tax rates that were applied? These are the two points. One is about the CapEx and the other one is about the taxes. Okay, thank you.
Hi, Lucas. As I started talking about CapEx, I'll continue. This year we had some effects of the FX when we look at the investment plans. Well, the expectations were different. Large part of investments is in the international market, so we also see some impact there. A little bit lower when we talk about prices because many of the pieces of equipment were contracted in periods before the global crisis. But we still see some impact due to those effects, but I do not consider this to be so relevant.
Lucas, this is André Salgueiro speaking. I'm going to answer the questions about the income tax.
In fact, we had no changes to the benefits that the company has been granted in the past quarters. Basically what happened this quarter is that there was a growth, especially in Brazil, because there was a change in the mix and, the generation was different in Brazil and what happened abroad. We saw some differences. But in terms of expectations, there's no change that happened will make the future be more different or much more different in the other quarters. Okay, this is it.
Thank you very much and have a good day, everyone. Our next question comes from Gabriel Rezende with Itaú BBA. Good morning. Thank you very much for the opportunity. My question is related to the dynamics of the local market in Brazil. In last quarter, the performance was very positive.
There was a rebound of the effects that we had last year. We see that it continued. We saw the sectors helped mining, machinery, oil and gas. These are sectors that are doing very well. At the same time, we have an economic scenario for 2022 which is quite challenging for Brazil. I would like to understand how you see it in terms of growth of the local market for the quarters to come, including 2022. Then I ask my other question. Okay? Thank you.
Hello, Renata. Good morning. This is André Salgueiro speaking. In fact, it was, as I said, the domestic market was the main highlight. The growth was very strong. First in the GPT segment that grew 59.1% in relation to last year, and we had a growth of all the businesses.
Some businesses growing at the base of two digits. We had the resumption of the wind generation projects that also contribute to this performance. As for the industrial area, we saw positive dynamics for short cycle that has been going on since the second half of last year. We have noticed an improvement in the entry order especially in oil and gas and mining and water and the wastewater. We are working on the budget for next year. We do not have the precise numbers yet, and we also have to separate the two businesses. The short cycle business provides us not a very long visibility for the portfolio, and we can say that this is positive and we can have some changes all of a sudden, but we do not expect that.
As for long cycle, our portfolio has been built along the past few months, providing a good visibility depending on the business, such as el-industrial, electro, electronic equipment. We can see ahead for a portfolio and also wind generation that we can look ahead up to 2023. Based on the long cycle portfolio, we can say that we have good perspectives for the second half. For the short cycle, we do not have this flexibility. We need some confirmation that will be given along the next months to understand what was the consolidated dynamics for the domestic market. Okay, perfect. Thank you very much for the answer. My second question is in relation to what you have said, even, related to the lack of, raw materials in the global chain. Because you're very verticalized, it may be of influence.
I would like to understand, how would you see the dynamics? Because it helps you on the one hand, but on the other hand, it may affect the consumers, those who develop the project. Since you have many local plants abroad, I would like to know how the lack of raw materials would affect your business. Because we have seen some bottleneck, for example, in the freight operations and how this is going to be affected in short term.
Renata, this is André Rodrigues. Let's talk about this lack of material crisis that is generating this crisis globally. All along this year and even last year, we said that we had all the raw material we needed. We just had some specific problems related to some specific operations that did not affect the deliveries, but everything was manageable.
Part of this is the result of our verticalization process. We can be a bit more conservative in terms of inventory. We decided to increase some inventories as a strategic measure that contributed for us to go through those period without any relevant effect on our operations. I think the global crisis of supply is not over yet. Let's see what's happening to electronic components. Those who didn't place an order for next year, if they place orders now, they're likely to receive those components only at the end of the year or even in 2023 only. But in our case, what we see as demand for the manufacturing of our products, we have all the demands already seen. For the short term, we have this solved.
The company has been preparing for the future, and it's just natural that things will start to improve. They're not going to be normalized in 2022, the situation is going to improve. We are verticalized and we have this availability and the mobility to produce here and send it to Mexico and from Mexico to China is a good protection for us. What happened in the beginning of the pandemic, especially in Europe, those companies that didn't have this level of verticalization and would depend on other manufacturers of components had to stop their productions because they didn't have production, and this did not happen to us. We understand that today, that model is a model that brings us some advantage.
I've always said that one of the reasons why we are so successful is that we have an industrial strategy which is very solid and very sound, not only in Brazil, but in other regions as well. Of course, this can cause a problem for a client. As Salgueiro mentioned, we do not see this reflected on the orders placed with us. This is something that we have been monitoring when we consider long cycle equipment business and the deliveries are in the long term. This is up to WEG to have the raw materials than to the client, because the client is the final receiver, and the risk is lessened. Okay, this is so clear. Have a good day. Thank you.
Our next question comes from Daniel Gasparete with Credit Suisse. Good morning, everyone. Thank you for the call.
I have two questions as well. I would like to talk about the ROIC behavior. What's your expectations for the next year in view of the increase in CapEx and also the working capital? And the second question would be to pass through prices. How do you see that point in the market, both in the Brazilian market and international market? What's the expected sales increase? Thank you. Good morning. Hello, Daniel Gasparete. Good morning. This is André Salgueiro speaking. In relation to the ROIC, what we have been saying in the last quarters is that this indicator grew in the past years. If we look at the longer horizon and more recently when we look at the beginning of last year up to now, it even accelerated in terms of growth. We had a very strong growth from the viewpoint of results of the company.
We had very good improvement of the working capital, as André mentioned in the first answer he gave. We have the FX effect that the valuation of the real helped us to improve this indicator more recently. Since last quarter or even the quarter before that, we said that it was possible to see some stabilization of the ROIC for different factors. One is related to investment, that we accelerated the investments in the third quarter, and the expectation is to continue with this trend in the future. We also have the working capital and also the effects that can interfere. We do not provide official guidance for ROIC or any other indicator, but we are going to be working to deliver healthy ROIC and higher than the average of our peers, so as to say.
This is the idea we have in mind, and these are the factors that may impact the ROIC in the future. In relation to the increase in prices, we have already been approaching this. In order to minimize the impact of raw materials, we needed to recompose the prices. Whenever possible, we were recomposing the prices in all the markets where we operate. In international markets, we made some adjustments this year in order to offset the increases of the raw materials. I would like to remind you that all those adjustments happen especially in short cycle products, low voltage products, paints and varnishes, and may change depending on the line of products.
This is something important to consider because sometimes there's a mismatch between the increase of the raw material prices and the recomposition of prices. This recomposition in industrial in the industry took everyone by surprise, and this has taken WEG and also our suppliers, clients, and even competitors to follow the same trend. Okay. Thank you.
Have a good day. Our next question comes from Victor Mizusaki with Bradesco BBI. Hello, good morning. Congratulations on the results. I have two questions. The first one, in 2019, WEG made a very relevant agreement with the French group Arkema, and the discussion at the time was focused on the electric motors for the improvement of energy efficiency. The estimate at the time was the consumption 8%.
We have seen this discussion of energy aspects, and I would like to understand if we can expect large agreements for electrical motors for the industrial sector that would involve the replacement of engines. Or is this a trend that we are likely to expect for the next years? Also in relation to growth, WEG in the past months has been seeing that M&As have been concentrated in Brazil and the growth has been more organic. My question is, are you looking at possible M&As abroad? Can we expect anything out of this? What was the increase in capacity abroad considering the investments in China and in the U.S.? Victor, okay, here we go. Let's talk about the trend.
This is something that WEG has been working on, related to the efficiency of electrical motors. This is a front that we have. We want to bring more opportunities for investments because our clients are willing to have more efficient products, and the company has been investing in research and development and innovation so that we can offer better solutions to our clients. In 2010, the first company in the world that presented the highest level of efficiency in motors was WEG. We are prepared for that, and we understand that this is a trend, and we understand that there's a growing demand for those products. As you said, you had the agreement with Arkema, and we are doing the same approach with other companies as well.
Understand that this is the demand from the industries at large, especially at moments where you need to reduce energy consumption considering the energy crisis, supply crisis. It's very important to have complex industrial complex with optimized machines. This is the way we are taking and all the strategy related to renewables that take WEG to the position of continuing growth due to those demands.
Hi, Victor, this is André Salgueiro speaking. In relation to your second question, from the viewpoint of growth, especially in the international market, which was the focus you raised. We have some information that was provided on WEG Day last year when we showed which are the regions where we have presence. We showed the size of the markets and our market share in our main products as well as in the regions where we operate. There we show the message that there's a lot of room, a lot of opportunities from the viewpoint of growth by gaining market in the international market. This is our main objective, and the investments are always focused on this long-term growth, the sustainable continued growth. The investments are going to depend on each business specifically. We have some examples of M&A in the investments, as you mentioned.
For example, as to transformers in United States, we acquired WTU, and now we decided to increase the capacity with a new plant, our third plant in the United States.
In China, which is another example you mentioned, the plant of the low voltage industrial motors in China is increasing its capacity year- on- year. We have been investing in that modular expansion model that we have both in Brazil and Mexico. As we feel the demand of the market, we make investments so that we can meet that demand. The main message here is that we believe in this long-term vision, the growth opportunities, and we are going to make all the necessary investments so that we can meet all this growth. An interesting example would be the operations in India. When we talk investment and M&A, this has a lot to do with this. It was a decision that we made.
We looked at potential acquisition, but we decided to have a greenfield project to break into the segment of low voltage industrial equipment. From there, we are going to develop that market. Yes, we're always looking at CapEx and M&A, and we have this view of opportunity in growing in the international market.
Okay, thank you. Our next question comes from Marcelo Mota, JP Morgan. Good morning, everyone. I have two questions. Could you comment on the margin? It's going to migrate at the same margin of last year, close to 19% or 18.5%. However, when we look at the first nine months of 2021 EBITDA margin, we see that there is a gap if we consider the fourth quarter of 2021.
Do you think there is going to be an additional reduction in the fourth quarter of 2021, or it may be related to the mix and or is there anything related to raw material costs, the supply chain that you discussed? This is the first question related to EBITDA margin, and the second question is related to M&A. You have been focusing on Industry 4.0, capacity increases. I would like to understand what is in your mind in terms of M&A and also maybe including mobility and everything that you have been considering.
Motta, thank you very much for the questions. Let's talk about the margin. This was everybody's concern and the main questions that we hear in our meetings.
This period, as we had anticipated, both the EBITDA margin and the gross margin were impacted by the cost of raw materials and also the product mixes. It's obvious that all the global supply chain has been impacted, and then in this last period. We have been observing increase of raw materials in the past quarters. First, last year, we felt this increase in Brazil, especially, the raw materials connected to the foreign exchange rate. We observed that the price increases, especially in the most relevant segments such as iron and copper. We always say that costs can cause a mismatch which is temporary in the short term. Another point is to remember that materials cost structure is very similar to our competitors as well. As the main commodities, they also suffer all those impacts.
mix of products in addition to what's happening in the world, we also have changes to our mix. We say that the wind business as of the third quarter became more important. It's a business where the margin is lower than the average margins of the company. This also impacts the margin in this third quarter. When we look at the fourth quarter, the expectation, if nothing different happens, and if the projections continue, our margin, the expectation of margins will not change for the year. We understood in the beginning of the year that the company would deliver EBITDA margins, operational margins, very close to what we reported last year, 18.7%. Obviously, excluding the non-recurring effect of the ICMS tax in the calculation basis of the PIS and COFINS taxes.
We do not see anything different now, so we are going to be focused on going after the margin that we posted last year. Of course, it's not going to be a margin similar to what we recorded in the first quarter. As to M&A, the company has not changed its strategy. We're always on the lookout for the new opportunities that can bring us access to the market and/or a new technology. What happened in the past quarters, or as of 2020, is that the pandemic affected this process. Looking for opportunities in the international market prevented us from doing a completed due diligence process, for example, or an integration process which is well conducted, which is so important for us to implement our culture.
This all prevented us from the opportunities outside, but the company has always been on the lookout for opportunities. Of course, there are no preferential areas. Each business has its own strategy. If the automation business is not focused on electrical mobility, but would bring opportunities for growth in other segments which may not be so relevant as it is in Brazil. We are going to go after the growth opportunities, and it's connected to the strategic development of WEG. The message is that all business areas has its own strategic planning. They know what are their growth objectives, and the growth objectives can come from organic or inorganic growth, depending on the acquisitions. Okay, perfect.
Thank you. Good morning. Our next question comes from Rogério Araújo with BofA. Good morning, André Salgueiro. Congratulations on the results.
I have two questions on my side. The first, you mentioned on the first page of your release that there was long cycle entry order abroad. Could you provide more information about it? Is WEG likely to be accelerating the gaining of revenues as we have seen in the past quarters? This is my first question, and then I can ask my second question. Rogério, good morning. This is Salgueiro speaking. In fact, what we said in the release is related to long cycle portfolio. Especially in the industrial side, we have seen at the global level, important industries such as oil and gas, mining, water and wastewater segments. We see that level of entry of orders has been increasing since the end of the second quarter and the beginning of the third quarter.
We have seen this being consolidated in the third quarter. In this business, we can say that the portfolio is very positive, indicating growth in the future. Also there is the mix, short cycle that provides less visibility for the business. Our visibility is positive for short cycle, but changes can happen depending on something happened to the economy. It's not something that we are foreseeing now, but we understand that this is something that can happen. What I need to say is that for the consolidated view, we have to consider the short cycle aspect. Could you provide some information about this mix related to long and short cycle segments? Yes. For this quarter, we reached 66% short cycle and 34% for long cycle.
I don't know if you remember, but last year and the worst moment of the pandemic in the second quarter of 2020, the long cycle was 40% of the revenues. From then on, the short cycle has been improving, and we are looking at the short cycle because of its improvement and the slight drop that we had in long cycle for the industrial aspect. It's more likely 34% long and 66% short. My other question is in relation to the domestic market. It's a follow-up on a question that you have already answered, in fact, related to the uncertainties and the slowdown in the economy. We saw the Mexico had some problems with a relevant drop in the GDP.
What I would like to hear from you is what is the situation now, considering all the uncertainties. What do we have to follow to understand what is the trigger for the companies to invest? What are the triggers? Could you compare those periods of crisis with what's going on now? When orders stop coming in. Roger, this is André Rodrigues. I was not even at the company at that time, so I'll ask him to answer. What happened when we compare 2016 and today? In 2016, we experienced a very atypical situation, where we started the year with the expectation that it would be a bit more difficult. The growth was 25.4% in our revenues in 2015.
We expected 2016 to be difficult, but not how difficult it was. The revenues of WEG decreased by 4%, which is something rare to happen for the company. One of the advantages of our company is because we're exposed to different segments, different sectors of the economy, it's very difficult to have everything up. You have the ups and downs, and then this is where we're looking for opportunities. At that time, nearly all sectors were down. We had a crunch, a slowdown in Brazil for the short cycle products. At that time, we didn't have a long cycle portfolio which was so solid that would ensure performance that would amortize the drop of the short cycle business that happened in 2016.
We built a long cycle portfolio, which is different from that we had in the past. Considering the TND history, we had the plant in Betim, we are working at full speed, and this is a reflection of what happened to the long cycle portfolio. The wind energy businesses is also resuming. In 2020, we already have deliveries planned throughout the year. At that time, we didn't have solar businesses. This is a business that has been growing a lot and that the expectations is that these are segments that are going to bring opportunities to WEG, considering the potential that Brazil has for solar radiation. We have a combination of a better portfolio of long cycle equipment, and we started to be exposed to new businesses.
We are in a different situation than that faced in 2015. We expect that this possible deceleration or slowdown in Brazil that may happen in 2022 is just an expectation, and we hope that new opportunities continue to be generated for WEG. This is what we have been preparing for. It's too early for us to imagine a pessimistic situation for 2022. That's clear. Thank you. Our next question comes from Ygor Araujo with Genial Investimentos. Hello, everyone. First of all, good morning. Congratulations on your results. Only to complement what everybody has already said. In relation to wind-related machineries, what's your capacity today, and what can we expect for the end of 2023 or beginning of 2023? The other question is related to M&A. Recently, you have expanded the products related to smart aspects.
Do you think you have any expectations to have any M&A in the domestic market? Hi, Ygor. Good morning. This is André Menegueti Salgueiro speaking. In relation to wind energy, this is something that is coming back. We started to generate revenues from the wind energy businesses. We had some revenue in the third quarter, and it's going to grow ever more relevant in the fourth quarter. Our current capacity is about 8-10 machines a month. What we have been saying to the market is that we have a portfolio of projects of wind generation whose visibility is going as far as 2023. The first agreement was announced with Aliança in the beginning of last year, and this agreement has been delivered now.
We have other agreements in the portfolio, in the pipeline with this visibility of, in the beginning of 2023, and we have good perspectives going forward. Some negotiations, some, conversations that we've been having now to increase this portfolio when we expect to have an investment cycle in, wind energy in Brazil in the next two or three years, which will be quite relevant. We are very competitive in terms of size. We have a 4.2 mega machine that is bringing opportunities to us. This is our vision in relation to wind energy. In relation to M&A, I think André Rodrigues has already mentioned the drivers, the access to the market and to technology.
If we think of those drivers who we understand we are looking at the opportunities, we do not like to talk business on business, but specifically, WEG Home is something that is growing now out of a need, and some clients requested demanded this. We brought this product to complement our portfolio in terms of construction structures. We have sales of switchboards electrical panels, and we have this portfolio of equipment such as cameras, sensors, movement sensors, and sensors for opening and closing curtains to complement our portfolio. It's an effort to complement the portfolio for us to sell products for the residential structures or buildings. Okay, thank you. We have now closed the question and answer session. I'll give the floor back to Mr. André Rodrigues for his final remarks.
Once again, I would like to thank you for attending the call, and I'm going to give you some important information. Most of you have already received the invitation for our WEG Day that is going to be held on November the eleventh in a virtual mode. It will be a very important moment to give you some update on WEG and talk about the future and the strategies of the company. It will be a pleasure to see you on your next WEG Day. Thank you very much. WEG's conference call is now closed. We would like to thank you for your participation, and have a nice day.