Ternium Announces Results for the Third Quarter and First Nine

Ternium Announces Results for the Third Quarter and First Nine Months
of 2012 
LUXEMBOURG -- (Marketwire) -- 11/06/12 --  Ternium S.A. (NYSE: TX)
today announced its results for the third quarter and nine months
ended September 30, 2012. 
The financial and operational information contained in this press
release is based on Ternium S.A.'s operational data and consolidated
financial statements prepared in accordance with International
Financial Reporting Standards (IFRS) and presented in U.S. dollars
(USD) and metric tons. 
Summary of Third Quarter 2012 Results  


 
                                                                            
                               3Q 2012(1)     2Q 2012(1)       3Q 2011(2)   
                                                                            
Shipments (tons)                2,265,000   2,173,000    4%  2,325,000   -3%
Net Sales (USD million)           2,198.0     2,157.2    2%    2,455.2  -10%
Operating Income (USD million)      252.5       257.6   -2%      349.1  -28%
EBITDA (USD million)                339.9       348.0   -2%      447.6  -24%
EBITDA Margin (% of net sales)         15%         16%              18%     
EBITDA per Ton, Flat & Long                                                 
 Steel (USD)                          149         160              188      
Net Foreign Exchange Result                                                 
 (USD million)                        0.7         0.3           (257.2)     
Net Income (USD million)            146.6       125.1             23.4      
Equity Holders' Net Income                                                  
 (USD million)                      122.6       110.8              6.4      
Earnings per ADS (USD)               0.62        0.56             0.03      
                                                                            

 
--  EBITDA(3) of USD339.9 million in the third quarter 2012, slightly
    lower than EBITDA in the second quarter 2012, as lower revenue per ton
    offset the positive impact of higher volume.
--  Earnings per American Depositary Share (ADS)(4) of USD0.62 in the
    third quarter 2012, compared to USD0.56 in the second quarter 2012.
--  Net debt position of USD1.8 billion at the end of Sep
tember 2012, down
    from USD1.9 billion at the end of June 2012.

  
Ternium's operating income in the third quarter 2012 was USD252.5
million, slightly lower than operating income in the second quarter
2012, mainly as a result of a USD21 decrease in revenue per ton
partially offset by a 91,000 ton increase in shipments. Ternium's net
income in the third quarter 2012 was USD146.6 million, an increase of
USD21.4 million compared to net income in the second quarter 2012. 
Operating income in the third quarter 2012 was USD96.6 million lower
than in the third quarter 2011 due to a USD78 decrease in revenue per
ton and a 61,000 ton decrease in shipments, partially offset by a
USD40 decrease in operating cost per ton(5) mainly related to lower
raw material and purchased slab costs. Net income in the third
quarter 2012 was USD123.1 million higher year-over-year mainly due to
USD278.7 million lower net financial expenses, partially offset by
the above mentioned lower operating income and a consequently higher
income tax expense. This decrease in net financial expenses was
principally due to the change in the functional currency of Ternium's
Mexican subsidiaries, effective as of January 1, 2012, as there was
no impact of the Mexican Peso fluctuation on Ternium's Mexican
subsidiary's US dollar denominated debt in the third quarter 2012,
while there was a USD257.2 million net foreign exchange non-cash loss
in the third quarter 2011. 
Summary of Results for First Nine Months of 2012 


 
                                                                            
                                                9M 2012(1)     9M 2011(1)   
                                                                            
Shipments (tons)                                 6,600,000   6,670,000   -1%
Net Sales (USD million)                            6,537.1     6,922.3   -6%
Operating Income (USD million)                       793.2       980.4  -19%
EBITDA (USD million)                               1,059.9     1,282.7  -17%
EBITDA Margin (% of net sales)                          16%         19%     
EBITDA per Ton, Flat & Long Steel (USD)                160         188      
Net Foreign Exchange Result (USD million)              7.8      (164.1)     
Net Income (USD million)                             462.2       513.5      
Equity Holders' Net Income (USD million)             393.0       408.8      
Earnings per ADS (USD)                                2.00        2.08      
                                                                            

 
--  EBITDA(6) of USD1.1 billion in the first nine months of 2012, down 17%
    compared to EBITDA in the previous year, mainly as a result of lower
    revenue per ton, partially offset by a lower operating cost per ton.
--  Earnings per ADS(7) of USD2.00 in the first nine months of 2012,
    USD0.07 lower than in the first nine months of 2011, mainly due to a
    lower operating income, partially offset by lower net financial
    expenses.

  
Ternium's operating income in the first nine months of 2012 was
USD187.1 million lower than its operating income in the first nine
months of 2011, mainly as a result of a USD39 lower revenue per ton
partially offset by a USD14 lower operating cost per ton mainly
related to lower raw material and purchased slab costs. 
Ternium's net income in the first nine months of 2012 was USD462.2
million, a decrease of USD51.3 million year-over-year, mainly due to
the above mentioned USD187.1 million lower operating income partially
offset by a USD143.5 million lower net financial expense and a
consequently lower income tax expense. This change in net financial
results was principally related to lower net foreign exchange
non-cash losses due to the aforementioned change in the functional
currency of Ternium's Mexican subsidiaries and a better result from
changes in fair value of derivative instruments, partially offset by
higher net interest expenses due to a higher net indebtedness. 
Outlook 
Ternium expects steel demand in the Americas to increase in 2013 as a
result of gradually improving market conditions in North America and
Brazil. In the fourth quarter, the company anticipates shipments to
remain relatively stable compared to the third quarter of 2012, with
a lower steel production level in Argentina as a result of the outage
for repairs of a blast furnace. Ternium expects reduced operating
income in the last quarter of the year compared to the third quarter
of 2012 mainly due to lower average prices in the North America
Region and higher operating costs. 
Analysis of Third Quarter 2012 Results  
Net income attributable to Ternium's equity holders in the third
quarter 2012 was USD122.6 million, compared to USD6.4 million in the
third quarter 2011. Including non-controlling interest, net income
for the third quarter 2012 was USD146.6 million, compared to USD23.4
million in the third quarter 2011. Earnings per ADS in the third
quarter 2012 were USD0.62, compared to USD0.03 in the third quarter
2011. 
Net sales in the third quarter 2012 were USD2.2 billion, 10% lower
than net sales in the third quarter 2011. Shipments of flat and long
products were 2.3 million tons in the third quarter 2012, 3% lo
wer
compared to shipments in the third quarter 2011, with lower shipments
in the South & Central America Region being offset by higher
shipments in the North America Region. Revenue per ton shipped was
USD967 in the third quarter 2012, a 7% decrease compared to the third
quarter 2011. 
The following table shows Ternium's total consolidated net sales,
shipments and revenue per ton for the third quarter 2012 and the
third quarter 2011: 


 
                                                                            
                   Net Sales            Shipments          Revenue / ton    
                 (million USD)        (thousand tons)         (USD/ton)     
                                                                            
                                                           3Q     3Q        
             3Q 2012 3Q 2011 Dif.  3Q 2012 3Q 2011 Dif.   2012   2011  Dif. 
                                                                            
  North                                                                     
   America   1,247.5 1,326.6   -6% 1,384.2 1,338.5    3%    901    991   -9%
  South &                                                                   
   Central                                                                  
   America     940.0 1,098.9  -14%   876.4   980.2  -11%  1,073  1,121   -4%
  Europe &                                                                  
   other         2.4     4.3           3.9     6.6          616    646      
             ------- ------- ----  ------- ------- ----  ------ ------ ---- 
                                                                            
Total flat                                                                  
 and long                                                                   
 products    2,189.9 2,429.8  -10% 2,264.5 2,325.4   -3%    967  1,045   -7%
                                                                            
Other                                                                       
 products                                                                   
 (*)             8.1    25.4  -68%                                          
             ------- ------- ----                                           
                                                                            
Total net                                                                   
 sales       2,198.0 2,455.2  -10%                                          
                                                                            
(*) Primarily includes iron ore, pig iron and pre-engineered metal          
 buildings.                                                                 

 
Sales of flat and long products in the North America Region were
USD1.2 billion in the third quarter 2012, a decrease of 6% compared
to the same period in 2011 mainly due to lower revenue per ton,
partially offset by higher shipments. Shipments in the region totaled
1.4 million tons during the third quarter 2012, or 3% higher than in
the same period in 2011. Revenue per ton shipped in the region
decreased 9% to USD901 in the third quarter 2012 over the same
quarter in the third quarter 2011. 
Flat and long product sales in the South & Central America Region
were USD940.0 million during the third quarter 2012, a decrease of
14% compared to the same period in 2011 mainly as a result of lower
shipments and lower revenue per ton. Shipments in the region totaled
876,000 tons during the third quarter 2012, or 11% lower than in the
third quarter 2011. Revenue per ton shipped in the region was
USD1,073 in the third quarter 2012, a decrease of 4% compared to the
same quarter in 2011. 
Sales of other products totaled USD8.1 million during the third
quarter 2012, USD17.3 million lower than in the third quarter 2011,
mainly as a result of lower iron ore sales. 
Cost of sales was USD1.8 billion in the third quarter 2012, a
decrease of USD137.1 million, or 7%, compared to the third quarter
2011. This was due to a USD150.7 million, or 10%, decrease in raw
material and consumables used, mainly reflecting a decrease in raw
material costs and lower sales volumes, partially offset by a USD13.6
million increase in other costs, including a USD20.1 million increase
in maintenance expenses, related in part to repairs in a blast
furnace in Argentina, a USD5.4 million increase in labor costs and a
USD7.4 million decrease in depreciation of property, plant and
equipment and amortization of intangible assets. 
During the third quarter 2012, there were higher expenditures
included in the cost of sales related to the replacement of staves
under a scheduled repair of Siderar's Blast Furnace #2. At the
beginning of October, there were certain problems during the last
stage of this repair works and, as a result of this, the blow-in
process was interrupted. Due to these problems, Blast Furnace #2 will
need an extraordinary repair that will take between three and four
months to be completed. Lost production will be replaced with
purchases of slabs and hot rolled coils from third parties in order
not to affect market supply. 
Selling, General & Administrative (SG&A) expenses in the third
quarter 2012 were USD197.6 million, or 9.0% of net sales, a decrease
of USD18.1 million compared to the third quarter 2011, including a
USD4.2 million decrease in freight and transportation expenses, a
USD3.7 million decrease in depreciation of property, plant and
equipment and amortization of intangible assets, a USD3.8 million
decrease in taxes and a USD3.5 million decrease in maintenance
expenses. 
Operating income in the third quarter 2012 was USD252.5 million, or
11.5% of net sales, compared to operating income of USD349.1 million,
or 14.2% of net sales, in the third quarter 2011. 


 
                                                                            
                                 Flat steel products   Long steel products  
          USD million            3Q 2012    3Q 2011    3Q 2012    3Q 2011   
                                                                            
  Net Sales                       1,852.2    2,098.5      337.8      331.3  
  Cost of sales                  (1,495.0)  (1,645.9)    (250.3)    (228.6) 
  SG&A expenses                    (171.4)    (186.2)     (24.5)     (26.7) 
  Other operating income                                                    
   (expenses), net                    2.5       (1.0)       1.1       (0.8) 
                                                                            
Operating income                    188.2      265.4       64.0       75.2  
                                                                            
 
                                                                          
                                       Other                 Total        
          USD million           3Q 2012    3Q 2011    3Q 2012    3Q 2011  
                                                                          
  Net Sales                          8.1       25.4    2,198.0    2,455.2 
  Cost of sales                     (6.1)     (14.0)  (1,751.4)  (1,888.6)
  SG&A expenses                     (1.7)      (2.8)    (197.6)    (215.7)
  Other operati
ng income                                                  
   (expenses), net                   0.0       (0.1)       3.6       (1.8)
                                                                          
Operating income                     0.2        8.5      252.5      349.1 

 
Flat steel products segment
 Operating income for the flat steel
products segment was USD188.2 million in the third quarter 2012, a
decrease of USD77.1 million compared to the third quarter 2011,
reflecting lower sales and operating costs. Sales of flat products in
the third quarter 2012 decreased 12% compared to the third quarter
2011, reflecting a decrease in shipments and revenue per ton shipped,
mainly due to lower steel prices in Ternium's main steel markets. 


 
                                                                                
                             
                               Net Sales (million USD)   Shipments (thousand 
tons)   Revenue / ton (USD/ton) 
                               3Q 2012 3Q 2011   Dif.    3Q 2012 3Q 2011    
Dif.    3Q 2012 3Q 2011    Dif.  
                                                                                
                             
  North America                  998.2  1,084.1     -8%  1,059.7  1,038.4       
 2%     942    1,044     -10%
  South & Central America        851.5  1,010.1    -16%    780.4    887.7      -
12%   1,091    1,138      -4%
  Europe & other                   2.4      4.3              3.9      6.6       
        616      646         
                              ------------------------- ------------------------
--- -------------------------
                                                                                
                             
Total flat products            1,852.2  2,098.5    -12%  1,844.0  1,932.7       
-5%   1,004    1,086      -7%

 
Operating cost decreased 9%, reflecting lower sales volumes and a
decrease in operating cost per ton mainly from lower raw material
costs. 
Long steel products segment
 Operating income for the long steel
products segment was USD64.0 million in the third quarter 2012, a
decrease of USD11.2 million compared to the third quarter 2011,
reflecting lower revenue per ton partially offset by higher
shipments. Sales of long products in the third quarter 2012 were 2%
higher than in the third quarter 2011. 


 
                                                                            
                 Net Sales (million       Shipments         Revenue / ton   
                        USD)           (thousand tons)        (USD/ton)     
                   3Q     3Q           3Q     3Q           3Q     3Q        
                  2012   2011  Dif.   2012   2011  Dif.   2012   2011  Dif. 
                                                                            
  North America   249.2  242.5    3%  324.6  300.1    8%    768    808   -5%
  South &                                                                   
   Central                                                                  
   America         88.5   88.7   -0%   96.0   92.6    4%    922    959   -4%
  Europe & other      -      -            -      -            -      -      
                 ------ ------ ----  ------ ------ ----  ------ ------ ---- 
                                                                            
Total long                                                                  
 products         337.8  331.3    2%  420.5  392.7    7%    803    844   -5%

 
Operating cost increased 8%, reflecting higher shipments and stable
operating cost per ton. 
EBITDA in the third quarter 2012 was USD339.9 million, or 15.5% of
net sales, compared with USD447.6 million, or 18.2% of net sales, in
the third quarter 2011. 
Net financial results were a USD33.8 million loss in the third
quarter 2012, compared with a USD312.4 million loss in the third
quarter 2011. 
During the third quarter 2012, Ternium's net interest results totaled
a loss of USD31.8 million, higher than a loss of USD21.1 million in
the third quarter 2011, mainly reflecting higher net indebtedness and
weighted average cost of debt. 
Net foreign exchange result was a gain of USD0.7 million in the third
quarter 2012 compared to a loss of USD257.2 million in the third
quarter 2011. The third quarter 2011 loss was primarily due to the
impact of the Mexican Peso's 13.4% devaluation on Ternium's Mexican
subsidiary's US dollar denominated debt. This non-cash result was
offset by changes in Ternium's net equity position in the currency
translation adjustments line, as the value of Ternium Mexico's US
dollar denominated debt was not altered by the Mexican Peso's
fluctuation when stated in US dollars in Ternium's consolidated
financial statements. Prior to January 1, 2012, Ternium's Mexican
subsidiaries used the Mexican Peso as functional currency, their
financial statements were prepared in Mexican Pesos and foreign
exchange results were registered on their net non-Mexican Peso
positions whenever the Mexican Peso revaluated or devaluated in
relation to those other currencies. 
Change in fair value of financial instruments included in net
financial results in the third quarter 2012 was a USD1.1 million
gain, compared with a USD30.7 million loss in the third quarter 2011.
These results were mainly related to certain derivative instruments
entered into by Ternium's Argentine subsidiary Siderar to compensate
for the interest rate charges derived from its Argentine Peso
denominated financial debt. 
Equity in results of non-consolidated companies was a loss of USD6.3
million in the third quarter 2012, compared to a gain of USD1.5
million in the third quarter 2011. Equity in results of
non-consolidated companies in the third quarter 2012 included an
USD8.2 million loss related to Ternium's acquisition during the first
quarter 2012 of an equity stake in Usiminas, which is accounted for
under the equity method, and an USD 2.0 million gain related to the
company's participation in Pena Colorada.  
Income tax expense in the third quarter 2012 was USD65.9 million, or
31% of income before income tax, compared with an income tax expense
of USD14.7 million in the same period in 2011, or 39% of income
before income tax. Income tax in the third quarter 2011 included a
non-recurrent non-cash charge of USD4.4 million due to an unfavorable
resolution on a tax-related dispute in Mexico. 
Net income attributable to non-controlling interest in the third
quarter 2012 was USD23.9 million, compared to USD17.0 million in the
same period in 2011, mainly due to a higher result attributable to
non-controlling interest in Ternium Mexico partially offset by a
lower result attributable to non-controlling interest in Siderar. 
Analysis of Results for First Nine Months of 2012 
Net income attributable to the Company's equity holders in the first
nine months of 2012 was USD393.0 million, compared to USD408.8
million in the first nine months of 2011. Including non-controlling
interest, net income in the first nine months of 2012 was USD462.2
million, compared to USD513.5 million in the first nine months of
2011. Earnings per ADS were USD2.00 in the first nine months of 2012,
compared to USD2.08 in the first nine months of 2011. 
Net sales were USD6.5 billion in the first nine months of 2012, 6%
lower than net sales in the first nine months of 2011. Shipments of
flat and long products were 6.6 million tons in the first nine months
of 2012, or 1% lower compared to shipments in the first nine months
of 2011, with lower shipments in South & Central America partially
offset by higher shipments in North America. Revenue per ton shipped
was USD987 in the first nine months of 2012, a 4% decrease compared
to the first nine months of 2
011, mainly as a result of lower flat
steel prices in Mexico. 
The following table shows Ternium's total consolidated net sales,
shipments and revenue per ton for the first nine months of 2012 and
2011: 


 
                                                                            
            Net Sales (million    Shipments (thousand      Revenue / ton    
                   USD)                  tons)               (USD/ton)      
                                                                            
           9M 2012 9M 2011 Dif.  9M 2012 9M 2011 Dif.  9M 2012 9M 2011 Dif. 
                                                                            
  North                                                                     
   America 3,773.9 3,801.5   -1% 4,059.2 3,845.5    6%     930     989   -6%
  South &                                                                   
   Central                                                                  
   America 2,734.6 3,025.0  -10% 2,529.7 2,797.6  -10%   1,081   1,081    0%
  Europe &                                                                  
   other       7.1    19.8          11.1    26.6           642     744      
           ------- ------- ----  ------- ------- ----  ------- ------- ---- 
                                                                            
Total flat                                                                  
 and long                                                                   
 products  6,515.6 6,846.3   -5% 6,600.0 6,669.7   -1%     987   1,026   -4%
                                                                            
Other                                                                       
 products                                                                   
 (*)          21.5    76.0  -72%                                            
           ------- ------- ----                                             
                                                                            
Total net                                                                   
 sales     6,537.1 6,922.3   -6%                                            
                                                                            
(*) Primarily includes iron ore, pig iron and pre-engineered metal          
 buildings.                                                                 

 
Sales of flat and long products in the North America Region were
USD3.8 billion in the first nine months of 2012, a decrease of 1%
compared to the first nine months of 2011, mainly due to lower
revenue per ton, partially offset by higher shipments. Shipments in
the region totaled 4.1 million tons in the first nine months of 2012,
a 6% increase compared to the first nine months of 2011. Revenue per
ton shipped in the region decreased 6% to USD930 in the first nine
months of 2012 over the first nine months of 2011. 
Flat and long product sales in the South & Central America Region
were USD2.7 billion in the first nine months of 2012, a decrease of
10% compared to the first nine months of 2011, due to lower
shipments. Shipments in the region totaled 2.5 million tons in the
first nine months of 2012, or 10% lower than in the first nine months
of 2011. Revenue per ton shipped was USD1,081, which was stable
compared to the same period in 2011. 
Sales of other products were USD21.5 million in the first nine months
of 2012, compared to USD76.0 million in the first nine months of
2011, a reduction mainly related to lower iron ore sales. 
Cost of sales was USD5.1 billion in the first nine months of 2012, a
decrease of USD153.3 million, or 3%, compared to the first nine
months of 2011. This was due to a USD173.1 million, or 4%, decrease
in raw material and consumables used, mainly reflecting a decrease in
raw material costs and lower sales volumes, partially offset by a
USD19.8 million increase in other costs, including a USD37.7 million
increase in maintenance expenses, an USD18.0 million increase in
labor costs and a USD23.5 million decrease in depreciation of
property, plant and equipment and amortization of intangible assets. 
Selling, General & Administrative (SG&A) expenses in the first nine
months of 2012 were USD612.2 million, or 9.4% of net sales, a
decrease of USD26.0 million compared to the first nine months of
2011, including a USD12.2 million decrease in depreciation of
property, plant and equipment and amortization of intangible assets,
a USD9.5 million decrease in freight and transportation expenses and
a USD7.8 million decrease in maintenance expenses, partially offset
by a USD8.3 million increase in labor expenses. 
Operating income in the first nine months of 2012 was USD793.2
million, or 12% of net sales, compared to operating income of
USD980.4 million, or 14% of net sales, in the first nine months of
2011. 


 
                                                                            
                                                            Long steel      
                                   Flat steel products       products       
           USD million             9M 2012    9M 2011    9M 2012   9M 2011  
                                                                            
  Net Sales                         5,508.2    5,935.3    1,007.4    911.0  
  Cost of sales                    (4,377.1)  (4,599.2)    (744.6)  (652.8) 
  SG&A expenses                      (522.9)    (550.8)     (84.2)   (78.3) 
  Other operating income                                                    
   (expenses), net                      4.8      (14.2)       3.0      3.0  
                                                                            
Operating income (expenses)           613.0      771.1      181.5    182.9  
                                                                            
 
                                                                          
                                         Other                Total       
           USD million            9M 2012    9M 2011    9M 2012   9M 2011 
                                                                          
  Net Sales                           21.5       76.0    6,537.1  6,922.3 
  Cost of sales                                                   (5,292. 
                                     (17.7)     (40.7)  (5,139.4)       7)
  SG&A expenses                       (5.1)      (9.1)    (612.2)  (638.2)
  Other operating income                                                  
   (expenses), net                     0.0        0.2        7.8    (11.0)
                                                                          
Operating income (expenses)           (1.3)      26.3      793.2    980.4 

 
Flat steel products segment
 The flat steel products segment's
operating income was USD613.0 million in the first nine months of
2012, a decrease of USD158.1 million compared to the first nine
months of 2011, reflecting lower sales and operating cost. Sales of
flat products in the first nine months of 2012 decreased 7% compared
to the first nine months of 2011, reflecting a 3% decrease in
shipments, due to lower shipments in the South & Central America
Region partially offset by higher shipments in the North America
Region, and a 4% decrease in revenue per ton shipped, mainly due to
lower prices in the North America Region.  


 
                                                                            
                            Net Sales                   Shipments           
                           (million USD)              (thousand tons)       
                      9M 2012    9M 2011  Dif.    9M 2012    9M 2011  Dif.  
                                                                            
  North America        3,033.9    3,157.1   -4%    3,114.0    3,0
32.6    3% 
  South & Central                                                           
   America             2,467.3    2,758.3  -11%    2,244.3    2,488.5  -10% 
  Europe & other           7.0       19.8             10.8       26.6       
                    ---------- ---------- ----  ---------- ---------- ----  
                                                                            
Total flat products    5,508.2    5,935.3   -7%    5,369.1    5,547.7   -3% 
                                                                            
 
                                               
                          Revenue / ton        
                             (USD/ton)         
                      9M 2012    9M 2011  Dif. 
                                               
  North America            974      1,041   -6%
  South & Central                              
   America               1,099      1,108   -1%
  Europe & other           642        744      
                    ---------- ---------- ---- 
                                               
Total flat products      1,026      1,070   -4%

 
Operating cost decreased 5%, reflecting lower sales volumes and a
decrease in operating cost per ton mainly from lower raw material
costs. 
Long steel products segment
 The long steel products segment's
operating income was USD181.5 million in the first nine months of
2012, stable when compared to operating income in the first nine
months of 2011, reflecting higher sales and operating costs. Sales of
long products in the first nine months of 2012 increased 11% compared
to the first nine months of 2011, reflecting a 10% increase in
shipments, due to higher shipments in the North America Region
partially offset by lower shipments in the South & Central America
Region, and a 1% increase in revenue per ton.  


 
                                                                            
                   Net Sales            Shipments           Revenue / ton   
                 (million USD)        (thousand tons)         (USD/ton)     
                        9M                                 9M     9M        
              9M 2012  2011  Dif.  9M 2012 9M 2011 Dif.   2012   2011  Dif. 
                                                                            
  North                                                                     
   America      740.0  644.3   15%   945.3   812.9   16%    783    793   -1%
  South &                                                                   
   Central                                                                  
   America      267.2  266.7    0%   285.4   309.0   -8%    936    863    8%
  Europe &                                                                  
   other          0.2    0.0           0.3     0.0          623  1,507      
              ------- ------ ----  ------- ------- ----  ------ ------ ---- 
                                                                            
Total long                                                                  
 products     1,007.4  911.0   11% 1,230.9 1,122.0   10%    818    812    1%

 
Operating cost in the first nine months of 2012 increased 13%
year-over-year, reflecting higher sales volumes and an increase in
operating cost per ton mainly related to higher raw material costs. 
EBITDA in the first nine months of 2012 was USD1.1 billion, or 16.2%
of net sales, compared to USD1.3 million, or 18.5% of net sales, in
the first nine months of 2011. 
Net financial results were an USD88.6 million loss in the first nine
months of 2012, compared with a USD232.2 million loss in the first
nine months of 2011. 
In the first nine months of 2012, Ternium's net interest results
totaled a USD97.6 million loss, a USD62.8 million higher loss than in
the first nine months of 2011, mainly reflecting higher net
indebtedness and weighted average cost of debt. 
Net foreign exchange result was a gain of USD7.8 million in the first
nine months of 2012 compared to a USD164.1 million loss in the first
nine months of 2011. The first nine months of 2011 loss was primarily
due to the impact of the Mexican Peso's 8.6% devaluation on Ternium's
Mexican subsidiary's US dollar denominated debt. This non-cash result
was offset by changes in Ternium's net equity position in the
currency translation adjustments line, as the value of Ternium
Mexico's US dollar denominated debt was not altered by the Mexican
Peso's fluctuation when stated in US dollars in Ternium's
consolidated financial statements. Prior to January 1, 2012,
Ternium's Mexican subsidiaries used the Mexican Peso as functional
currency, their financial statements were prepared in Mexican Pesos
and foreign exchange results were registered on their net non-Mexican
Peso positions whenever the Mexican Peso revaluated or devaluated in
relation to those other currencies. 
Change in fair value of financial instruments included in net
financial results in the first nine months of 2012 was an USD11.7
million gain, compared with a USD24.2 million loss in the first nine
months of 2011. These results were mainly related to certain
derivative instruments entered into by Ternium's Argentine subsidiary
Siderar to compensate for the interest rate charges derived from its
Argentine Peso denominated financial debt. 
Equity in results of non-consolidated companies was a loss of USD9.3
million in the first nine months of 2012, compared to a gain of
USD7.5 million in the first nine months of 2011. Equity in results of
non-consolidated companies in the first nine months of 2012 included
an USD18.8 million loss related to Ternium's acquisition of an equity
stake in Usiminas, which is accounted for under the equity method,
and a USD9.3 million gain related to the company's participation in
Pena Colorada.  
Income tax expense in the first nine months of 2012 was USD233.1
million, or 34% of income before income tax, compared with an income
tax expense of USD242.2 million in the first nine months of 2011, or
32% of income before income tax.  
Net income attributable to non-controlling interest in the first nine
months of 2012 was USD69.1 million, compared to USD104.7 million in
the first nine months of 2011, mainly due to a lower result
attributable to non-controlling interest in Siderar partially offset
by a higher result attributable to non-controlling interest in
Ternium Mexico. 
Cash Flow and Liquidity 
Net cash provided by operating activities in the first nine months of
2012 was USD778.6 million. Working capital increased USD80.2 million
in the first nine months of 2012 as a result of an aggregate USD77.8
million increase in trade and other receivables and a USD38.4 million
increase in inventories, partially offset by an aggregate USD36.1
million increase in accounts payable and other liabilities.
Inventories increased in the first nine months of 2012 mainly
reflecting higher volumes of raw materials, partially offset by lower
volumes and costs of purchased steel. 
Capital expenditures in the first nine months of 2012 were USD710.2
million. Ternium's ongoing projects included, among others, in Mexico
the construction of a greenfield facility for the manufacture of cold
rolled and galvanized steel products and the development of mining
activities, and, in Argentina, the investment in new equipment and
enhancements in the steel shop, repairs and enhancements at the
coking and blast furnace areas, and the expansion and enhancements of
the hot strip mill. In addition, the company completed during the
period the revamping and expansion of two galvanizing units in
Argentina and Guatemala. 
In the first nine months of 2012, Ternium had free cash flow of
USD68.4 million(8). In addition, the company acquired an equity stake
in Usiminas' control group for USD2.2 billion. Ternium's net proceeds
from borrowings in the first nine months of 2012 were USD33
8.4
million, mainly due to a USD700.0 million syndicated term loan
obtained to finance Ternium's acquisition of a stake in Usiminas and
net proceeds of short-term debt, partially offset by the scheduled
repayments of Ternium Mexico's outstanding debt. In addition, net
dividends paid to shareholders were USD147.2 million and net
dividends paid to minority shareholders were USD15.9 million. As of
September 30, 2012, Ternium's net debt position was USD1.8(9)
billion.  
Net cash provided by operating activities in the third quarter 2012
was USD335.9 million. Working capital decreased USD89.9 million in
the third quarter 2012 as a result of an USD101.1 million decrease in
inventories and an aggregate USD41.7 million net decrease in trade
and other receivables, partially offset by an aggregate USD52.9
million net decrease in accounts payable and other liabilities.
Inventories decreased in the third quarter 2012 mainly reflecting
lower volumes and prices of purchased steel, partially offset by
higher volumes of raw materials. Capital expenditures in the third
quarter 2012 were USD303.7 million. Ternium had free cash flow of
USD32.2 million(10) in the period.  
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 company in Latin America, with an annual
production capacity of approximately 10.8 million tons of finished
steel products. The company manufactures and processes a wide range
of flat and long steel products for customers active in the
construction, home appliances, capital goods, container, food, energy
and automotive industries. With its principal operations in Mexico
and Argentina, Ternium serves markets in the Americas through its
integrated manufacturing system and extensive distribution network.
In addition, Ternium participates in the control group of Usiminas, a
Brazilian steel company. More information about Ternium is available
at www.ternium.com. 
(1) Ternium changed prospectively the functional currency of its
Mexican subsidiaries to the US dollar, effective as of January 1,
2012. For all periods prior to January 1, 2012, the functional
currency for the Company's Mexican subsidiaries was the Mexican peso. 
(2) In accordance with changes introduced by applicable IFRS, certain
comparative amounts have been reclassified to conform to the
deconsolidation of Pena Colorada, effective as of January 1, 2012.
Pena Colorada was proportionally consolidated until December 31,
2011. 
(3) EBITDA in the third quarter 2012 equals operating income of
USD252.5 million adjusted to exclude depreciation and amortization of
USD87.4 million. 
(4) Each American Depositary Share (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. 
(5) Flat and long steel products operating cost per ton is equal to
flat and long steel products cost of sales plus flat and long steel
products SG&A, divided by shipments. 
(6) EBITDA in the first nine months of 2012 equals operating income
of USD793.2 million adjusted to exclude depreciation and amortization
of USD266.7 million. 
(7) Results are based on a weighted average number of shares of
common stock outstanding (net of treasury shares) of 1,963,076,776 in
the first nine months of 2012 and 1,970,097,533 in the first nine
months of 2011. 
(8) Free cash flow in the first nine months of 2012 equals net cash
provided by operating activities of USD778.6 million less capital
expenditures of USD710.2 million. 
(9) Net debt position at September 30, 2012 equals borrowings of
USD2.3 billion less cash and equivalents plus other investments of
USD0.5 billion. 
(10) Free cash flow in the third quarter 2012 equals net cash
provided by operating activities of USD335.9 million less capital
expenditures of USD303.7 million. 


 
                                                                            
                                                                            
Consolidated income statement                                               
                                                                            
           USD million            3Q 2012    3Q 2011    9M 2012    9M 2011  
                                      (Unaudited)           (Unaudited)     
                                                                            
  Net sales                        2,198.0    2,455.2    6,537.1    6,922.3 
                                                                            
  Cost of sales                   (1,751.4)  (1,888.6)  (5,139.4)  (5,292.7)
                                 ---------  ---------  ---------  --------- 
Gross profit                         446.5      566.6    1,397.7    1,629.5 
                                                                            
  Selling, general and                                                      
   administrative expenses          (197.6)    (215.7)    (612.2)    (638.2)
  Other operating income                                                    
   (expenses), net                     3.6       (1.8)       7.8      (11.0)
                                 ---------  ---------  ---------  --------- 
                                                                            
Operating income                     252.5      349.1      793.2      980.4 
                                                                            
  Interest expense                   (35.2)     (28.3)    (112.5)     (68.7)
  Interest income                      3.4        7.2       14.9       33.9 
  Other financial (expenses)                                                
   income, net                        (2.0)    (291.4)       9.0     (197.3)
  Equity in (losses) earnings of                                            
   non-consolidated companies         (6.3)       1.5       (9.3)       7.5 
                                 ---------  ---------  ---------  --------- 
                                                                            
Income before income tax expense     212.4       38.1      695.3      755.7 
                                                                            
Income tax expense                   (65.9)     (14.7)    (233.1)    (242.2)
Profit for the period                146.6       23.4      462.2      513.5 
                                                                            
Attributable to:                                                            
  Equity holders of the Company      122.6        6.4      393.0      408.8 
  Non-controlling interest            23.9       17.0       69.1      104.7 
  Profit for the period              146.6       23.4      462.2      513.5 
                                                                            
                                                                            
                                                                            
Consolidated balance sheet                                                  
                                               September 30,   December 31, 
                  USD million                       2012           2011     
                                                                            
                                                 (Unaudited)                
  Property, plant and equipment, net               
   4,309.6        3,969.2
  Intangible assets, net                                970.7          977.7
  Investments in non-consolidated companies           2,054.3           94.9
  Other investments                                       7.1           14.1
  Deferred tax assets                                    13.8            8.1
  Receivables, net                                       87.2          124.2
  Trade receivables, net                                  4.6            7.5
                                               -------------- --------------
Total non-current assets                              7,447.3        5,195.7
  Receivables                                           143.1           91.5
  Derivative financial instruments                          -            0.1
  Inventories, net                                    2,091.5        2,123.5
  Trade receivables, net                                813.1          745.9
  Sidor financial asset                                 136.7          136.3
  Other investments                                     162.2          281.7
  Cash and cash equivalents                             327.6        2,158.0
                                               -------------- --------------
Total current assets                                  3,674.2        5,537.0
Non-current assets classified as held for sale            5.0           10.4
                                               -------------- --------------
                                                                            
Total assets                                         11,126.5       10,743.1
Capital and reserves attributable to the                                    
 company's equity holders                             5,712.2        5,756.4
Non-controlling interest                              1,116.2        1,084.8
                                                                            
Total Equity                                          6,828.4        6,841.2
  Provisions                                             17.3           15.3
  Deferred income tax                                   691.1          740.6
  Other liabilities                                     236.7          197.0
  Trade payables                                         19.1           21.1
  Borrowings                                          1,229.0          948.5
                                               -------------- --------------
Total non-current liabilities                         2,193.2        1,922.5
  Current tax liabilities                               214.6          106.6
  Other liabilities                                     123.9          112.9
  Trade payables                                        695.6          682.3
  Derivative financial instruments                        0.9           29.9
  Borrowings                                          1,069.9        1,047.6
                                               -------------- --------------
Total current liabilities                             2,104.9        1,979.4
Total liabilities                                     4,298.1        3,901.9
                                                                            
Total equity and liabilities                         11,126.5       10,743.1
                                                                            
                                                                            
                                                                            
Consolidated cash flow statement                                            
           USD million            3Q 2012    3Q 2011    9M 2012    9M 2011  
                                      (Unaudited)           (Unaudited)     
                                                                            
Profit for the period                146.6       23.4      462.2      513.5 
  Adjustments for:                                                          
  Depreciation and amortization       87.4       98.5      266.7      302.3 
  Equity in losses (earnings) of                                            
   non-consolidated companies          6.3       (1.5)       9.3       (7.5)
  Changes in provisions                0.7        0.4        4.7       28.0 
  Net foreign exchange results                                              
   and others                         30.1      271.4       59.9      151.3 
  Interest accruals less                                                    
   payments                          (18.3)       7.0      (13.1)      18.1 
  Income tax accruals less                                                  
   payments                           (6.7)    (104.2)      69.1     (250.2)
  Changes in working capital          89.9     (167.5)     (80.2)    (573.5)
                                 ---------  ---------  ---------  --------- 
                                                                            
Net cash provided by operating                                              
 activities                          335.9      127.5      778.6      182.2 
                                                                            
  Capital expenditures              (303.7)    (163.5)    (710.2)    (426.4)
  Proceeds from the sale of                                                 
   property, plant & equipment         0.5        0.4        1.5        1.4 
  Acquisition of business                                                   
    Purchase consideration               -          -   (2,243.6)         - 
  Dividends received from non-                                              
   consolidated companies                -          -        4.7          - 
  Decrease in Other Investments       14.6      165.4      126.5      193.0 
  Proceeds from Sidor financial                                             
   asset                                 -       63.7          -      133.1 
                                 ---------  ---------  ---------  --------- 
                                                                            
Net cash (used in) provided by                                              
 investing activities               (288.6)      66.0   (2,821.2)     (98.9)
                                                                            
  Dividends paid in cash to                                                 
   company's shareholders                -          -     (147.2)    (147.2)
  Dividends paid in cash by                                                 
   subsidiary companies                  -     (140.6)     (15.9)    (140.6)
  Contributions from non-                                                   
   controlling shareholders in                                              
   consolidated subsidiaries          12.3        9.8       41.7       39.2 
  Repurchase of treasury shares          -          -          -     (150.0)
  Proceeds from borrowings           140.3      271.7    1,038.2      612.2 
  Repayments of borrowings          (357.5)    (274.0)    (699.8)    (572.1)
                                 ---------  ---------  ---------  --------- 
                                                                            
Net cash (used in) provided by                                              
 financing activities               (205.0)    (133.1)     216.9     (358.5)
                                                                            
(Decrease) Increase in cash and                                             
 cash equivalents                   (157.8)      60.4   (1,825.6)    (275.2)
                                  Shipments                                 
       Thousand tons        3Q 2012   3Q 2011   2Q 2012   9M 2012   9M 2011 
  North America              1,059.7   1,038.4   1,011.8   3,114.0   3,032.6
  South & Central America      780.4     887.7     749.9   2,244.3   2,488.5
  Europe & other                 3.9       6.6       
4.0      10.8      26.6
                           --------- --------- --------- --------- ---------
Total flat products          1,844.0   1,932.7   1,765.7   5,369.1   5,547.7
  North America                324.6     300.1     319.2     945.3     812.9
  South & Central America       96.0      92.6      88.1     285.4     309.0
  Europe & other                   -         -       0.3       0.3       0.0
                           --------- --------- --------- --------- ---------
Total long products            420.5     392.7     407.6   1,230.9   1,122.0
                                                                            
Total flat and long                                                         
 products                    2,264.5   2,325.4   2,173.3   6,600.0   6,669.7
                                                                            
                                Revenue / ton                               
          USD/ton           3Q 2012   3Q 2011   2Q 2012   9M 2012   9M 2011 
  North America                  942     1,044       992       974     1,041
  South & Central America      1,091     1,138     1,087     1,099     1,108
  Europe & other                 616       646       675       642       744
                           --------- --------- --------- --------- ---------
Total flat products            1,004     1,086     1,032     1,026     1,070
  North America                  768       808       763       783       793
  South & Central America        922       959       932       936       863
  Europe & other                   -         -       623       623     1,507
                           --------- --------- --------- --------- ---------
Total long products              803       844       800       818       812
                                                                            
Total flat and long                                                         
 products                        967     1,045       989       987     1,026
                                                                            
                                  Net Sales                                 
        USD million         3Q 2012   3Q 2011   2Q 2012   9M 2012   9M 2011 
  North America                998.2   1,084.1   1,004.1   3,033.9   3,157.1
  South & Central America      851.5   1,010.1     815.5   2,467.3   2,758.3
  Europe & other                 2.4       4.3       2.7       7.0      19.8
                           --------- --------- --------- --------- ---------
Total flat products          1,852.2   2,098.5   1,822.3   5,508.2   5,935.3
  North America                249.2     242.5     243.6     740.0     644.3
  South & Central America       88.5      88.7      82.2     267.2     266.7
  Europe & other                   -         -       0.2       0.2       0.0
                           --------- --------- --------- --------- ---------
Total long products            337.8     331.3     326.0   1,007.4     911.0
                           --------- --------- --------- --------- ---------
Total flat and long                                                         
 products                    2,189.9   2,429.8   2,148.3   6,515.6   6,846.3
Other products (1)               8.1      25.4       8.9      21.5      76.0
                           --------- --------- --------- --------- ---------
                                                                            
Total net sales              2,198.0   2,455.2   2,157.2   6,537.1   6,922.3
                                                                            
(1) Primarily includes iron ore, pig iron and pre-engineered metal          
buildings.                                                                  

  
Sebastian Marti 
Ternium 
Investor Relations 
+1 (866) 890 0443 
+54 (11) 4018 2389 
www.ternium.com 
 
 
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