Ternium(TX) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Ternium reported a net income of $171 million for Q4 2025, with a slight sequential decline in adjusted EBITDA, which remained stable [13][14] - The EBITDA margin reached 10% for the year, with a cash generation from operations of $2.3 billion, allowing the company to finance capital expenditures [4][18] - The company achieved $250 million in savings through cost reduction and efficiency programs in 2025 compared to 2024 [4] Business Line Data and Key Metrics Changes - The steel segment saw a decline in shipments primarily due to weaker volumes in the U.S. and Brazil, although higher volumes were recorded in Mexico [14][15] - Mining cash operating income increased sequentially due to stronger shipments and higher realized iron ore prices, partially offset by higher unit costs [15] Market Data and Key Metrics Changes - In Mexico, apparent consumption of steel decreased by 10% in 2025, with flat products consumption down 14% compared to 2024 [23] - The U.S. implemented significant trade measures against unfair practices from China, impacting the global steel market [5][9] - Brazil's recent anti-dumping measures and increased import taxes on steel products represent a significant shift in the market environment [9] Company Strategy and Development Direction - Ternium is focusing on enhancing regional integration and has expanded its footprint in Mexico, investing in technology to offer high-value products [6][11] - The company has started production in new facilities, including a cold rolling mill and a galvanized line, aimed at producing high-quality automotive steel [7][8] - Ternium aims to improve profitability in 2026, driven by cost reductions and operational efficiency [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Ternium's outlook for the coming years, expecting profitability to improve in 2026 despite ongoing trade issues [10][11] - The company is actively participating in discussions regarding trade frameworks to ensure fair competition and support local producers [5][6] Other Important Information - Ternium's board proposed an annual dividend of $2.7 per ADS for fiscal year 2025, maintaining the same level as 2024, reflecting confidence in the company's prospects [18] - The company secured a $1.25 billion loan through a green financing facility to support its projects, receiving multiple awards for this initiative [8] Q&A Session Summary Question: Outlook for the Mexican market and demand recovery - Management noted that demand in Mexico was significantly low in 2025, with expectations of a 4% market growth in 2026, driven by local steel mills gaining market share against imports [21][23][24] Question: Impact of anti-dumping measures in Brazil - Management indicated that the impact on pricing dynamics would be gradual, with expectations for a moderate increase in domestic prices [22][26] Question: Ternium's plan if USMCA is not renewed - Management stated that they operated in 2025 under the assumption of no renewal and would continue to adapt to the environment, focusing on market share growth [31][34] Question: Expectations for Ternium's volumes in 2026 - Management expects volumes to increase in Mexico, while the southern region may see recovery in the second half of the year [36][37] Question: Margin potential without USMCA changes - Management believes there is potential for margins to improve, aiming for a return to the 15%-20% range, but acknowledges that this may take time [41][46][86] Question: Capital allocation priorities - Management emphasized that both increasing dividends and pursuing growth opportunities in key markets are priorities [88][89]