Ternium(US:TX)2025-04-30 13:15Financial Performance - Net sales for the three-month period ended March 31, 2025, were $3,932,808 thousand, a decrease of 17.7% compared to $4,778,297 thousand in the same period of 2024[10] - Gross profit for the same period was $530,950 thousand, down 51.9% from $1,103,553 thousand year-over-year[10] - Operating income decreased to $131,826 thousand, a decline of 80.5% compared to $674,856 thousand in the prior year[10] - Profit for the period was $142,331 thousand, representing a 72.6% decrease from $491,431 thousand in the previous year[10] - Basic and diluted earnings per share for profit attributable to equity holders of the company were $0.03, down from $0.18 in the same period of 2024[10] - Total comprehensive income for the period was $405,027 thousand, a decrease of 45.6% compared to $744,542 thousand in the prior year[11] - Net cash provided by operating activities was $207.0 million, down from $475.5 million in the previous year[23] - Capital expenditures for the period were $517.8 million, compared to $449.2 million in the same quarter of 2024[23] - The company reported a net foreign exchange loss of $30,695 thousand in Q1 2025, compared to a gain of $41,008 thousand in Q1 2024[59] - For the three-month period ended March 31, 2025, revenues amounted to $462 million, a decrease of 11.8% compared to $524 million for the same period in 2024[91] - Net profit from continuing operations was $36 million, down 86.3% from $263 million in the prior year[91] Assets and Equity - Total assets as of March 31, 2025, were $23,715,575 thousand, an increase from $23,128,547 thousand at the end of 2024[12] - Total equity increased to $16,536,596 thousand from $16,131,569 thousand at the end of 2024[12] - As of March 31, 2025, total equity stood at $16.5 billion, an increase from $16.1 billion at the beginning of the year[14] - Property, plant and equipment increased to $8,803,071 thousand as of March 31, 2025, from $7,855,930 thousand at the end of Q1 2024, an increase of approximately 12%[60] - Total assets as of March 31, 2025, were $5,668 million, a slight decrease from $5,726 million as of December 31, 2024[91] - Total liabilities decreased to $689 million from $790 million as of December 31, 2024, reflecting a reduction of 12.8%[91] Usiminas Acquisition - The company reported a provision for ongoing litigation related to the acquisition of a participation in Usiminas amounting to $45,300 thousand for the current period[10] - The company increased its participation in Usiminas Control Group, indicating a strategic move towards market expansion[9] - As of June 30, 2023, Ternium owned 242.6 million ordinary shares of Usiminas, representing 34.4% of Usiminas' ordinary shares and 20.4% of its total share capital[32] - On July 3, 2023, Ternium completed the acquisition of 57.7 million ordinary shares of Usiminas for $118.7 million, increasing its participation in the Usiminas control group to 51.5%[35] - The fair value of net assets acquired from Usiminas amounted to $3,593.3 million, with significant assets including inventories valued at $1,707.3 million and property, plant, and equipment at $904.8 million[41] - Ternium recognized a loss of $441.4 million related to the remeasurement of its previously held interest in Usiminas, alongside a bargain purchase gain of $270.4 million, resulting in a net loss effect of $171.0 million[39] - The Usiminas control group, post-acquisition, holds 61.3% of the voting rights, with Ternium and NSC each nominating three members to the board of directors[36] - Ternium recognized non-controlling interests in Usiminas at $2,575.9 million, based on the proportionate share of the acquired net identifiable assets[45] - Provisions for contingencies recognized as part of the business combination totaled $856.2 million, including tax-related contingencies of $432.5 million[47] - Ternium has established a "put" and "call" option mechanism with the NSC group regarding their remaining shares in Usiminas, allowing for future transactions at specified prices[42] - The total purchase consideration for the acquisition was $118.7 million, with a significant portion allocated to the remeasurement of previously held interests[41] - Ternium began fully consolidating Usiminas' balance sheet and results of operations in its financial statements starting July 2023[37] Segment Performance - The Steel segment reported net sales of $3,801,118 thousand for the three-month period ended March 31, 2025, a decrease from $4,690,004 thousand in the same period of 2024, reflecting a decline of approximately 19%[54] - The Mining segment generated net sales of $131,690 thousand in Q1 2025, compared to $88,293 thousand in Q1 2024, indicating an increase of about 49%[54] - Operating income for the Steel segment in Q1 2025 was $243,546 thousand, significantly lower than $593,211 thousand in Q1 2024, a decline of about 59%[54] - The cost of sales for the three-month period ended March 31, 2025, was $3,401,858 thousand, down from $3,674,744 thousand in the same period of 2024, reflecting a decrease of approximately 7%[57] - Selling, general and administrative expenses decreased to $396,200 thousand in Q1 2025 from $431,166 thousand in Q1 2024, a reduction of about 8%[58] Legal and Tax Matters - Retained earnings included in the financial statements may not be wholly distributable due to Luxembourg law[16] - The estimated current tax expense related to OECD Pillar Two for the three-month period ended March 31, 2025, is $3.8 million, with a total provision of $25.3 million[68] - The potential indemnification amount related to the Usiminas acquisition could reach approximately $336.4 million, based on the latest court decisions[73] - Ternium Brasil has a commitment of approximately $106.2 million under a supply agreement with Petrobras S.A. due to terminate in February 2026[76] - The company recognized provisions for tax contingencies of $432,488 thousand as part of the business combination, up from $329,141 thousand previously[48] - Labor lawsuits related to the Cubatão Plant amounted to $57,343 thousand as of March 31, 2025, down from $34,459 thousand at the acquisition date[48] Shareholder Information - The company proposed an annual dividend of $0.27 per share, totaling approximately $530 million, which includes an interim dividend of $0.09 per share already paid[66] - As of March 31, 2025, Techint Holdings S.à r.l. indirectly owned 65.03% of the company's share capital, while Tenaris Investments S.à r.l. held 11.46%[79] Economic and Regulatory Environment - The company has significant foreign exchange restrictions in Argentina, impacting its operations and financial transactions[86] - Ternium Argentina's financial position in ARS included $341 million in monetary assets and $202 million in monetary liabilities as of March 31, 2025[94] - On February 1, 2025, the U.S. government announced tariffs on all products imported from Mexico, Canada, and China, with specific exemptions for USMCA-compliant products[96] - A 25% tariff was imposed on virtually all imports of steel and certain steel derivatives starting March 12, 2025, revoking previous exemptions[96] - Reciprocal tariffs with a minimum of 10% were announced on April 2, 2025, but Mexico and Canada were exempt from these tariffs[96] - A 25% tariff under Section 232 on all imported automobiles produced outside the U.S. was confirmed on April 2, 2025, affecting only non-U.S. specific content[96] - Other countries have announced retaliatory tariffs against U.S. exports, creating uncertainties for Ternium[97] - Ternium is currently unable to predict the impact of the new tariffs on its business or financial condition due to these uncertainties[97]