Ternium(US:TX)2022-08-03 19:40Financial Data and Key Metrics Changes - Ternium reported an adjusted EBITDA of $1.2 billion for Q2 2022, with a margin of $414 per ton, similar to Q1 2022 [8][27] - For the past 12 months, Ternium generated $5.8 billion in adjusted EBITDA and $1.9 billion in free cash flow, returning over $500 million to shareholders in dividends [9] - Net income for the period reached $936 million, or $4.07 per ADS, reflecting strong operational performance [27] Business Line Data and Key Metrics Changes - Steel shipments in Mexico were 1.7 million tons in Q2 2022, slightly below the previous year's level [28] - Consolidated steel shipments totaled 3 million tons in Q2 2022, stable sequentially but down year-over-year [30] - The company anticipates a decrease in steel prices in Q3 2022, reflecting a significant decline in benchmark prices [30] Market Data and Key Metrics Changes - The industrial market in Mexico remains relatively healthy, with the auto industry facing supply chain disruptions [12] - In Argentina, steel demand remains stable despite macroeconomic volatility, with good demand from sectors like agribusiness and energy [17] - The commercial market in Mexico is experiencing weak demand due to destocking processes and higher interest rates [16] Company Strategy and Development Direction - Ternium aims to stabilize its operations amid increased volatility in the business environment, particularly due to geopolitical factors and inflationary pressures [10][11] - The company is focusing on enhancing its competitive position and cash generation capabilities to navigate market volatility [24] - Ternium is committed to sustainability, having released its annual sustainability report and improved CO2 emissions management [18][20] Management's Comments on Operating Environment and Future Outlook - Management expects continued volatility in the business environment but believes steel business variables are stabilizing [11] - The company is optimistic about maintaining healthy shipments in the coming quarters, despite anticipated margin decreases [23] - Management highlighted the importance of addressing supply chain disruptions and the potential for increased shipments once these issues are resolved [14] Other Important Information - Ternium's safety performance has improved, with the lowest lost time injury frequency rate recorded in the first half of the year [22] - The company is actively working on its engineering projects to comply with USMCA regulations for the automotive industry by 2027 [54] Q&A Session Summary Question: Volume trends in Mexico and EBITDA guidance - Management indicated that the Pesqueria facility is operating at 80%-85% capacity, but market conditions are affecting overall volumes [41] - EBITDA is expected to normalize to a range of 15%-20% in the future, reflecting historical averages [43][44] Question: Impact of US steel imports on the Mexican market - Management noted that imports have decreased from last year's peak, and Ternium's market share is increasing [52][53] Question: Steel demand in Argentina - Demand remains stable, but macroeconomic uncertainties could affect future volumes [78] Question: Incremental shipments from Pesqueria - Management acknowledged that the initial shipment targets for 2022 would not be met due to unexpected market conditions [84] Question: Construction sector outlook - Management expressed caution regarding the construction sector, highlighting low inventory levels and the potential for restocking [96] Question: Working capital usage - The increase in working capital was primarily due to higher prices, and a decrease is expected in the coming quarters [105]