Investor Presentation June 2019 Ternium I June 2019 As of June 13, - - PowerPoint PPT Presentation

investor presentation
SMART_READER_LITE
LIVE PREVIEW

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,


slide-1
SLIDE 1

Ternium I June 2019

1

As of June 13, 2019

Investor Presentation

June 2019

slide-2
SLIDE 2

Ternium I June 2019

2

Forward-Looking Statements

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.

slide-3
SLIDE 3

Ternium I June 2019

3

Profile and Performance

slide-4
SLIDE 4

Ternium I June 2019

4

Ternium’s Profile

A leading steel company in Latin America

  • Net sales of $11.5 billion in 2018
  • Steel shipments in 2018 of 13.0 million tons
  • Industrial facilities in Mexico, Argentina, Brazil, Colombia, USA and Central America
  • Vertically integrated, from iron ore mines to service centers
  • Focus on high value-added products
  • Participation in Usiminas1 control group

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

slide-5
SLIDE 5

Ternium I June 2019

5

Sustainable Profitability

A comprehensive management approach

  • Proactive approach to environment, health

and safety (EHS) management

  • Focus on differentiation through

sophisticated products and services

  • Deep ties with our communities
  • Commitment to integrity
  • Recruitment, training and retention of talent
  • Quest for excellence in industrial

management and technology

  • Fostering of steel value chain

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

slide-6
SLIDE 6

Ternium I June 2019

6

Sustainable Profitability

Strong commitment to the environment, health and safety

  • Standardized Environment Health & Safety (EHS)

management systems

  • Extensive training and management performance

accountability on EHS

  • Dupont program and certification of EHS systems
  • Health and safety OHSAS 18001
  • Environment ISO 14001
  • Energy saving ISO 50001
  • Investment in best available technologies to reduce

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)

slide-7
SLIDE 7

Ternium I June 2019

7

Sustainable Profitability

Commitment to integrity through strong corporate governance

  • Audit committee (three independent directors)
  • Internal Audit Department reporting to the

Chairman and the Audit Committee

  • Business Conduct Compliance Officer reporting

to the CEO

  • Compliance department that oversees SOX

certifications and related party transactions

  • Employee accountability and training to ensure

a transparent behavior

  • Confidential channels to report non-compliant

behavior

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

slide-8
SLIDE 8

Ternium I June 2019

8

  • Supporting 1,600 SMEs (customers and suppliers)

through:

  • Training programs
  • Industrial projects and business consultancy
  • Institutional assistance
  • Commercial support and financial aid
  • Playing an active role at:
  • Universities
  • Business schools
  • Government agencies
  • Industrial associations

“ProPymes has helped create an industrial network that encourages the professionalization and quest for excellence of SMEs.”

Sustainable Profitability

Fostering the steel industry value chain in Mexico and Argentina

slide-9
SLIDE 9

Ternium I June 2019

9

Sustainable Profitability

Deep ties with our communities

  • Working together with local institutions to enhance

the education and welfare of our communities

  • Scholarships, internships, teachers’ training,

infrastructure funding, volunteering programs

  • Health prevention campaigns, infrastructure

funding, sports sponsoring

  • Integration (social and arts events)

New technical school in Pesquería Volunteer programs for school repair Heritage Photo Archive

slide-10
SLIDE 10

Ternium I June 2019

10

Performance

Sustainable growth and resilient profitability

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)

slide-11
SLIDE 11

Ternium I June 2019

11

Performance

Solid financial position

  • Strong balance sheet
  • Net debt to EBITDA ratio1 of 0.6x at the end of

March 2019

  • $0.3 billion reduction of net debt in first

quarter 2019

  • Growing dividend payments
  • $1.20 per ADS in 2018
  • 33% increase since 2014
  • 4% dividend yield in 20182

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)

slide-12
SLIDE 12

Ternium I June 2019

12

Performance

EBITDA and Net Income

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

slide-13
SLIDE 13

Ternium I June 2019

13

Latin American Steel Markets

slide-14
SLIDE 14

Ternium I June 2019

14

Latin American Steel Markets

Mexico became the largest steel market in the region

  • Mexico, Brazil, Argentina and Colombia account for approximately 81% of Latin America’s steel

consumption

  • Mexico’s steel consumption CAGR of 5.8% in the last decade, among the highest in the region,

driven by a dynamic manufacturing industry

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

slide-15
SLIDE 15

Ternium I June 2019

15

Mexico

slide-16
SLIDE 16

Ternium I June 2019

16 60% 59% 60% 62% 64% 40% 41% 40% 38% 36% 2014 2015 2016 2017 2018 Industrial Commercial

Apparent flat steel use – Mexico (% share)

Ternium’s Markets - Mexico

Industrial market continues to gain participation in Mexico’s flat steel use

An attractive steel market in Latin America

  • Flat steel consumption decreased slightly

compared to 2017 levels

  • Opportunity to substitute imports of high-end

products

  • Stable industrial steel demand
  • Weak commercial market
  • Expected ratification of USMCA agreement
  • Section 232 lifted for Mexico and Canada

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

slide-17
SLIDE 17

Ternium I June 2019

17

Ternium’s Markets - Mexico

Strong industrial steel demand growth over the last years

  • Stable industrial market
  • Production of light vehicles in 2018

remained at high levels

  • New facilities starting-up in 2019 (BMW)
  • Weak construction environment
  • Decreasing government spending over the

last years

  • Uncertainty related to USMCA’s

negotiation process and change of administration in Mexico affected private investment in 2018

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

slide-18
SLIDE 18

Ternium I June 2019

18 5.6 5.9 6.4 6.6 6.5 2014 2015 2016 2017 2018 Industrial Commercial

Ternium’s Markets - Mexico

Strong growth of shipments to industrial market over the last years

Ternium shipments in Mexico stabilized in 2018

  • New Pesquería Industrial Center
  • Upgrade of re-rolling facility resulting in a

broader product range

  • Pesquería expansion project under development
  • Differentiation in the commercial market through

value-added products and services

  • Increasing customer digital connectivity
  • Nationwide coverage through distribution centers

and regional distributors

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%

slide-19
SLIDE 19

Ternium I June 2019

19

Southern Region – Argentina

slide-20
SLIDE 20

Ternium I June 2019

20

Ternium’s Markets - Argentina

Gradual recovery expected from second quarter 2019

  • Strong activity levels in the first half of 2018, steep

decline from Sep’18

  • Improved agribusiness sector performance expected

in 2019

  • Record acreage sown for the ‘18/’19 season
  • Projected grain production +22% y-o-y
  • Ending of destocking in Argentina’s value chain
  • Recovery of Brazilian economy taking longer than

expected

  • Restrictive monetary policy with an aim at taming

inflation

  • High interest rates

2.8 3.1 2.5 2.9 2.6 2014 2015 2016 2017 2018

  • 9%

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

slide-21
SLIDE 21

Ternium I June 2019

21

Developing Ternium’s industrial system

slide-22
SLIDE 22

Ternium I June 2019

22

Ternium Brasil

Strong foundation to continue growing

  • 5 mtpy high-end slab facility in Brazil acquired in Sep’17
  • Further integrate Ternium Brasil to take it to its full potential
  • Increase competitiveness in the high-end Mexican steel market vis-

à-vis imports

  • Improve customer service supported by higher operational flexibility
  • Customized steel products
  • Coordinated product development
  • Enhanced logistics
  • Realize cost reduction opportunities
  • Coordinated procurement effort (Exiros)
  • IT integration
  • Inventory optimization
  • Benchmarking
slide-23
SLIDE 23

Ternium I June 2019

23

New Hot Rolling Mill at Pesquería Industrial Center

Linking Ternium’s industrial systems in Brazil and Mexico

  • Significant technological upgrade to expand TX’s product

range in Mexico

  • Aimed at replacing high value-added steel imports and

improving customer service

  • Targeting the automotive industry, as well as the home

appliance, machinery, energy and construction sectors

  • Annual production capacity of 4.1 million tons (option to

increase capacity to 4.8 million tons)

  • Expected start up: end of 2020
  • Total investment of $1.1 billion
slide-24
SLIDE 24

Ternium I June 2019

24

New Coating Lines at Pesquería Industrial Center

Opportunity to grow in the high-end Mexican market

  • New hot-dipped galvanizing and painting lines
  • High-end value-added products for the home-appliance,

heating-ventilation-air conditioning (HVAC) and automotive industries

  • Most advanced painting technology in Mexico
  • Annual production capacity:
  • Galvanizing: 350,000 tons
  • Painting: 120,000 tons
  • Expected start up:
  • Galvanizing: second half 2019
  • Painting: first half 2019
  • Total investment of $280 million
slide-25
SLIDE 25

Ternium I June 2019

25

Colombia

Growth opportunity in the long steel market

  • Colombian steel market is the fourth largest in Latin America
  • Imports account for a significant share of long steel

consumption

  • Ternium to expand its participation in the construction sector

in the north/northwest of Colombia

  • Approximately 50% of steel rebar consumption
  • No local production
  • Expensive logistics from the mills in central Colombia
  • Greenfield rebar facility under construction
  • Annual capacity of 520,000 tons
  • Start up: end of 2019
  • Total investment of $90 million
slide-26
SLIDE 26

Ternium I June 2019

26

Conclusion

slide-27
SLIDE 27

Ternium I June 2019

27

Conclusion

  • Consistently superior results in attractive steel

markets in Latin America

  • Solid financial position and strong dividend payments
  • Successful implementation of business strategy

geared toward sustainable profitable growth

  • TX Brasil integration and new investment program

provide opportunity to grow and strengthen business in the region

  • Continued focus on generating long-term shareholder

value

slide-28
SLIDE 28

Ternium I June 2019

28

slide-29
SLIDE 29

Ternium I June 2019

29

Appendix

  • Corporate Structure
  • Production Capacity
  • CSA Acquisition
  • Shipments and Net Sales
  • Income Statement
  • Cash Flow Statement
  • Balance Sheet
  • Selected Webcast Presentation Slides First Quarter 2019
slide-30
SLIDE 30

Ternium I June 2019

30

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%

Corporate Structure

slide-31
SLIDE 31

Ternium I June 2019

31

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

Production Capacity

(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)

slide-32
SLIDE 32

Ternium I June 2019

32

CSA Acquisition

The Transaction

  • On Sep 7, 2017 Ternium acquired thyssenkrupp Slab International B.V. (tkSI) and its wholly-owned

subsidiary CSA Siderúrgica do Atlântico Ltda. from thyssenkrupp AG (tkAG)

  • In addition, tkAG assigned to Ternium an agreement to supply slabs to thyssenkrupp’s former Calvert re-

rolling facility in the U.S. (amended in Dec17)

  • Ternium disbursed EUR1.4 billion on a cash-free, debt-free basis, for the acquisition of both the tkSI

shares and the slab supply agreement

  • The transaction was financed with a five-year syndicated term loan facility in a principal amount of $1.5

billion

  • Ternium began consolidating tkSI’s balance sheet and results of operations in its consolidated financial

statements in Sep17

  • Upon closing, CSA name was changed to Ternium Brasil
slide-33
SLIDE 33

Ternium I June 2019

33

CSA Acquisition

The Assets

CSA is a Brazilian state-of-the-art steel slab producer

  • 5 mtpy capacity of high-grade steel slabs
  • 490 MW combined cycle power plant
  • Deep-water harbor
  • Compact, efficient and environmentally friendly facility
  • Just-in-time iron ore supply (railroad)

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.”

slide-34
SLIDE 34

Ternium I June 2019

34

Shipments and Net Sales

First Quarter 2019

1Q 2019 1Q 2018 Dif. 1Q 2019 1Q 2018 Dif. 3Q 1Q 2019 1Q 2018 Dif. Mexico 1,425.9 1,515.4

  • 6%

1,563.4 1,774.5

  • 12%

912 854 7% Southern Region 386.2 473.6

  • 18%

442.3 645.3

  • 31%

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

  • 2%

3,204.5 3,522.8

  • 9%

831 770 8% Other products1 74.7 83.4

  • 10%

Total steel segment 2,737.5 2,796.9

  • 2%

Total mining segment 75.8 69.7 9% 919.9 929.3

  • 1%

82 75 10% Intersegment eliminations (75.8) (69.6) 9% Total net sales 2,737.6 2,797.0

  • 2%

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%

1,563.4 1,523.4 3% 912 945

  • 4%

Southern Region 386.2 474.3

  • 19%

442.3 505.1

  • 12%

873 939

  • 7%

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

  • 4%

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

  • 2%

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)

slide-35
SLIDE 35

Ternium I June 2019

35

Income Statement

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)

slide-36
SLIDE 36

Ternium I June 2019

36

Cash Flow Statement

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

  • (4.8)

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)

slide-37
SLIDE 37

Ternium I June 2019

37

Balance Sheet

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

slide-38
SLIDE 38

Ternium I June 2019

38

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

Webcast Presentation - First Quarter 2019 Results

Steel Shipments

3,523 3,322 3,143 2,964 3,205

1Q18 2Q18 3Q18 4Q18 1Q19

8%

Total Shipments (thousand tons)

  • 12%

28% 3%

slide-39
SLIDE 39

Ternium I June 2019

39

Webcast Presentation - First Quarter 2019 Results

Consolidated Net Sales and Steel Shipments

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)

  • 4%

Mexico 49% Other Markets 37%

Brazil USA

Southern Region 14%

Steel Shipments 1Q19

Colombia Other

slide-40
SLIDE 40

Ternium I June 2019

40

(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…

Webcast Presentation - First Quarter 2019 Results

EBITDA and Net Results

Net Income 1Q19 Net Income 4Q18

  • Higher shipments in Mexico and Other

Markets

  • Lower shipments in Argentina
  • Weaker pricing environment at Ternium’s

main steel markets in 1Q19

  • Higher FX losses and lower derivative

contract results

  • Lower inflation adjustment gains at Ternium’s

Argentine subsidiary

  • Lower earnings from Usiminas
  • Higher effective tax rate: non-recurrent $104

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 $)

slide-41
SLIDE 41

Ternium I June 2019

41

www.ternium.com www.ternium.com