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Ternium(TX) - 2025 Q1 - Earnings Call Transcript
TXTernium(TX)2025-04-30 12:30
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Financial Data and Key Metrics Changes - Ternium reported a sequential increase in EBITDA driven by improved margins and slightly higher shipments [6] - Net income for Q1 2025 stood at 142million,includinga142 million, including a 45 million provision adjustment charge related to ongoing litigation [18] - Adjusted net income, excluding the major charge, was 188million,markingasignificantimprovementoverthepriorquarter[19]BusinessLineDataandKeyMetricsChanges−ThesteelsegmentsawhighershipmentsinBrazilandothermarkets,partiallyoffsetbylowersalesvolumesinMexico[19]−Miningsegmentshipmentsincreasedslightlyquarteroverquarterandrose14188 million, marking a significant improvement over the prior quarter [19] Business Line Data and Key Metrics Changes - The steel segment saw higher shipments in Brazil and other markets, partially offset by lower sales volumes in Mexico [19] - Mining segment shipments increased slightly quarter over quarter and rose 14% year over year, driven by higher production levels in Mexico and Brazil [22] Market Data and Key Metrics Changes - In Mexico, apparent consumption of steel decreased almost 5% in 2024, affecting demand [30] - Brazilian trade authorities reported a significant year-over-year increase in imports during Q1 2025, with ongoing anti-dumping investigations on imports from China [9] Company Strategy and Development Direction - The company aims to enhance competitiveness by increasing operational efficiency and reducing costs amid a challenging trade environment [10] - Ternium's expansion project in Mexico has a revised total CapEx of 4 billion, representing a 16% increase compared to previous estimates [12] - The company expects to achieve a double-digit EBITDA margin in Q2 2025, supported by increased realized prices and cost reduction initiatives [11] Management's Comments on Operating Environment and Future Outlook - Management noted that trade tensions and uncertainty are impacting global economic growth, but there is optimism regarding the Plan Mexico initiative to enhance industrialization [6][8] - The outlook for the steel sector in Argentina is improving, with expectations of a 20% increase in shipments in the upcoming quarters [56] Other Important Information - The company maintains a strong balance sheet with a net cash position of 1.3billionasofMarch2025[23]−Ternium′sCapExfor2025isprojectedtobearound1.3 billion as of March 2025 [23] - Ternium's CapEx for 2025 is projected to be around 2.5 billion, with significant investments in ongoing projects [23] Q&A Session Summary Question: Situation in Mexico and GDP impact - Management acknowledged the challenging environment in Mexico, with expectations for demand to improve in the following quarters, particularly in the commercial market [30][31] Question: Margins and profitability outlook - Management indicated that margins are expected to improve in Q2 2025, with a potential return to more reasonable levels compared to previous quarters [37][38] Question: Cost reduction and volume growth opportunities - Management confirmed ongoing cost reduction programs and highlighted the potential for volume growth in Mexico due to decreased imports [41][45] Question: Cash returns and dividend payments - Management expressed confidence in sustaining dividend payments despite ongoing CapEx plans, citing a solid financial position [54] Question: Argentina's steel sector outlook - Management noted improvements in Argentina's steel sector, with expectations for increased shipments and no immediate plans for capacity expansion [56] Question: CapEx increase reasons and timeline - Management explained that the CapEx increase was due to higher construction costs and inflation, with the additional costs expected to be distributed over the project timeline [64]