Ternium(TX) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Ternium reported a net income of $171 million for the fourth quarter of 2025, with adjusted EBITDA slightly declining sequentially, in line with expectations [13][14] - The EBITDA margin reached 10% for the year, supported by a cost reduction program that generated $250 million in savings [4][18] - Cash generated by operations in 2025 was strong at $2.3 billion, allowing the company to finance capital expenditures [18] Business Line Data and Key Metrics Changes - The steel segment experienced a decline in shipments due to weaker volumes in the U.S. and Brazil, although higher volumes were noted in Mexico [15][16] - Mining cash operating income increased sequentially, driven by stronger shipments and higher realized iron ore prices [16] Market Data and Key Metrics Changes - Apparent consumption of steel in Mexico 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] Company Strategy and Development Direction - Ternium is focusing on enhancing operational efficiency and reducing costs while expanding its footprint in Mexico with new facilities [8][11] - The company is optimistic about profitability improvements in 2026, driven by cost reductions and favorable trade policies [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a fatal accident at Ternium Mexico and emphasized the importance of safety [4] - The outlook for the Mexican market is cautiously optimistic, with expectations of a 4% growth in 2026 despite current low demand levels [23][24] Other Important Information - Ternium secured a $1.25 billion loan through a green financing facility to support its new projects, which received several awards [8][9] - The company proposed an annual dividend of $2.7 per ADS for fiscal year 2025, maintaining the same level as 2024 [18] Q&A Session Summary Question: Outlook for the Mexican market and recovery path - Management noted that demand in Mexico was significantly low in 2025, with expectations of a 4% market growth in 2026, aiming to gain market share against imports [23][24] Question: Impact of anti-dumping measures in Brazil - Management indicated that the impact of anti-dumping measures would be gradual, with expectations of a moderate increase in domestic prices [22][25] 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 [30][34] Question: Volume expectations for 2026 - Management expects volumes to increase in Mexico, while the southern region may see recovery in the second half of the year [35][36] Question: Margin potential without USMCA changes - Management expressed that margins could improve, but the full impact of USMCA negotiations would likely be seen in 2027 [40][79] Question: Capital allocation priorities - Management confirmed that both increasing dividends and exploring growth opportunities in key markets are priorities [86]