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As of June 13, 2019
Investor Presentation June 2019 Ternium I June 2019 As of June 13, - - PowerPoint PPT Presentation
Investor Presentation June 2019 Ternium I June 2019 As of June 13, 2019 1 Forward-Looking Statements This presentation contains certain forward-looking statements and information relating to Ternium S.A. and its subsidiaries (collectively,
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As of June 13, 2019
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This presentation contains certain forward-looking statements and information relating to Ternium S.A. and its subsidiaries (collectively, “Ternium”) that are based on the current beliefs of its management as well as assumptions made by and information currently available to Ternium. Such statements reflect the current views of Ternium with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of Ternium to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political conditions in the countries in which Ternium does business or other countries which have an impact on Ternium’s business activities and investments, changes in interest rates, changes in inflation rates, changes in exchange rates, the degree of growth and the number of consumers in the markets in which Ternium operates and sells its products, changes in steel demand and prices, changes in raw material and energy prices or difficulties in acquiring raw materials or energy supply cut-offs, changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or targeted. Ternium does not intend, and does not assume any obligation, to update these forward-looking statements.
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1Usiminas: a leading company in the Brazilian flat steel market
Mexico 49% Other Markets 37%
Brazil USA
Southern Region 14%
Steel Shipments 1Q19
Colombia Other
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1Long steel Americas, global player, U.S. minimill and U.S. integrated
(Source: Bloomberg) Talent Value Chain Industrial excellence Transparency Profitability Community Talent Value Chain Industrial excellence Integrity Profitability Market leadership EHS
0% 5% 10% 15% 20% 25% 2013 2014 2015 2016 2017 2018
EBITDA Margin (% of net sales)
Ternium Peers range1
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management systems
accountability on EHS
environmental footprint and safety risk
1.1 1.1 1.0 0.8 0.7 2014 2015 2016 2017 2018
Lost time injury frequency rate
(# of events / million hours worked)
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Codes Policies Procedures
Conduct for all Transparency Relevant employees Business conduct information Ethics for senior Antifraud Related party financial officers Securities trading transactions Conduct for Human rights suppliers
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through:
“ProPymes has helped create an industrial network that encourages the professionalization and quest for excellence of SMEs.”
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the education and welfare of our communities
infrastructure funding, volunteering programs
funding, sports sponsoring
New technical school in Pesquería Volunteer programs for school repair Heritage Photo Archive
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5.6 5.9 6.4 6.6 6.5 2.5 2.6 2.2 2.5 2.3 1.2 1.1 1.1 2.5 4.1 9.4 9.6 9.8 11.6 13.0 2014 2015 2016 2017 2018 Mexico Southern Region Other Markets
Steel shipments (million tons)
1,471 1,073 1,549 1,931 2,698 2014 2015 2016 2017 2018
EBITDA ($ million)
62 857 664 (26) 1,219 2014 2015 2016 2017 2018
Free cash flow ($ million)
443 467 435 409 520 2014 2015 2016 2017 2018
Capital Expenditures ($ million)
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1 Net Debt/EBITDA Ratio (last 12 months EBITDA) 2 Dividend yield: Dividend / Average stock price (Source: Bloomberg)
1.1 0.9 2.7 1.7 1.5 Dec-15 Dec-16 Dec-17 Dec-18 Mar-19
0.6x1
Net Debt ($ billion)
1.1x 0.6x 1.4x
1 Net Debt/EBITDA Ratio (last 12 months EBITDA)
0.6x
0.90 0.90 1.00 1.10 1.20 2014 2015 2016 2017 2018
Dividends Payments ($ per ADS)
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603 725 856 513 470 1Q18 2Q18 3Q18 4Q18 1Q19
EBITDA ($ million)
22% 24% 29% 19% 17% 1Q18 2Q18 3Q18 4Q18 1Q19
EBITDA Margin (% of net sales)
171 218 273 173 147 1Q18 2Q18 3Q18 4Q18 1Q19
EBITDA per Ton1 ($)
1 Consolidated EBITDA divided by steel shipments.
377 297 553 435 225 1.73 1.54 2.63 1.79 1.11 1Q18 2Q18 3Q18 4Q18 1Q19
Net Income and Earnings per ADS
Net Income (Loss) (USD million) Earnings (Losses) per ADS
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9.7 21.1 6.6 25.4 1990 2000 2010 Brasil Mexico 2018 2.7 4.8 1.1 3.4 1990 2000 2010 Argentina Colombia 2018
Apparent steel use (million tons)
Source: Alacero March 2019
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Apparent flat steel use – Mexico (% share)
53% 55% 14.2 15.0 15.4 16.5 15.9 2014 2015 2016 2017 2018 Local Imports
Apparent flat steel use – Mexico (million tons)
Source: Alacero / Ternium estimates
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3.2 3.4 3.5 3.9 3.9 2014 2015 2016 2017 2018
Light vehicle production (million units)
238 241 255 254 252 205 202 180 166 167 2014 2015 2016 2017 2018 Private Government
Construction spending (billion of constant MXN)
Source: AMIA / Global Insights / INEGI
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Ternium steel shipments in Mexico (million tons)
46% 44% 56%
Commercial, 44% Automotive, 28% Other industries, 11% Home appliances, 9% HVAC / lighting, 8%
Ternium’s steel shipments by industry (2018)
54%
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decline from Sep’18
in 2019
expected
inflation
2.8 3.1 2.5 2.9 2.6 2014 2015 2016 2017 2018
Apparent flat steel use – Argentina (million tons)
Commercial, 47% Automotive, 17% Agribusiness, 5% Home appliance, 4% Cans, 5% Oil & gas, 7% Other industrial, 15%
Ternium’s steel shipments by industry (2018)
Source: Alacero / Ternium estimates
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à-vis imports
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range in Mexico
improving customer service
appliance, machinery, energy and construction sectors
increase capacity to 4.8 million tons)
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heating-ventilation-air conditioning (HVAC) and automotive industries
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consumption
in the north/northwest of Colombia
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markets in Latin America
geared toward sustainable profitable growth
provide opportunity to grow and strengthen business in the region
value
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Economic participation
1 Participation based on ordinary shares distributed 2 Participation based on total shares distributed 3 Net of non-controlling interest in TX Argentina 4 Formerly known as Siderar 5 Formerly known as CSA
Non-consolidated companies
Techint Group: 62% Tenaris: 11% Ternium (treasury shares): 2% Public: 24%
Exiros Ternium Colombia Ternium México Usiminas Ternium Argentina4
CEU: 5%1 Nippon Steel & Sumitomo Metal: 32%1 TenarisConfab: 5%1 Other (ordinary shares): 23%1
39%
29% 71% 61% 50% 100% 6%1
Other
28%1
Tenaris
50%
Subsidiaries
Peña Colorada
50%
Las Encinas
100%
Ternium Int. Guatemala Ternium USA 100% 100%
Joint operations
ArcelorMittal
50%
Tenigal 51%
Nippon Steel & Sumitomo Metal
49%
Techgen 48%
22%
Tecpetrol
30%
Ternium Brasil5 100%
Direct Indirect3 Total Ternium Mexico 71% 17% 89% Ternium Argentina4 61% 61% Ternium Brasil5 100% 100% Usiminas2 17% 2% 19% Tenigal 51% 51% Ternium Colombia 100% 100% TX Int. Guatemala 100% 100% TX USA 100% 100% Las Encinas 71% 17% 89% Peña Colorada 36% 9% 45%
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Mexico Argentina Other (1) Total Slabs 2.4 3.2 5.0 10.7 Billets 1.6 0.2 1.9 Crude steel 4.1 3.2 5.2 12.5 Hot rolled coils 6.4 2.9 9.3 Rebars & wire rods 1.2 0.2 1.4 Cold rolled coils 3.6 1.8 5.4 Tinplated products 0.2 0.2 Galvanized products 2.0 0.7 0.3 3.0 Pre-painted products 0.6 0.1 0.2 0.9 Service center 3.9 2.3 1.3 7.5
(1) Brazil, Southern US, Colombia and Central America
(2)
(2) Corresponds to Ternium Brasil
Production Capacity as of year-end 2018 (million metric tons per year)
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subsidiary CSA Siderúrgica do Atlântico Ltda. from thyssenkrupp AG (tkAG)
rolling facility in the U.S. (amended in Dec17)
shares and the slab supply agreement
billion
statements in Sep17
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CSA is a Brazilian state-of-the-art steel slab producer
Daniel Novegil, Ternium’s CEO at the time said: “This acquisition brings another state-of-the-art facility into Ternium’s industrial system, along with CSA’s highly-skilled personnel and know-how, thereby enhancing our differentiation and value-added capabilities in the steel production supply chain. Upon integration, Ternium customers will not only benefit from our expanded high-end steel slabs capacity, but also see the results of an enhanced product development and supply chain management effort that will increase our high-end steel specialization in Mexico and Argentina. We move forward as a strengthened organization across our strategic industrial sectors in Latin America.”
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1Q 2019 1Q 2018 Dif. 1Q 2019 1Q 2018 Dif. 3Q 1Q 2019 1Q 2018 Dif. Mexico 1,425.9 1,515.4
1,563.4 1,774.5
912 854 7% Southern Region 386.2 473.6
442.3 645.3
873 734 19% Other Markets 850.8 724.4 17% 1,198.8 1,103.0 9% 710 657 8% Total steel products 2,662.8 2,713.4
3,204.5 3,522.8
831 770 8% Other products1 74.7 83.4
Total steel segment 2,737.5 2,796.9
Total mining segment 75.8 69.7 9% 919.9 929.3
82 75 10% Intersegment eliminations (75.8) (69.6) 9% Total net sales 2,737.6 2,797.0
1 The item “Other products” primarily includes Ternium Brasil’s and Ternium México’s electricity sales.
1Q 2019 4Q 2018 Dif. 1Q 2019 4Q 2018 Dif. 3Q 1Q 2019 4Q 2018 Dif. Mexico 1,425.9 1,439.9
1,563.4 1,523.4 3% 912 945
Southern Region 386.2 474.3
442.3 505.1
873 939
Other Markets 850.8 653.3 30% 1,198.8 935.2 28% 710 699 2% Total steel products 2,662.8 2,567.5 4% 3,204.5 2,963.6 8% 831 866
Other products1 74.7 68.2 10% Total steel segment 2,737.5 2,635.7 4% Total mining segment 75.8 71.9 5% 919.9 856.9 7% 82 84
Intersegment eliminations (75.8) (71.5) 6% Total net sales 2,737.6 2,636.1 4%
1 The item “Other products” primarily includes Ternium Brasil’s and Ternium México’s electricity sales.
Net Sales (USD million) Shipments (thousand tons) Revenue / ton (USD / ton) Net Sales (USD million) Shipments (thousand tons) Revenue / ton (USD / ton)
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USD million 1Q 2019 4Q 2018 1Q 2018 Net sales 2,737.6 2,636.1 2,797.0 Cost of sales (2,216.6) (2,059.9) (2,132.7) Gross profit 521.0 576.3 664.3 Selling, general and administrative expenses (219.3) (202.0) (223.8) Other operating income (expenses), net 5.6 8.5 5.8 Operating income 307.3 382.7 446.2 Finance expense (19.8) (29.6) (30.1) Finance income 5.9 5.8 4.9 Other financial expenses, net (13.0) 84.5 (23.8) Equity in earnings of non-consolidated companies 14.9 47.8 20.0 Profit before income tax expense 295.3 491.3 417.3 Income tax expense (70.4) (55.8) (40.6) Profit for the period 224.9 435.4 376.7 Attributable to: Owners of the parent 218.2 350.6 338.9 Non-controlling interest 6.7 84.9 37.8 Profit for the period 224.9 435.4 376.7 (Unaudited)
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USD million 1Q 2019 4Q 2018 1Q 2018 Profit for the period 224.9 435.4 376.7 Adjustments for: Depreciation and amortization 162.9 130.1 157.3 Equity in earnings of non-consolidated companies (14.9) (47.8) (20.0) Changes in provisions (4.4) (9.0) 1.2 Net foreign exchange results and others 0.7 (108.4) (2.4) Interest accruals less payments (0.2) (0.1) (12.6) Income tax accruals less payments (57.1) (77.7) (100.1) Changes in working capital 166.6 190.4 (212.6) Net cash provided by operating activities 478.5 513.0 187.4 Capital expenditures (209.8) (164.6) (97.7) Proceeds from the sale of property, plant & equipment 0.2 0.3 0.2 Recovery / (Loans) to non-consolidated companies 24.5
Decrease in Other Investments (17.3) 28.2 (7.4) Net cash used in investing activities (202.4) (136.1) (109.7) Financial Lease Payments (12.8) (2.6) (1.3) Proceeds from borrowings 166.1 83.5 227.1 Repayments of borrowings (210.1) (614.5) (407.7) Net cash (used in) provided by financing activities (56.7) (537.3) (181.9) Increase (Decrease) in cash and cash equivalents 219.4 (160.5) (104.2) (Unaudited)
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March 31, December 31, 2019 2018 (Unaudited) Property, plant and equipment, net 6,166.1 5,817.6 Intangible assets, net 990.9 1,012.5 Investments in non-consolidated companies 506.1 495.2 Deferred tax assets 147.4 134.2 Receivables, net 622.5 649.4 Trade receivables, net 3.9 4.8 Derivative financial instruments 0.5 0.8 Other investments 7.2 7.2 Total non-current assets 8,444.5 8,121.8 Receivables 318.8 309.8 Derivative financial instruments 1.1 0.8 Inventories, net 2,566.4 2,689.8 Trade receivables, net 1,241.8 1,128.5 Other investments 61.8 44.5 Cash and cash equivalents 464.3 250.5 Total current assets 4,654.3 4,423.9 Non-current assets classified as held for sale 2.1 2.1 Total assets 13,100.9 12,547.9 USD million
March 31, December 31, 2019 2018 Capital and reserves attributable to the owners of the parent 6,586.1 6,393.3 Non-controlling interest 1,083.6 1,091.3 Total Equity 7,669.7 7,484.6 Provisions 635.1 644.0 Deferred tax liabilities 478.8 474.4 Other liabilities 423.4 414.5 Trade payables 0.9 0.9 Financial Lease Liabilities 323.5 65.8 Borrowings 1,435.6 1,637.1 Total non-current liabilities 3,297.4 3,236.8 Current income tax liabilities 92.5 150.3 Other liabilities 380.4 351.2 Trade payables 1,045.7 904.2 Derivative financial instruments 8.1 13.0 Financial Lease Liabilities 50.2 8.0 Borrowings 557.0 399.9 Total current liabilities 2,133.9 1,826.5 Total liabilities 5,431.3 5,063.3 Total equity and liabilities 13,100.9 12,547.9 USD million
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811 659 744 670 880 1,103 996 1,071 935 1,199
1Q18 2Q18 3Q18 4Q18 1Q19
Slabs
Other Markets Mexico
1,775 1,722 1,525 1,523 1,563
1Q18 2Q18 3Q18 4Q18 1Q19
645 604 546 505 442
1Q18 2Q18 3Q18 4Q18 1Q19
Southern Region
3,523 3,322 3,143 2,964 3,205
1Q18 2Q18 3Q18 4Q18 1Q19
8%
Total Shipments (thousand tons)
28% 3%
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2,797 3,022 2,999 2,636 2,738 1Q18 2Q18 3Q18 4Q18 1Q19
Net Sales ($ million)
4%
770 866 831 720 750 780 810 840 870 900 930 1Q18 2Q18 3Q18 4Q18 1Q19
Revenue per Ton ($/ton)
Mexico 49% Other Markets 37%
Brazil USA
Southern Region 14%
Steel Shipments 1Q19
Colombia Other
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(75)
(88) (33) (15) 435 225
Net Income 4Q18 Operating Income Net Financial Results Income Tax Net Income 1Q19
57 20 (6) (113 ) 513 470
EBITDA… Shipments Price/Mix Cost Other EBITDA…
Net Income 1Q19 Net Income 4Q18
Markets
main steel markets in 1Q19
contract results
Argentine subsidiary
million tax gain in 4Q (asset revaluation for tax purposes in Argentina)
Equity in Earnings of non-consolidated Companies
EBITDA 4Q18 EBITDA 1Q19
(million $) (million $)
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