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Ternium Announces 2019 Results

Steel News - Published on Thu, 20 Feb 2020

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Ternium SA has announced its results for the fourth quarter and full year period ended December 31, 2019. Ternium's operating income in 2019 was USD 864.6 million, reflecting a more sustainable operating margin after an extraordinary year in 2018, with soft steel demand in Mexico and a significant decline in steel shipments in Argentina. Operating income in 2019 decreased USD 1.2 billion year-over-year, mainly due to USD 66 lower revenue per tonne, a USD 30 increase in operating cost per tonne and a 440,000 tonne decrease in shipments. Revenue per ton decreased in 2019 principally as a result of declining steel prices in Ternium's North American markets in 2019 following a strong pricing environment in 2018.

Steel Shipments (tons)12,511,00012,951,000-3%
Iron Ore Shipments (tons)3,576,0003,616,000-1%
Net Sales ($ million)10,192.8011,454.80-11%
Operating Income ($ million)864.62,108.40-59%
EBITDA1 ($ million)1,525.702,697.70-43%
EBITDA Margin (% of net sales)15.00%23.60%-36%
EBITDA per Ton2 ($)121.9208.3-41%
Financial Expense, Net ($ million)-99-179.6-45%
Income Tax Expense ($ million)-196.5-369.4-47%
Net Income ($ million)6301,662.10-62%

Outlook - Following a challenging 2019, during which apparent steel consumption decreased in most markets in the Americas, steel demand in 2020 is expected to recover in Brazil and Colombia and to a lesser degree in the United States and Mexico. The company anticipates steel price volatility to decrease in 2020, as uncertainty caused by global and regional trade negotiations appears to have moderated after significant turbulence during the past two years and a prolonged steel inventory destocking in North America recently has come to an end. Ternium expects EBITDA to increase in the first quarter 2020 compared to the fourth quarter 2019, with higher shipments and a recovery in steel margin, mainly as a result of slightly lower costs. With marginally improving steel market sentiment in Mexico, the company anticipates steel shipments in the country to increase in the first quarter of the year after a seasonally weak fourth quarter 2019. Demand in Mexico’s industrial markets remains stable and public construction activity in the country is beginning to show some signs of improvement. In addition, the recent ratification by the USA of the United States-Mexico-Canada Agreement (USMCA) has reduced uncertainty, which should help foster economic activity and investment in Mexico in the years to come. In Argentina, Ternium expects shipments to seasonally decrease in the first quarter 2020 to levels similar to those in the first quarter 2019. The country’s macroeconomic environment in 2020 will continue to be highly dependent on the normalization of the country’s public debt situation. Steel market conditions for slab production at Ternium’s Brazilian facility recently improved, with an increase in seaborne slab prices and a decrease in raw material costs. Consequently, the facility is bringing production back to normal levels after decreasing it last year to reduce overall costs.

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Posted By : Rabi Wangkhem on Thu, 20 Feb 2020
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