Ternium Announces Fourth Quarter and Full Year 2023 Results
- Ternium reported a 10% increase in operating income in Q4 2023, with steel shipments reaching 4,035 thousand tons, a 34% increase from Q4 2022.
- The company proposed an annual dividend of $3.30 per ADS, representing a 22% increase from the prior year and a significant growth compared to 2018.
- Ternium's 2023 results showed a 19% decrease in operating income, mainly impacted by the consolidation of Usiminas' operations.
- Despite challenges in Argentina and Brazil, Ternium expects improved EBITDA and margin for Q1 2024, driven by higher steel prices and volumes.
- The company's strategic initiatives in Mexico and Brazil aim to strengthen its position in the Latin American steel market, with new facilities and projects underway.
- None.
Insights
The financial results of Ternium S.A. for Q4 and the full year of 2023 indicate a robust performance, particularly in the face of challenges such as input restrictions in Argentina and the consolidation of Usiminas' operations. The significant increase in steel shipments by 34% in Q4 compared to the same period the previous year and a 19% increase in annual steel shipments, underscore the company's ability to grow its operational volume. However, the reported decrease in Adjusted EBITDA by 7% for Q4 and 20% annually suggests margin pressures despite top-line growth. The proposed dividend increase and the high yield are indicative of the company's confidence in its cash flow and profitability, which could be appealing to income-focused investors.
The devaluation of the Argentine Peso and its impact on the company's financials is a critical aspect, as it resulted in a fair value decrease in Argentine securities but also a net foreign exchange gain due to Ternium Argentina's net short local currency position. This volatility in currency exchange rates is an important consideration for investors, as it can significantly affect net income and equity holders' net income, which showed a substantial recovery from the previous quarter's losses.
The strategic initiatives undertaken by Ternium, such as the construction of new facilities in Pesquería and the expansion of its downstream project, are set to enhance the company's competitive positioning within the Latin American market. The focus on increasing industrial system productivity, particularly in light of the recent relining of Usiminas' blast furnace, is expected to contribute to operational efficiency. Moreover, the nearshoring trend, which has been beneficial for the Mexican steel market, has contributed to Ternium's shipment growth and market share gains. This trend is likely to continue, given the current global supply chain realignment.
On the downside, the short-term weakness in the domestic commercial market due to destocking and downturn in steel spot prices could pose a challenge. However, the long-term outlook remains positive with expected reforms in Argentina and the commissioning of a new wind farm, which could lead to cost savings and a more sustainable operation.
The macroeconomic factors influencing Ternium's performance, such as the devaluation of the Argentine Peso and the impact of government policies on steel production rates, are significant. The devaluation has a dual impact: it creates a foreign exchange gain on the one hand but leads to a decrease in the fair value of holdings on the other. The proposed economic reforms by the new Argentine government could have a recessionary effect, potentially impacting Ternium's future shipments and market demand.
From a broader economic perspective, the growth in steel consumption and shipments in Mexico, driven by manufacturing and infrastructure investment, is a positive indicator of industrial activity and economic health in the region. Ternium's planned capacity expansions and productivity improvements are aligned with these economic trends and could bolster its market position in the long term, despite short-term volatilities.
LUXEMBOURG / ACCESSWIRE / February 20, 2024 / Ternium S.A. (NYSE:TX) today announced its results for the fourth quarter and full year ended December 31, 2023.
The financial and operational information contained in this press release is based on Ternium S.A.'s operational data and consolidated condensed financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and presented in US dollars ($) and metric tons. This press release includes certain non-IFRS alternative performance measures such as Adjusted Net Result, Adjusted Equity Holders' Net Result, Adjusted Earnings per ADS, Adjusted EBITDA, Net Cash and Free Cash Flow. The reconciliation of these figures to the most directly comparable IFRS measures is included in Exhibit I.
Fourth Quarter of 2023 Highlights
Summary of Fourth Quarter of 2023 Results
CONSOLIDATED | 4Q23 | 3Q23 | DIF | 4Q22 | DIF | |||||||||||||||
Steel Shipments (thousand tons) | 4,035 | 4,131 | -2 | % | 3,020 | 34 | % | |||||||||||||
Mining Shipments (thousand tons) | 1,952 | 2,176 | -10 | % | - | |||||||||||||||
Net Sales ($ million) | 4,931 | 5,185 | -5 | % | 3,546 | 39 | % | |||||||||||||
Operating Income ($ million) | 582 | 527 | 10 | % | 43 | 1249 | % | |||||||||||||
Adjusted EBITDA ($ million) | 651 | 698 | -7 | % | 303 | 115 | % | |||||||||||||
Adjusted EBITDA Margin (% of net sales) | 13 | % | 13 | % | 9 | % | ||||||||||||||
Net Income (Loss) ($ million) | 554 | (783 | ) | 59 | ||||||||||||||||
Equity Holders' Net Income (Loss) ($ million) | 414 | (739 | ) | 40 | ||||||||||||||||
Earnings (Losses) per ADS1 ($) | 2.11 | (3.77 | ) | 0.20 | ||||||||||||||||
Adjusted Net Income ($ million) | 554 | 323 | 59 | |||||||||||||||||
Adjusted Equity Holders' Net Income ($ million) | 414 | 271 | 40 | |||||||||||||||||
Adjusted Earnings per ADS1 ($) | 2.11 | 1.38 | 0.20 | |||||||||||||||||
1 American Depositary Share. Each ADS represents 10 shares of Ternium's common stock. Results are based on a weighted average number of shares of common stock outstanding (net of treasury shares) of 1,963,076,776.
Fourth quarter of 2023 highlights
Ternium reported a good set of operating results in the fourth quarter of 2023. Steel shipments in Mexico remained strong in a seasonally weaker period, aided by continued growth of commercial customer demand. On the other hand, steel shipments in the Southern Region were relatively weak in the fourth quarter, as government-imposed restrictions on the importation of inputs further affected Ternium's steel production rates in Argentina. Adjusted EBITDA margin remained relatively weak in the fourth quarter of 2023 due to the consolidation of Usiminas' steel operations, which continued to record a relatively low level of profitability as it ramped-up its main blast furnace at its Ipatinga facility.
After a new administration took office in Argentina in December 2023, the Argentine Peso suffered a significant devaluation versus the US dollar. This event resulted in a decrease of
Annual Dividend Proposal
Ternium's board of directors proposed that an annual dividend ofWith a dividend yield of approximately
Outlook
The Mexican steel market recorded a strong performance in 2023, with flat steel consumption reaching an all-time high of 18.1 million tons after annual growth of
Healthy industrial activity in Mexico, together with the nearshoring of manufacturing capacity, are contributing to steel demand growth in the region. Construction activity in Mexico remains at good levels, with non-residential construction such as industrial warehouses, natural gas pipelines and other infrastructure projects doing well and residential construction being negatively affected by increased input prices. On the other hand, apparent steel demand in the domestic commercial market is showing short-term weakness due to a destocking tied to the recent downturn in steel spot prices in North America.
In Brazil, Ternium began fully consolidating Usiminas results in July 2023, during a period of significant transformation for Usiminas as it successfully relined its main blast furnace. In 2024, Usiminas will be focused on increasing its industrial system productivity. For the first quarter of 2024, Usiminas anticipates a sequential improvement in the profitability of its steel segment, coupled with a revenue decline in its mining segment due to the temporary halt of one of its ore processing plants and seasonal rains at the beginning of the year.
In Argentina, a new government administration took office in December and is poised to introduce much needed macroeconomic reforms in the country. These reforms are expected to have a recessionary effect on the Argentine economy in the first half of 2024 and, consequently, are likely to negatively affect Ternium shipments in the local market. During 2024, the company expects to commission its new, captive wind farm from which it will source renewable energy, replacing
For the first quarter of 2024, Ternium expects adjusted EBITDA to increase compared to the fourth quarter of 2023. The company anticipates adjusted EBITDA margin to sequentially improve as a result of lower steel cost per ton and slightly higher revenue per ton, which it expects will be driven by higher realized steel prices in Mexico and the U.S. In addition, the company anticipates slightly higher shipments in the USMCA region to be offset by lower shipments in Argentina.
Summary of 2023 Results
CONSOLIDATED | 2023 | 2022 | DIF | |||||||||
Steel Shipments (thousand tons) | 14,213 | 11,896 | 19 | % | ||||||||
Mining Shipments (thousand tons) | 4,128 | 0 | ||||||||||
Net Sales ($ million) | 17,610 | 16,414 | 7 | % | ||||||||
Operating Income ($ million) | 2,198 | 2,700 | -19 | % | ||||||||
Adjusted EBITDA ($ million) | 2,740 | 3,415 | -20 | % | ||||||||
Adjusted EBITDA Margin (% of net sales) | 16 | % | 21 | % | ||||||||
Net Income ($ million) | 986 | 2,093 | ||||||||||
Equity Holders' Net Income ($ million) | 676 | 1,768 | ||||||||||
Earnings per ADS2 ($) | 3.44 | 9.00 | ||||||||||
Adjusted Net Income ($ million) | 2,092 | 2,093 | ||||||||||
Adjusted Equity Holders' Net Income ($ million) | 1,686 | 1,768 | ||||||||||
Adjusted Earnings per ADS2 ($) | 8.59 | 9.00 | ||||||||||
2 American Depositary Share. Each ADS represents 10 shares of Ternium's common stock. Results are based on a weighted average number of shares of common stock outstanding (net of treasury shares) of 1,963,076,776.
Highlights for the Year
2023 was an outstanding year for Ternium. Shipments in Mexico grew a remarkable
In 2023, Ternium advanced several initiatives aimed at further strengthening its unique position in Latin America. The company announced the construction of a new steelmaking facility and a direct reduction unit in Pesquería, as well as a new port facility for raw material handling in Brownsville, Texas. In addition, Usiminas completed the relining of its main blast furnace at the Ipatinga facility.
Ternium's Adjusted EBITDA in 2023 was supported by a record level of finished steel shipments and a healthy Adjusted EBITDA margin, despite the negative effect of the consolidation of Usiminas' operations as it relined its main blast furnace at Ipatinga. In addition, net income in 2023 was negatively impacted by a
Analysis of Fourth Quarter and Full Year 2023 Results
Consolidated Steel Products Sales
In the fourth quarter of 2023, steel shipments remained strong, similar to the levels achieved in the prior quarter. The consolidation of Usiminas added 1.0 million tons to total steel shipments. Revenue per ton decreased sequentially in the fourth quarter, reflecting lower realized steel prices in most of Ternium's markets. Particularly in Mexico, revenue per ton decreased sequentially in the fourth quarter reflecting lower industrial contract prices, as they reset with a lag, partially offset by higher spot prices, as market prices in the USMCA region rebounded during the period.
In the fourth quarter of 2023, steel shipments in Mexico remained near record levels despite negative seasonality effects, supported by higher commercial customer demand. Steel shipments in the Southern Region decreased sequentially in the fourth quarter due to the impact on Ternium's production rates in Argentina of government-imposed restrictions on the importation of inputs.
On a year-over-year basis, Ternium's steel shipments increased
In 2023, Ternium's steel shipments in Mexico increased
Mining Products Sales
Ternium reports intercompany and third-party sales of mining products under the Mining and Usiminas segments.
In the fourth quarter of 2023, iron ore shipments increased slightly sequentially. Intercompany iron ore shipments increased in the period mainly due to the ramp-up of Usiminas' main blast furnace at its Ipatinga facility. This was mostly offset by lower iron ore shipments to third parties.
Net sales increased sequentially in the fourth quarter reflecting higher iron ore prices.
On a year-over-year basis, Ternium's iron ore shipments to third parties increased by 4.1 million tons in 2023 due to the consolidation of Usiminas.
Revenue per ton increased year-over-year in 2023 reflecting higher iron ore prices.
CONSOLIDATED | NET SALES ($ MILLION) | SHIPMENTS (THOUSAND TONS) | REVENUE/TON ($/TON) | ||||||||||||||||||||||||
| 4Q23 | 3Q23 | DIF | 4Q23 | 3Q23 | DIF | 4Q23 | 3Q23 | DIF | |||||||||||||||||||
Mexico | 2,265 | 2,383 | -5 | % | 2,122 | 2,135 | -1 | % | 1,067 | 1,116 | -4 | % | |||||||||||||||
Brazil | 1,064 | 1,136 | -6 | % | 952 | 957 | -1 | % | 1,118 | 1,187 | -6 | % | |||||||||||||||
Southern Region | 905 | 941 | -4 | % | 561 | 603 | -7 | % | 1,611 | 1,561 | 3 | % | |||||||||||||||
Other Markets | 455 | 504 | -10 | % | 399 | 436 | -8 | % | 1,140 | 1,157 | -2 | % | |||||||||||||||
Total steel products | 4,689 | 4,964 | -6 | % | 4,035 | 4,131 | -2 | % | 1,162 | 1,202 | -3 | % | |||||||||||||||
Mining products | 180 | 149 | 21 | % | 1,952 | 2,176 | -10 | % | 92 | 68 | 35 | % | |||||||||||||||
Other products | 62 | 72 | -15 | % | |||||||||||||||||||||||
Net sales | 4,931 | 5,185 | -5 | % | |||||||||||||||||||||||
CONSOLIDATED | NET SALES ($ MILLION) | SHIPMENTS (THOUSAND TONS) | REVENUE/TON ($/TON) | ||||||||||||||||||||||||
| 2023 | 2022 | DIF | 2023 | 2022 | DIF | 2023 | 2022 | DIF | |||||||||||||||||||
Mexico | 9,311 | 8,828 | 5 | % | 8,355 | 6,843 | 22 | % | 1,114 | 1,290 | -14 | % | |||||||||||||||
Brazil | 2,279 | 582 | 292 | % | 2,014 | 723 | 178 | % | 1,132 | 804 | 41 | % | |||||||||||||||
Southern Region | 3,569 | 3,834 | -7 | % | 2,271 | 2,362 | -4 | % | 1,572 | 1,623 | -3 | % | |||||||||||||||
Other Markets | 1,853 | 2,848 | -35 | % | 1,573 | 1,968 | -20 | % | 1,178 | 1,447 | -19 | % | |||||||||||||||
Total steel products | 17,013 | 16,092 | 6 | % | 14,213 | 11,896 | 19 | % | 1,197 | 1,353 | -12 | % | |||||||||||||||
Mining products | 329 | 0 | 4,128 | 0 | 80 | ||||||||||||||||||||||
Other products | 268 | 323 | -17 | % | |||||||||||||||||||||||
Net sales | 17,610 | 16,414 | 7 | % | |||||||||||||||||||||||
Operating Income
In the fourth quarter of 2023, operating income included a
$ MILLION | 4Q23 | 3Q23 | DIF | 4Q22 | DIF | 2023 | 2022 | DIF | ||||||||||||||||
Operating income | 582 | 527 | 10 | % | 43 | 1249 | % | 2,198 | 2,700 | -19 | % | |||||||||||||
Net sales | 4,931 | 5,185 | -5 | % | 3,546 | 39 | % | 17,610 | 16,414 | 7 | % | |||||||||||||
Cost of sales | (4,039 | ) | (4,192 | ) | -4 | % | (3,119 | ) | 29 | % | (14,051 | ) | (12,487 | ) | 13 | % | ||||||||
SG&A expenses | (432 | ) | (443 | ) | -3 | % | (275 | ) | 57 | % | (1,472 | ) | (1,144 | ) | 29 | % | ||||||||
Other operating income (expense), net | 121 | (22 | ) | (110 | ) | 110 | (84 | ) | ||||||||||||||||
Net Financial Results
In the fourth quarter of 2023, Ternium recorded a
Ternium's divestment of Argentine government bond holdings in the fourth quarter of 2023 resulted in a loss of
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Net interest results | 49 | 30 | 10 | 130 | 28 | ||||||||||
Net foreign exchange result | 171 | (33 | ) | (27 | ) | 98 | (164 | ) | |||||||
Change in fair value of financial assets | (85 | ) | 36 | 20 | (58 | ) | 76 | ||||||||
Other financial (expense) income, net | (32 | ) | (3 | ) | 6 | (47 | ) | (10 | ) | ||||||
Net financial results | 103 | 30 | 9 | 123 | (70 | ) |
Income Tax Results
Deferred tax results reflect the impact of local currency fluctuations versus the US dollar on companies that use the US dollar as functional currency, mainly Ternium Mexico, Ternium Argentina and Ternium Brasil, net of the positive effect of local inflation.
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Current income tax expense | (141 | ) | (164 | ) | (23 | ) | (591 | ) | (600 | ) | |||||
Deferred tax (loss) gain | (15 | ) | (89 | ) | 12 | 257 | 27 | ||||||||
Income tax expense | (156 | ) | (253 | ) | (11 | ) | (334 | ) | (574 | ) | |||||
Result before income tax | 709 | (530 | ) | 70 | 1,321 | 2,666 | |||||||||
Effective tax rate | 22 | % | -48 | % | 16 | % | 25 | % | 22 | % |
Net Income
Ternium's Net Income in the fourth quarter of 2023 was strong, reflecting a healthy operation, the positive effect on Operating Income from liabilities and contingency reversals, and the positive effect on Financial Results of the Argentine Peso devaluation.
In the third quarter of 2023, Adjusted Net Income and Adjusted Equity Holders' Net Income equaled the period's Net Loss and Equity Holders' Net Loss, respectively, adjusted to exclude a loss of
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Owners of the parent | 414 | (739 | ) | 40 | 676 | 1,768 | |||||||||
Non-controlling interest | 140 | (44 | ) | 19 | 310 | 325 | |||||||||
Net Income (Loss) | 554 | (783 | ) | 59 | 986 | 2,093 | |||||||||
Less: non-cash effects related to the increase in the participation in Usiminas | - | (1,106 | ) | - | (1,106 | ) | - | ||||||||
Adjusted Net Income | 554 | 323 | 59 | 2,092 | 2,093 |
Adjusted EBITDA
Adjusted EBITDA in the fourth quarter of 2023 equals net results adjusted to exclude:
- Income Tax Results;
- Equity in Results of Non-consolidated Companies;
- Net Financial Results;
- Reversal of Usiminas' post-retirement liabilities;
- Contingency reversal due to dismissal of public civil action against Usiminas;
- Impairment charge on Las Encinas' mining assets; and
- Depreciation and Amortization.
And adjusted to include the proportional EBITDA in Unigal (
Adjusted EBITDA Margin equals Adjusted EBITDA divided by net sales.
Cash Flow and Liquidity
In the fourth quarter of 2023, Ternium posted a strong level of cash from operations, partly as a result of a working capital reduction in the period. The decrease in working capital included a
Trade receivables decreased in the period mainly as a result of lower shipment volumes. The inventory reduction mainly reflected a decrease in steel costs and lower raw material volumes. In particular, inventories at Ternium's Argentine operations were affected by the government-imposed restrictions on the importation of inputs.
Capital expenditures increased sequentially in the fourth quarter as Ternium advanced the construction of the new facilities at its industrial center in Pesquería. The company has reassessed the estimated cost of its upstream and downstream expansion projects in Pesquería to
As of year-end 2023, Ternium recorded a strong
Ternium's net cash position as of December 31, 2023 included Ternium Argentina's total position of cash and cash equivalents and other investments of
In 2023, Ternium's cash from operations reached a solid
In addition to its Pesquería growth projects, during the year Ternium advanced the construction of a new wind farm in Argentina and several projects aimed at further improving environmental and safety conditions at its facilities. Usiminas' capital expenditures included those in connection with the relining of its main blast furnace in Ipatinga, among others.
In 2023, Ternium's net cash position decreased
In 2023, Ternium paid dividends to shareholders of
In addition, Ternium invested
Conference Call and Webcast
Ternium will host a conference call on February 21, 2024, at 8:30 a.m. ET in which management will discuss fourth quarter and full year 2023 results. A webcast link will be available in the Investor Center section of the company's website at www.ternium.com.
Forward Looking Statements
Some of the statements contained in this press release are "forward-looking statements". Forward-looking statements are based on management's current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to gross domestic product, related market demand, global production capacity, tariffs, cyclicality in the industries that purchase steel products and other factors beyond Ternium's control.
About Ternium
Ternium is a leading steel producer in the Americas, providing advanced steel products to a wide range of manufacturing industries and the construction sector. We invest in low carbon emissions steelmaking technologies to support the energy transition and the mobility of the future. We also support the development of our communities, specially through educational programs in Latin America. More information about Ternium is available at www.ternium.com.
Income Statement
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Net sales | 4,931 | 5,185 | 3,546 | 17,610 | 16,414 | ||||||||||
Cost of sales | (4,039 | ) | (4,192 | ) | (3,119 | ) | (14,051 | ) | (12,487 | ) | |||||
Gross profit | 892 | 993 | 427 | 3,559 | 3,927 | ||||||||||
Selling, general and administrative expenses | (432 | ) | (443 | ) | (275 | ) | (1,472 | ) | (1,144 | ) | |||||
Other operating income (expense), net | 121 | (22 | ) | (110 | ) | 110 | (84 | ) | |||||||
Operating income | 582 | 527 | 43 | 2,198 | 2,700 | ||||||||||
Financial expense | (44 | ) | (47 | ) | (18 | ) | (125 | ) | (47 | ) | |||||
Financial income | 94 | 78 | 28 | 255 | 75 | ||||||||||
Other financial income (expense), net | 54 | 0 | (1 | ) | (6 | ) | (99 | ) | |||||||
Equity in earnings of non-consolidated companies | 24 | 19 | 19 | 105 | 37 | ||||||||||
Effect related to the increase of the participation in Usiminas | - | (171 | ) | - | (171 | ) | - | ||||||||
Recycling of other comprehensive income related to Usiminas | - | (935 | ) | - | (935 | ) | - | ||||||||
Profit (loss) before income tax results | 709 | (530 | ) | 70 | 1,321 | 2,666 | |||||||||
Income tax expense | (156 | ) | (253 | ) | (11 | ) | (334 | ) | (574 | ) | |||||
Profit (loss) for the period | 554 | (783 | 59 | 986 | 2,093 | ||||||||||
Attributable to: | |||||||||||||||
Owners of the parent | 414 | (739 | ) | 40 | 676 | 1,768 | |||||||||
Non-controlling interest | 140 | (44 | ) | 19 | 310 | 325 | |||||||||
Net income (loss) | 554 | (783 | ) | 59 | 986 | 2,093 |
Statement of Financial Position
$ MILLION | DECEMBER 31, 2023 | DECEMBER 31, 2022 | ||||||
Property, plant and equipment, net | 7,638 | 6,262 | ||||||
Intangible assets, net | 996 | 944 | ||||||
Investments in non-consolidated companies | 517 | 822 | ||||||
Other investments | 211 | 101 | ||||||
Deferred tax assets | 1,713 | 200 | ||||||
Receivables, net | 1,073 | 319 | ||||||
Total non-current assets | 12,149 | 8,648 | ||||||
Receivables, net | 1,173 | 663 | ||||||
Derivative financial instruments | 15 | 0 | ||||||
Inventories, net | 4,948 | 3,470 | ||||||
Trade receivables, net | 2,065 | 1,181 | ||||||
Other investments | 1,976 | 1,875 | ||||||
Cash and cash equivalents | 1,846 | 1,653 | ||||||
Total current assets | 12,024 | 8,842 | ||||||
Non-current assets classified as held for sale | 7 | 2 | ||||||
Total assets | 24,179 | 17,492 | ||||||
Statement of Financial Position (cont.)
$ MILLION | DECEMBER 31, 2023 | DECEMBER 31, 2022 | ||||||
Capital and reserves attributable to the owners of the parent | 12,419 | 11,846 | ||||||
Non-controlling interest | 4,393 | 1,922 | ||||||
Total equity | 16,812 | 13,768 | ||||||
Provisions | 840 | 81 | ||||||
Deferred tax liabilities | 171 | 163 | ||||||
Other liabilities | 1,149 | 538 | ||||||
Trade payables | 12 | 1 | ||||||
Lease liabilities | 189 | 190 | ||||||
Borrowings | 1,206 | 533 | ||||||
Total non-current liabilities | 3,567 | 1,506 | ||||||
Current income tax liabilities | 137 | 136 | ||||||
Other liabilities | 430 | 345 | ||||||
Trade payables | 2,233 | 1,188 | ||||||
Derivative financial instruments | 8 | 1 | ||||||
Lease liabilities | 52 | 49 | ||||||
Borrowings | 940 | 499 | ||||||
Total current liabilities | 3,801 | 2,217 | ||||||
Total liabilities | 7,367 | 3,723 | ||||||
Total equity and liabilities | 24,179 | 17,492 | ||||||
Statement of Cash Flows
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Result for the period | 554 | (783 | ) | 59 | 986 | 2,093 | |||||||||
Adjustments for: | |||||||||||||||
Depreciation and amortization | 191 | 165 | 160 | 658 | 616 | ||||||||||
Income tax accruals less payments | (45 | ) | 158 | (90 | ) | (161 | ) | (1,196 | ) | ||||||
Equity in earnings of non-consolidated companies | (24 | ) | (19 | ) | (19 | ) | (105 | ) | (37 | ) | |||||
Impairment charge | 42 | - | 99 | 42 | 99 | ||||||||||
Interest accruals less payments/receipts, net | (34 | ) | 1 | (34 | ) | (45 | ) | (25 | ) | ||||||
Changes in provisions | (61 | ) | (4 | ) | 0 | (64 | ) | (1 | ) | ||||||
Changes in working capital | 320 | 388 | 955 | 321 | 1,152 | ||||||||||
Net foreign exchange results and others | (225 | ) | 8 | (100 | ) | (236 | ) | 51 | |||||||
Non-cash effects related to the increase of the participation in Usiminas | - | 1,106 | - | 1,106 | - | ||||||||||
Net cash provided by operating activities | 718 | 1,020 | 1,032 | 2,501 | 2,753 | ||||||||||
Capital expenditures and advances to suppliers for PP&E | (597 | ) | (430 | ) | (159 | ) | (1,461 | ) | (581 | ) | |||||
Decrease (increase) in other investments | 129 | (333 | ) | (444 | ) | (718 | ) | (771 | ) | ||||||
Proceeds from the sale of property, plant & equipment | 1 | 1 | 1 | 2 | 2 | ||||||||||
Dividends received from non-consolidated companies | 28 | - | - | 43 | 29 | ||||||||||
Acquisition of non-controlling interest | - | - | - | - | (4 | ) | |||||||||
Acquisition of business: | |||||||||||||||
Purchase consideration | - | (119 | ) | - | (119 | ) | - | ||||||||
Cash acquired | - | 781 | - | 781 | - | ||||||||||
Net cash (used in) investing activities | (439 | ) | (100 | ) | (602 | ) | (1,470 | ) | (1,325 | ) | |||||
Dividends paid in cash to company's shareholders | (216 | ) | - | (177 | ) | (569 | ) | (530 | ) | ||||||
Finance lease payments | (16 | ) | (16 | ) | (12 | ) | (59 | ) | (49 | ) | |||||
Proceeds from borrowings | 119 | 163 | 61 | 355 | 286 | ||||||||||
Repayments of borrowings | (121 | ) | (145 | ) | (108 | ) | (493 | ) | (723 | ) | |||||
Net cash (used in) provided by financing activities | (234 | ) | 3 | (236 | ) | (766 | ) | (1,016 | ) | ||||||
Increase in cash and cash equivalents | 45 | 923 | 194 | 264 | 412 |
Shipments
Steel and Mining Segments
THOUSAND TONS | 4Q23 | 3Q23 | DIF | 4Q22 | DIF | 2023 | 2022 | DIF | ||||||||||||||||
Mexico | 2,122 | 2,135 | -1 | % | 1,873 | 13 | % | 8,355 | 6,843 | 22 | % | |||||||||||||
Brazil | 186 | 194 | -4 | % | 182 | 2 | % | 486 | 723 | -33 | % | |||||||||||||
Southern Region | 486 | 558 | -13 | % | 589 | -18 | % | 2,151 | 2,362 | -9 | % | |||||||||||||
Other Markets | 391 | 408 | -4 | % | 376 | 4 | % | 1,537 | 1,968 | -22 | % | |||||||||||||
Total steel products | 3,185 | 3,296 | -3 | % | 3,020 | 5 | % | 12,529 | 11,896 | 5 | % | |||||||||||||
Mining products (Intercompany) | 894 | 842 | 6 | % | 891 | 0 | % | 3,402 | 3,457 | -2 | % | |||||||||||||
Usiminas Segment
THOUSAND TONS | 4Q23 | 3Q23 | DIF | 4Q22 | DIF | 2023 | 2022 | DIF | |||||||||||||
Mexico | - | - | - | ||||||||||||||||||
Brazil | 942 | 955 | -1 | % | 1,897 | ||||||||||||||||
Southern Region | 76 | 45 | 69 | % | 121 | ||||||||||||||||
Other Markets | 30 | 39 | -23 | % | 69 | ||||||||||||||||
Total Usiminas steel products | 1,048 | 1,038 | 1 | % | 2,086 | ||||||||||||||||
Intercompany shipments | 431 | 215 | 100 | % | 646 | ||||||||||||||||
Third-party shipments | 1,952 | 2,176 | -10 | % | 4,128 | ||||||||||||||||
Total Usiminas mining products | 2,383 | 2,391 | 0 | % | 4,774 | ||||||||||||||||
Consolidated
THOUSAND TONS | 4Q23 | 3Q23 | DIF | 4Q22 | DIF | 2023 | 2022 | DIF | ||||||||||||||||
Mexico | 2,122 | 2,135 | -1 | % | 1,873 | 13 | % | 8,355 | 6,843 | 22 | % | |||||||||||||
Brazil | 952 | 957 | -1 | % | 182 | 2,014 | 723 | |||||||||||||||||
Southern Region | 561 | 603 | -7 | % | 589 | -5 | % | 2,271 | 2,362 | -4 | % | |||||||||||||
Other Markets | 399 | 436 | -8 | % | 376 | 6 | % | 1,573 | 1,968 | -20 | % | |||||||||||||
Total steel products | 4,035 | 4,131 | -2 | % | 3,020 | 34 | % | 14,213 | 11,896 | 19 | % | |||||||||||||
Mining products | 1,952 | 2,176 | -10 | % | 0 | 4,128 | 0 | |||||||||||||||||
Net Sales
Steel and Mining Segments
$ MILLION | 4Q23 | 3Q23 | DIF | 4Q22 | DIF | 2023 | 2022 | DIF | ||||||||||||||||
Mexico | 2,265 | 2,383 | -5 | % | 1,954 | 16 | % | 9,311 | 8,828 | 5 | % | |||||||||||||
Brazil | 114 | 148 | -23 | % | 115 | -1 | % | 342 | 582 | -41 | % | |||||||||||||
Southern Region | 805 | 874 | -8 | % | 950 | -15 | % | 3,402 | 3,834 | -11 | % | |||||||||||||
Other Markets | 452 | 495 | -9 | % | 462 | -2 | % | 1,841 | 2,848 | -35 | % | |||||||||||||
Total steel products | 3,636 | 3,900 | -7 | % | 3,481 | 4 | % | 14,897 | 16,092 | -7 | % | |||||||||||||
Other products | 82 | 81 | 0 | % | 65 | 26 | % | 298 | 323 | -8 | % | |||||||||||||
Total steel segment | 3,718 | 3,982 | -7 | % | 3,546 | 5 | % | 15,194 | 16,414 | -7 | % | |||||||||||||
Mining products (Intercompany) | 192 | 114 | 69 | % | 96 | 99 | % | 500 | 411 | 22 | % | |||||||||||||
Note: other products include mainly electricity sales in Mexico and Brazil.
Usiminas Segment
$ MILLION | 4Q23 | 3Q23 | DIF | 4Q22 | DIF | 2023 | 2022 | DIF | ||||||||||||||||
Mexico | - | - | - | |||||||||||||||||||||
Brazil | 1,059 | 1,134 | -7 | % | 2,193 | |||||||||||||||||||
Southern Region | 100 | 68 | 47 | % | 168 | |||||||||||||||||||
Other Markets | 23 | 20 | 15 | % | 43 | |||||||||||||||||||
Total Usiminas steel products | 1,182 | 1,221 | -3 | % | 2,403 | |||||||||||||||||||
Intercompany | 32 | 14 | 129 | % | 46 | |||||||||||||||||||
Third parties | 180 | 149 | 21 | % | 329 | |||||||||||||||||||
Total Usiminas mining products | 212 | 162 | 31 | % | 375 | |||||||||||||||||||
Usiminas segment consolidated net sales | 1,362 | 1,370 | -1 | % | 2,732 | |||||||||||||||||||
Net Sales (cont.)
Consolidated
$ MILLION | 4Q23 | 3Q23 | DIF | 4Q22 | DIF | 2023 | 2022 | DIF | ||||||||||||||||
Mexico | 2,265 | 2,383 | -5 | % | 1,954 | 16 | % | 9,311 | 8,828 | 5 | % | |||||||||||||
Brazil | 1,064 | 1,136 | -6 | % | 115 | 2,279 | 582 | |||||||||||||||||
Southern Region | 905 | 941 | -4 | % | 950 | -5 | % | 3,569 | 3,834 | -7 | % | |||||||||||||
Other Markets | 455 | 504 | -10 | % | 462 | -1 | % | 1,853 | 2,848 | -35 | % | |||||||||||||
Total steel products | 4,689 | 4,964 | -6 | % | 3,481 | 35 | % | 17,013 | 16,092 | 6 | % | |||||||||||||
Mining products | 180 | 149 | 21 | % | 0 | 329 | 0 | |||||||||||||||||
Other products | 62 | 72 | -15 | % | 65 | -5 | % | 268 | 323 | -17 | % | |||||||||||||
Total net sales | 4,931 | 5,185 | -5 | % | 3,546 | 39 | % | 17,610 | 16,414 | 7 | % | |||||||||||||
Note: other products include mainly electricity sales in Mexico and Brazil.
Exhibit I - Alternative performance measures
These non-IFRS measures should not be considered in isolation of, or as a substitute for, measures of performance prepared in accordance with IFRS. These non-IFRS measures do not have a standardized meaning under IFRS and, therefore, may not correspond to similar non-IFRS financial measures reported by other companies.
Adjusted EBITDA
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Net income (loss) | 554 | (783 | ) | 59 | 986 | 2,093 | |||||||||
Adjusted to exclude: | |||||||||||||||
Income tax results | 156 | 253 | 11 | 334 | 574 | ||||||||||
Equity in earnings of non-consolidated companies | (24 | ) | (19 | ) | (19 | ) | (105 | ) | (37 | ) | |||||
Net financial results | (103 | ) | (30 | ) | (9 | ) | (123 | ) | 70 | ||||||
Reversal of Usiminas' post-retirement liabilities | (109 | ) | - | - | (109 | ) | - | ||||||||
Contingency reversal - dismissal of public civil action against Usiminas | (63 | ) | - | - | (63 | ) | - | ||||||||
Non-cash effects related to the increase in the participation in Usiminas | - | 1,106 | - | 1,106 | - | ||||||||||
Impairment of Ternium's investment in Ternium Brasil | - | - | 99 | - | 99 | ||||||||||
Impairment on Las Encinas' mining assets | 42 | - | - | 42 | - | ||||||||||
Depreciation and amortization | 191 | 165 | 160 | 658 | 616 | ||||||||||
Adjusted to include: | |||||||||||||||
Proportional EBITDA in Unigal ( | 8 | 6 | - | 14 | - | ||||||||||
Adjusted EBITDA | 651 | 698 | 303 | 2,740 | 3,415 | ||||||||||
Divided by: net sales | 4,931 | 5,185 | 3,546 | 17,610 | 16,414 | ||||||||||
Adjusted EBITDA Margin (%) | 13 | % | 13 | % | 9 | % | 16 | % | 21 | % |
Adjusted Net Income
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Net income (loss) | 554 | (783 | ) | 59 | 986 | 2,093 | |||||||||
Less: non-cash effects related to the increase in the participation in Usiminas | - | (1,106 | ) | - | (1,106 | ) | - | ||||||||
Adjusted Net Income | 554 | 323 | 59 | 2,092 | 2,093 |
Exhibit I - Alternative performance measures (cont.)
Adjusted Equity Holders' Net Income and Adjusted Earnings per ADS
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Equity holders' net income (loss) | 414 | (739 | ) | 40 | 676 | 1,768 | |||||||||
Less: non-cash effects related to the increase in the participation in Usiminas | - | (1,010 | ) | - | (1,010 | ) | - | ||||||||
Adjusted Equity Holders' Net Income | 414 | 271 | 40 | 1,686 | 1,768 | ||||||||||
Divided by: outstanding shares of common stock, net of treasury shares (expressed in ADS equivalent) | 196 | 196 | 196 | 196 | 196 | ||||||||||
Adjusted Earnings per ADS ($) | 2.11 | 1.38 | 0.20 | 8.59 | 9.00 |
Free Cash Flow
$ MILLION | 4Q23 | 3Q23 | 4Q22 | 2023 | 2022 | ||||||||||
Net cash provided by operating activities | 718 | 1,020 | 1,032 | 2,501 | 2,753 | ||||||||||
Less: capital expenditures and advances to suppliers for PP&E | (597 | ) | (430 | ) | (159 | ) | (1,461 | ) | (581 | ) | |||||
Free cash flow | 121 | 590 | 873 | 1,040 | 2,172 |
Note: Free Cash Flow in the comparative quarters in 2023 has been modified due to a reclassification, moving the following amounts from Interest accruals less payments to Other investments:
Net Cash Position
$ BILLION | DECEMBER 31, 2023 | SEPTEMBER 30, 2023 | DECEMBER 31, 2022 | |||||||||
Cash and cash equivalents3 | 1.8 | 1.8 | 1.7 | |||||||||
Plus: other investments (current and non-current)3 | 2.2 | 2.7 | 2.0 | |||||||||
Less: borrowings (current and non-current) | (2.1 | ) | (2.2 | ) | (1.0 | ) | ||||||
Net cash position | 1.9 | 2.4 | 2.6 | |||||||||
3 Ternium Argentina's consolidated position of cash and cash equivalents and other investments amounted to
SOURCE: Ternium S.A.
View the original press release on accesswire.com
FAQ
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What strategic initiatives did Ternium undertake in Mexico and Brazil in 2023?
