Ternium(US:TX)2023-11-01 17:33Financial Data and Key Metrics Changes - Adjusted EBITDA margin in Q3 was 13%, down from 23% in Q2, affected by decreased steel prices and Usiminas' operating results [14][22] - Adjusted net income decreased to $323 million, reflecting lower operating results and deferred tax results [28] - Consolidated net sales were $5.2 billion, with steel products accounting for $5 billion and mining and other products for $221 million [17] Business Line Data and Key Metrics Changes - Steel shipments reached 4.1 million tons, with expectations for slight increases in Q4 [17] - In Mexico, steel shipments hit a record 2.1 million tons in Q3, up 5% sequentially and 24% year-over-year [53] - Iron ore shipments to third parties were 2.2 million tons, primarily due to Usiminas consolidation [55] Market Data and Key Metrics Changes - Steel demand in Mexico remains strong, supported by nearshoring trends [9] - Brazil's steel imports increased by 57% in the first nine months, raising concerns for the local industry [156] - Argentina's economic instability and import constraints are impacting operations and economic activity [25] Company Strategy and Development Direction - The company is focused on expanding its facility in Pesquería, aiming to create a sophisticated and sustainable steel production system [26][50] - Plans to defend against unfair trade practices, particularly regarding steel imports from China, are being emphasized [24][110] - The company aims to deepen synergies across its industrial system in the region [26] Management's Comments on Operating Environment and Future Outlook - Management expects improved margin performance starting in Q1 next year as Usiminas ramps up operations and steel prices stabilize [22][150] - The company anticipates a decrease in realized steel prices in Q4 due to lower industrial contract prices [31] - The outlook for the Mexican market remains positive, with robust demand despite potential impacts from higher interest rates [101] Other Important Information - The company announced an interim dividend of $1.10 per ADS, a 22% increase from last year [34][131] - Cash flow from operations reached $945 million in Q3, with a working capital decrease of $388 million [133] - The company holds $1.25 billion in cash in Argentina, primarily in dollar-denominated instruments [40][136] Q&A Session Summary Question: Do you have a number for Ternium EBITDA ex-Usiminas? - The EBITDA from Usiminas consolidation was slightly above $25 million, with expectations for normalized levels in Q1 next year [37] Question: What are the plans for Usiminas? - The blast furnace in Cubatão will not come online again, and plans for Usiminas are still under analysis [39] Question: How do you view the cash position in Argentina? - The cash in Argentina is primarily in dollar-denominated bonds, with a small fraction in peso-denominated instruments for daily operations [40][136] Question: What is the expected cost structure post-reline? - Costs are expected to decrease significantly as Usiminas transitions from purchasing slabs to producing them [70][98] Question: How do you see demand in Mexico amid higher interest rates? - Currently, there is no observed decline in demand, with robust activity in industrial sectors [101] Question: What are the expectations for CapEx in 2024? - Expected CapEx for Ternium in 2024 is $1.5 billion, with an additional $300 million for Usiminas [123] Question: What is the company's stance on import tariffs in Brazil? - The company supports increased import tariffs to protect the local industry from unfair trade practices [110][142]