MAHLE REPORTS ADJUSTED EBITDA1 OF R$ 326.7 million in 2016; ADJUSTED MARGIN OF 14.6%

Mogi Guaçu (SP), March 20, 2017 - MAHLE Metal Leve S.A. (BM&FBOVESPA: LEVE3), a Brazilian autoparts company that manufactures and sells components for internal combustion engines and automotive filters, announces today its results for 2016. The Company's operating and financial information, unless otherwise indicated, is presented on a consolidated basis in Brazilian Reais, according to Brazilian Corporation Law.

2016 and 4Q16 HIGHLIGHTS

Conference Call and Webcast of Results:

Date: March 21, 2017

12:00 p.m. (Brasília time) 11:00 a.m. (Eastern time)

Phone numbers:

Brazil: +55 11 3193-1001

Brazil: +55 11 2820-4001

USA: +1 786 924-6977

Other: +1 888 700-0802

Webcast:http://cast.comunique- se.com.br/MAHLE/4Q16

Net sales revenue of R$ 2,236.0 million in 2016, 7.7% less than in 2015, and adjusted Ebitda margin of 14.6%. In the 4Q16, net sales revenue was 7.5% less than that of the 4Q15 and adjusted Ebitda margin was 8.4%;

Exports and aftermarket sales accounted for 75.0% of total sales in 2016 (71.5% in 2015) and 74.6% in the 4Q16 (76.0% in the 4Q15);

Adjusted net income2 totaled R$ 170.1 million (R$ 226.9 million in 2015) and adjusted net margin was 7.6% in 2016; adjusted net margin in the 4Q16 was R$ 2.8 million (R$ 50.4 million in the 4Q15), with adjusted net margin of 0.5%;

Net debt/adjusted Ebitda¹ ratio in 2016 was 0.56 times, while at the end of 2015 the ratio was 0.75 times;

Provision for impairment losses of 188.6 million of the piston ring business and reversion of R$ 64.1 million relating to income and social contribution taxes on the impairment loss;

  • MAHLE Metal Leve received the "Transparency Award 2016" from Brazil's National Association of Finance, Accounting and Administration Executives (ANEFAC) for the quality of the information in its 2015 financial statements.

¹

Ebitda adjustment due to impairment loss of R$ 188.6 million on goodwill of the piston rings business, and R$ 21.0 million mainly due to additional labor claims

referring to the discontinuance of subsidiary MAHLE Hirschvogel Forjas S.A.

²

Net income adjustment, as mentioned in item 1 above, due to the reversal of R$ 64.1 million relating to income and social contribution taxes on the impairment loss.

TABLE OF CONTENTS

  1. MANAGEMENT'S COMMENTS 3
  2. MACROECONOMIC SCENARIO AND OUTLOOK 4
  3. ABOUT MAHLE METAL LEVE 4
  4. PERFORMANCE OF THE AUTOMOTIVE INDUSTRY 5
  5. Performance of the Brazilian automotive industry 5

  6. Performance of the Argentinean automotive industry 6

  7. Vehicle production in the main export markets 6

  8. ECONOMIC AND FINANCIAL PERFORMANCE 7
  9. Net sales revenue and market share by segment 7

  10. Domestic OEM (original equipment manufacturer) sales 8

  11. Domestic aftermarket sales 8

  12. OEM exports 8

  13. Aftermarket exports 8

  14. Consolidated exports by region 9

  15. Net sales revenue by segment 9

  16. Gross margin 10

  17. Selling, general and administrative expenses 10

  18. Technology and product development expenses 10

  19. Other operating income (expenses), net 10

  20. Operating income measured by EBITDA 11

  21. Net financial income (expenses) 12

  22. Income and social contribution taxes 13

  23. Net income 13

  24. Capital expenditures 13

  25. Indebtedness 14

  26. Dividends and interest on capital to shareholders 15

  27. INVESTOR RELATIONS AND CAPITAL MARKETS 15
  28. Performance of the Company shares and free-float shares 16

  29. Shareholders' profile 16

  30. CORPORATE RISK MANAGEMENT, INTERNAL CONTROLS AND COMPLIANCE 16
  31. CORPORATE GOVERNANCE 17
  32. EXCELLENCE AND TECHNOLOGICAL INNOVATION 17
  33. HUMAN RESOURCES 17
  34. ENVIRONMENT 18
  35. INDEPENDENT AUDITORS 19
  36. REPRESENTATION BY THE EXECUTIVE BOARD 19
  37. ACKNOWLEDGMENTS 19 MANAGEMENT 19
  38. EXHIBITS 20
  39. Balance sheet 20

  40. Income statement 20

  41. Statement of cash flow 21

  42. DEAR SHAREHOLDERS

    In compliance with legal and statutory provisions, the Company's Management submits to shareholders the Management Report and the Financial Statements accompanied by the Independent Auditors' Report for the fiscal year ended December 31, 2016.

    1 Management's Comments

    We closed 2016 with political and economic challenges still to be overcome in our country.

    The instable and uncertain environment has caused a strong impact in the Brazilian economic activity, thus increasing the unemployment rate, the inflation level, consumer confidence and credit restriction. Such factors directly impacted the Brazilian automotive industry, which underwent a drop in vehicle sales and production of 19.9% and 11.0%, respectively, compared to 2015.

    It should be noted that we faced this period with the permanent engagement of our employees. The Company is attentive to the future, with focus on the innovation, automation and cost management, always committed to developing sustainable products and solutions in long term.

    Accordingly, in 2016, the Company reported net sales revenue of R$ 2,236.0 million (a drop of 7.7% compared to 2015), resulting from a performance of -4.3% of OEM exports; -2.1% of aftermarket sales; and a drop of 18.8% in domestic OEM sales.

    In 2016, domestic OEM sales were impacted by the discontinuance of subsidiary MAHLE Hirschvogel Forjas S.A., whose revenue in 2015 was R$ 36.7 million. Comparing the periods, the drop was of 14.3% in 2016.

    The decrease of 4.3% in OEM exports was due mainly to the negative performance of the US market - heavy vehicle segment (a drop of 9.6% in the production of that segment in 2016 compared to 2015), which was partially offset by the positive exchange variation between the periods.

    The graph below shows revenue distribution in 2016 and 2015 in the markets where the Company operates:

    In 2016, operating income measured by adjusted EBITDA was R$ 326.7 million, with EBITDA margin of 14.6%. The net debt/Ebitda ratio at the end of 2016 was 0.56 times, while at the end of 2015 the ratio was 0.75 times.

    The Company has been using its best efforts to develop new technologies. A good example is the installation of a state-of-the-art dynamometer for validation and development of more powerful, economic and cleaner engines at our Tech Center. This testbed is able to reproduce the real cycle of use of a vehicle regardless of its application: city, highway, city-highway use, among others. The purpose is to assess how a propellant will respond to running and thus verify the consumption and emission levels.

    The Company estimates that the margin of assessment error for this new equipment is only 0.4%, well below that registered from a conventional testbed, where the difference could reach 2.0%.

    Additionally, the Company was one of the winners of the award "Maiores e Melhores 2016" in the "Autoindústria" category (The Biggest and Best Ones of 2016 in the Automotive Industry) from Exame Magazine, which, in its special edition of July 2016, disclosed the winners for their performance in 2015.

    1. Macroeconomic Scenario and Outlook

      In 2016, the Brazilian economy still faced challenges, with negative effects in the investments, production and consumption.

      However, a stabilization process has started, supported by a reduction in the inventory level in certain market segments (including the automotive sector) and an increase in the private sector's confidence mainly with respect to the public policies by the new government and the positive impact that they have in the future resumption of the economic activity.

      Growth jumps are not expected for 2017, even if the economy resumes the expansion with the tax and exchange rate stability, controlled inflation rates and offer of credit and financing. The unemployment rate will unlikely be reversed and consumers do not seem to be willing to take on medium- and long-term financing in the next year. In addition, financial agents should maintain such actual selective level for granting lending over 2017.

      In the international market, the European economy is still showing a positive growth outlook with an European Central Bank (BCE)'s plan to inject funds in that market, having, however, economic uncertainties and policies generated by the United Kingdom's exit from the European Union, in addition to the fact that elections will take place in Germany and France in 2017. China shows more moderate growth trend in relation to past years, and the United States is showing signs that interest will return to regular rates, a suggestion that the US economy continues its recovery pace.

    2. About MAHLE Metal Leve
    3. We are a Brazilian autoparts company that manufactures and sells components for internal combustion engines and automotive filters. We manufacture products with state-of-art technology and the highest quality, and we continuously invest in the research and development of new products and production processes.

      We have been developing activities in Brazil since the 50's and have a broad portfolio of products and integrated solutions that in most cases have been customized jointly with our major customers. We operate in the OEM (Original Equipment Manufacturers) and aftermarket segments, serving automakers and large autoparts distributors and engine overhaul enterprises.

      Our products are manufactured and sold in Brazil and Argentina, and also exported to over 60 countries, among USA, Germany, Mexico, Portugal and Spain, for a diversified portfolio of customers including General Motors/Opel, Volkswagen, Fiat, Ford, Daimler MBB, International, Cummins, Volvo, PSA Peugeot, John Deere, Renault, Scania, Caterpillar, Honda, Hyundai and others.

      We own six industrial plants, five of which are located in Brazil, in the cities of Mogi Guaçu (two units), Indaiatuba, São Bernardo do Campo, all of which are located in the State of São Paulo, and in Itajubá, State of Minas Gerais. Our sixth plant is located in the city of Rafaela, Argentina. We have two distribution centers: one in the city of Limeira, State of São Paulo, and one in Buenos Aires, Argentina. We have a technology center located in the city

    MAHLE Metal Leve SA published this content on 20 March 2017 and is solely responsible for the information contained herein.
    Distributed by Public, unedited and unaltered, on 20 March 2017 22:44:04 UTC.

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