Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ternium SA (TX, Financial) reported shipments of 16 million tons for 2024 with an adjusted EBITDA of $2 billion, maintaining a 12% margin despite a challenging year for the steel industry.
- The company's net cash position remains strong at $1.6 billion by the end of December, even after significant capital expenditures and dividend payments.
- Significant progress was made on the downstream expansion project in Mexico, with new facilities starting operations and further expansions planned.
- The wind farm in Argentina began generating electricity, contributing to economic benefits and supporting the company's decarbonization goals.
- Ternium SA (TX) is well-equipped to navigate potential trade scenarios due to its adaptable structure and ongoing efforts to enhance operational efficiency.
Negative Points
- Shipments in Mexico decreased due to a weaker than expected commercial market and uncertainties surrounding trade actions.
- The US announced it will revoke all country exceptions to the 25% tariff on steel imports, creating uncertainty in the global market.
- Imports from China have significantly disrupted the Brazilian market, accounting for approximately 80% of flat steel imports.
- Argentina experienced a real decline of approximately 20% in steel demand due to macroeconomic measures, impacting sales volumes.
- Adjusted EBITDA decreased in the fourth quarter due to lower prices in main markets and a reduction in shipments.
Q & A Highlights
Q: Can you provide more details on the outlook for the first quarter of 2025 and the ramp-up of the Pesqueria project?
A: Maximo Vedoya, CEO, explained that the finishing lines at Pesqueria are ahead of schedule and expected to reach full capacity in the next two to three months. The cold rolling mill and hot-dip galvanized line are on track to start in December 2025, with a ramp-up period of nine to twelve months. CFO Pablo Brizzio added that they anticipate a slight improvement in EBITDA for Q1 2025 due to stable shipment levels, a decline in costs, and a marginal decrease in prices.
Q: Is Ternium considering increasing its stake in Usiminas, and what are the priorities for Usiminas moving forward?
A: CEO Maximo Vedoya stated that while Ternium has the option to increase its stake in Usiminas, they are currently focused on maximizing Usiminas' potential. Priorities include improving the performance of the Ipatinga mill and addressing commercial challenges, particularly with imports from China.
Q: How is Ternium prepared to navigate potential trade tariffs, and will this affect new investments?
A: CEO Maximo Vedoya assured that Ternium is not planning to halt any investments, including those in Mexico. He emphasized the importance of the Pesqueria project in strengthening Ternium's position in the North American market, especially with potential stricter rules of origin.
Q: What is Ternium's perspective on the impact of Chinese steel exports on the markets where it operates?
A: CEO Maximo Vedoya expressed optimism that countries like Mexico and Brazil are taking steps to address unfair trade practices from China. He noted that while Argentina is currently focused on stabilizing its macroeconomy, he expects it will also take measures against unfair trade in the future.
Q: How does Ternium view the potential impact of US-Mexico trade policies on steel?
A: CEO Maximo Vedoya highlighted that Ternium's exports to the US are minimal and emphasized the importance of the USMCA in enhancing regional competitiveness. He expressed confidence that a reasonable agreement will be reached between the US and Mexico, benefiting both countries.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
