Ternium Announces Fourth Quarter and Full Year 2012 Results

Ternium Announces Fourth Quarter and Full Year 2012 Results 
LUXEMBOURG -- (Marketwire) -- 02/20/13 --  Ternium S.A. (NYSE: TX)
today announced its results for the fourth quarter and twelve-month
period ended December 31, 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 Fourth Quarter 2012 Results  


 
                                                                            
                                 4Q 2012(1)    3Q 2012(1)      4Q 2011(2)   
                                                                            
Steel Shipments (tons)            2,168,000  2,265,000   -4% 2,154,000    1%
Iron Ore Shipments (tons)           497,000    451,000   10%   466,000    7%
Net Sales (USD million)             2,071.0    2,198.0   -6%   2,200.6   -6%
Operating Income (USD million)        122.7      252.5  -51%     271.5  -55%
EBITDA (USD million)                  226.8      339.9  -33%     365.2  -38%
EBITDA Margin (% of net sales)           11%        15%             17%     
Net Foreign Exchange Result (USD                                            
 million)                               3.6        0.7           (72.0)     
Equity in Results of non-                                                   
 consolidated Companies              (337.5)      (6.3)            2.6      
Net (Loss) Income (USD million)      (275.0)     146.6           136.4      
Equity Holders' Net (Loss)                                                  
 Income (USD million)                (253.8)     122.6           104.7      
(Losses) Earnings per ADS (USD)       (1.29)      0.62            0.53      
                                                                            
                                                                            

 
--  EBITDA(3) of USD226.8 million in the fourth quarter 2012, USD113.1
    million lower than EBITDA in the third quarter 2012 mainly as a result
    of 6% lower net sales and 3% higher steel operating cost per ton(4).
--  EBITDA in the fourth quarter 
2012 included non-recurring charges of
    USD19.9 million related to write-downs of PP&E.
--  USD345.1 million loss in the fourth quarter 2012 related to the
    investment in Usiminas, including a USD275.3 million impairment of
    goodwill.
--  Loss per American Depositary Share (ADS)(5) of USD1.29 in the fourth
    quarter 2012, a USD1.92 lower result than in the third quarter 2012
    mainly due to a USD1.52 per ADS loss related to the investment in
    Usiminas and lower operating income.
--  Capital expenditures of USD312.4 million in the fourth quarter 2012.
--  Net debt position of USD1.7 billion at the end of December 2012, down
    from USD1.8 billion at the end of September 2012.

  
Ternium's net sales were 6% down in the fourth quarter 2012 compared to
the third quarter 2012, mainly as a result of seasonally lower steel
shipments in Mexico and lower steel revenue per ton. Operating income
was USD122.7 million, a sequential decrease of USD129.8 million
mainly related to a lower operating income in the steel segment due
to a USD19 decrease in revenue per ton, a USD28 increase in operating
cost per ton and a 96,000 ton decrease in shipments. The steel
segment's operating cost per ton increased mainly due to higher costs
of third party slabs in Mexico and efficiency losses resulting from a
stoppage in a blast furnace in Argentina. In addition, other income
and expenses included in the quarter non-recurring charges of USD19.9
million related to write-downs of PP&E. Ternium's net loss in the
fourth quarter 2012 was USD275.0 million, a USD421.6 million lower
result compared to net income in the third quarter 2012, mainly due
to a USD336.9 million higher loss related to the investment in
Usiminas and a lower operating income, partially offset by a
consequently lower income tax expense. 
Operating income in the fourth quarter 2012 was USD148.8 million
lower than in the fourth quarter 2011 mainly due to a USD57 decrease
in steel revenue per ton and the above mentioned write-downs of PP&E.
Net result in the fourth quarter 2012 was USD411.4 million lower
year-over-year mainly as a result of the above mentioned losses
related to the investment in Usiminas and lower operating income,
partially offset by lower net financial expenses and a consequently
lower income tax expense. 
Summary of Full Year 2012 Results 


 
                                                                            
                                               FY 2012(1)      FY 2011(1)   
                                                                            
Steel Shipments (tons)                          8,768,000   8,824,000    -1%
Iron Ore Shipments (tons)                       1,863,000   2,050,000    -9%
Net Sales (USD million)                           8,608.1     9,122.8    -6%
Operating Income (USD million)                      915.9     1,251.8   -27%
EBITDA (USD million)                              1,286.8     1,647.8   -22%
EBITDA Margin (% of net sales)                         15%         18%      
Net Foreign Exchange Result (USD million)            11.4      (236.1)      
Equity in Results of non-consolidated                                       
 Companies                                         (346.8)       10.1       
Net Income (USD million)                            187.2       649.9       
Equity Holders' Net Income (USD million)            139.2       513.5       
Earnings per ADS (USD)                               0.71        2.61       
                                                                            
                                                                            

 
--  EBITDA(6) of USD1.3 billion in 2012, down 22% compared to EBITDA in
    the previous year, mainly as a result of lower net sales partially
    offset by slightly lower steel operating cost per ton.
--  Earnings per ADS(7) of USD0.71 during the year, USD1.90 lower than in
    2011 mainly due to losses related to the investment in Usiminas and
    lower operating income, partially offset by lower net financial
    expenses.
--  Net cash provided by operating activities of USD1.1 billion in 2012
    and capital expenditures of USD1.0 billion.

  
Ternium's operating income in 2012 was USD915.9 million, USD335.9
million lower than its operating income in the previous year mainly
as a result of a USD43 lower steel revenue per ton, partially offset
by a slight decrease in steel operating cost per ton.  
Ternium's net income in 2012 was USD187.2 million, a decrease of
USD462.8 million year-over-year, mainly due to a USD363.9 million
loss related to the investment in Usiminas and the above mentioned
USD335.9 million lower operating income, partially offset by a
USD183.1 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 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 2012, partially offset by higher net
interest expenses due to a higher net indebtedness. 
Us
iminas 
In accordance with IFRS guidance, Ternium performed an impairment
test of its investment in Usiminas and subsequently wrote down such
investment by USD275.3 million. This charge was recorded in the
fourth quarter 2012. The impairment was mainly due to expectations of
a weaker industrial environment in Brazil, where industrial
production and consequently steel demand have been suffering downward
adjustments. In addition, a higher degree of uncertainty regarding
future prices of iron ore led to a reduction in Ternium's forecast of
long term iron ore prices that affected cash flow expectations. 
In the fourth quarter 2012, Ternium's investment in Usiminas, which
is accounted for under the equity method, contributed a total loss of
USD345.1 million mainly as a result of the above mentioned
impairment, a USD51.5 million depreciation related to the difference
between the fair value and book value of fixed assets and an USD18.3
million loss from net losses in the quarter. Consequently, the book
value of Usiminas, as reflected in Ternium's financial statements,
decreased from USD1.9 billion as of September 30, 2012, to USD1.6
billion as of December 31, 2012. 
Changes in Segment Reporting 
Following a new internal organization and reporting in Ternium, the
company has changed its operating segments as from the financial
statements ended on December 31, 2012. The new reporting segments are
Steel and Mining. In addition, Ternium changed its reporting of
geographical information as follows: Mexico, Southern Region
(includes Argentina, Bolivia, Chile, Paraguay and Uruguay) and Other
Markets (mainly includes Colombia, United States and Central
America). 
Annual Dividend Proposal 
Ternium's board of directors proposed that an annual dividend of
USD0.065 per share (USD0.65 per ADS), or approximately USD130.3
million in the aggregate, be approved at the company's annual general
shareholders' meeting, which is scheduled to be held on May 2, 2013.
If the annual dividend is approved at the shareholders' meeting, it
will be paid on May 10, 2013. 
Outlook 
Ternium expects apparent steel use in Latin America to increase its
growth pace during 2013, with higher construction and industrial
activity driving the increased demand for steel products.  
In Mexico the company will initiate the ramp-up phase of its new
facilities in Pesqueria during the third quarter of the year, with
the goal of providing the Mexican automotive sector, which is
expected to continue growing strongly, with high specification
galvanized products. 
Ternium expects a higher operating income in the first quarter 2013
compared to the fourth quarter 2012, mainly as a result of higher
sales, driven by an increase in steel shipments, and a reduction in
steel cost per ton due to lower raw material and purchased slab costs
and the restart of Blast Furnace #2 in Argentina. 
Analysis of Fourth Quarter 2012 Results  
Net loss attributable to Ternium's equity holders in the fourth
quarter 2012 was USD253.8 million, compared to a net income of
USD104.7 million in the fourth quarter 2011. Including
non-controlling interest, net loss for the fourth quarter 2012 was
USD275.0 million, compared to a net income of USD136.4 million in the
fourth quarter 2011. Loss per ADS in the fourth quarter 2012 was
USD1.29, compared to an earning of USD0.53 in the fourth quarter
2011. 
Net sales in the fourth quarter 2012 were USD2.1 billion, 6% lower
than net sales in the fourth quarter 2011, mainly as a result of
lower net sales in the Southern Region and Mexico. The following
table shows Ternium's total consolidated net sales for the fourth
quarter 2012 and the fourth quarter 2011: 


 
                                                                            
                                              Net Sales (million USD)       
                                                                            
                                            4Q 2012        4Q 2011     Dif. 
                                                                            
  Mexico                                       1,047.2        1,099.2    -5%
  Southern Region                                692.3          766.7   -10%
  Other Markets                                  331.4          334.6    -1%
                                        -------------- -------------- ----- 
                                                                            
Total steel and mining segments                2,071.0        2,200.6    -6%

 
Cost of sales was USD1.7 billion in the fourth quarter 2012, a
decrease of USD0.8 million compared to the fourth quarter 2011. This
was due to a USD22.6 million, or 2%, decrease in raw material and
consumables used, mainly reflecting a decrease in raw material costs,
offset by a USD21.8 million increase in other costs, including a
USD17.7 million increase in maintenance expenses, a USD10.5 million
increase in depreciation of property, plant and equipment and
amortization of intangible assets, and a USD4.7 million decrease in
services and fees. 
Selling, General & Administrative (SG&A) expenses in the fourth
quarter 2012 were USD197.0 million, or 9.5% of net sales, an increase
of USD0.9 million compared to the fourth quarter 2011, mainly
including a USD3.7 million increase in labor expenses and a USD2.5
million increase in freight and transportation expenses, partially
offset by a USD2.9 million decrease in maintenance expenses and a
USD1.1 million decrease in services and fees expenses. 
Other net operating expenses in the fourth quarter 2012 was USD19.7
million, USD19.1 million higher than in the fourth quarter 2011
mainly as a result of write-downs of PP&E. 
Operating income in the fourth quarter 2012 was USD122.7 million, or
5.9% of net sales, compared to operating income of USD271.5 million,
or 12.3% of net sales, in the fourth quarter 2011. The following
table shows Ternium's operating income by segment for the fourth
quarter 2012 and the fourth quarter 2011. 


 
                                                                            
                                  Mining     Intersegment                   
              Steel segment      segment     eliminations        Total      
                                4Q     4Q     4Q     4Q                     
USD million 4Q 2012  4Q 2011   2012   2011   2012   2011   4Q 2012  4Q 2011 
                                                                            
Net Sales    2,064.3  2,171.4   47.1   49.9 (40.4) (20.7)   2,071.0  2,200.6
Cost of                                                                     
 sales     (1,746.9)(1,719.7) (24.7) (38.9)   40.0   26.2 (1,731.6)(1,732.5)
SG&A                                                                        
 expenses    (196.2)  (194.9)  (0.8)  (1.1)      -      -   (197.0)  (196.0)
Other                                                                       
 operating                                                                  
 (expenses)                                                                 
 income,                                                                    
 net          (19.7)    (0.5)    0.0    0.0      -      -    (19.7)    (0.5)
                                             
                               
Operating                                                                   
 income        101.5    256.2   21.6    9.9  (0.4)    5.4     122.7    271.5
                                                                            
EBITDA         201.4    345.6   25.9   14.1  (0.4)    5.4     226.8    365.2
                                                                            
EBITDA per                                                                  
 ton              93      160     52     30                                 

 
Steel reporting segment 


 
                                                                            
                 Net Sales (million   Shipments (thousand    Revenue / ton  
                        USD)                 tons)             (USD/ton)    
                                                                            
                 4Q2012  4Q2011 Dif.  4Q2012  4Q2011 Dif. 4Q2012 4Q2011 Dif.
                                                                            
 Mexico         1,041.1 1,079.3  -4% 1,219.7 1,182.2   3%    854    913  -7%
 Southern                                                                   
  Region          691.5   765.2 -10%   597.7   676.3 -12%  1,157  1,131   2%
 Other Markets    323.8   319.1   1%   350.8   295.4  19%    923  1,080 -15%
                ------- ------- ---- ------- ------- ---- ------ ------ ----
                                                                            
Total Steel                                                                 
 products       2,056.4 2,163.6  -5% 2,168.2 2,153.9   1%    948  1,005  -6%
 Other products                                                             
  (1)               7.9     7.7   2%                                        
                ------- ------- ----                                        
                                                                            
Total Steel                                                                 
 segment        2,064.3 2,171.4  -5%                                        
(1) Primarily includes pig iron and                                         
 pre-engineered metal buildings.                                            

 
Net sales of steel products in the fourth quarter 2012 decreased 5%
compared to the fourth quarter 2011, reflecting a USD57 decrease in
steel revenue per ton shipped, mainly due to lower steel prices in
Mexico and Other Markets. Shipments increased 14,000 tons, or 1%,
compared to the fourth quarter 2011, mainly due to higher sales
volume in Mexico and Other Markets, partially offset by lower
shipments in the Southern Region. 
Operating income for the steel segment was USD101.5 million in the
fourth quarter 2012, a decrease of USD154.7 million compared to the
fourth quarter 2011, reflecting higher shipments, lower revenue per
ton and a slightly higher operating cost per ton. In addition, other
income and expenses included in the quarter non-recurring charges of
USD19.9 million related to write-downs of PP&E. 
Mining reporting segment 
Sales of mining products in the fourth quarter 2012 were 6% lower
than in the fourth quarter 2011 mainly due to higher shipments and
lower revenue per ton. Shipments were 497,000 tons, 7% higher than in
the fourth quarter 2011. 
Operating income for the mining segment was USD21.6 million in the
fourth quarter 2012, an increase of USD11.7 million compared to the
fourth quarter 2011, reflecting higher shipments and lower operating
cost per ton, partially offset by lower revenue per ton.  
EBITDA in the fourth quarter 2012 was USD226.8 million, or 11.0% of
net sales, compared with USD365.2 million, or 16.6% of net sales, in
the fourth quarter 2011. 
Net financial results were a USD28.7 million loss in the fourth
quarter 2012, compared with a USD68.3 million loss in the fourth
quarter 2011. 
During the fourth quarter 2012, Ternium's net interest results
totaled a loss of USD27.6 million, higher than a loss of USD25.9
million in the fourth quarter 2011, mainly reflecting higher net
indebtedness and weighted average cost of debt. 
Net foreign exchange result was a gain of USD3.6 million in the
fourth quarter 2012 compared to a loss of USD72.0 million in the
fourth quarter 2011. The fourth quarter 2011 loss was primarily due
to the impact of the Mexican Peso's 4.2% 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 fourth quarter 2012 was a USD0.7 million
loss, compared with a USD32.2 million gain in the fourth quarter
2011. These results were mainly related to certain derivative
instruments entered into by Ternium to cover currency and interest
rate exposure in its subsidiaries and to results from the fair value
of financial investments. 
Equity in results of non-consolidated companies was a loss of
USD337.5 million in the fourth quarter 2012, compared to a gain of
USD2.6 million in the fourth quarter 2011. Equity in results of
non-consolidated companies in the fourth quarter 2012 included a
USD345.1 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 a USD4.8 million gain related to the
company's participation in Pena Colorada.  
Income tax expense in the fourth quarter 2012 was USD31.4 million,
compared with an income tax expense of USD69.4 million in the same
period in 2011.  
Net loss attributable to non-controlling interest in the fourth
quarter 2012 was USD21.2 million, compared to a net gain of USD31.7
million in the same period in 2011, mainly due to a lower result
attributable to non-controlling interest in Siderar. 
Analysis of Full Year 2012 Results 
Net income attributable to the Company's equity holders in 2012 was
USD139.2 million, compared to USD513.5 million in 2011. Including
non-controlling interest, net income in 2012 was USD187.2 million,
compared to USD649.9 million in 2011. Earnings per ADS were USD0.71
in 2012, compared to USD2.61 in 2011. 
Net sales were USD8.6 billion in 2012, 6% lower than net sales in
2011, reflecting a decrease in net sales in all regions. The
following table shows Ternium's total consolidated net sales for 2012
and 2011: 


 
                                                                            
                                              Net Sales (million USD)       
                                                                            
                                             2012           2011       Dif. 
                                                                            
  Mexico                                       4,475.1        4,544.8    -2%
  Southern Region                              2,746.6        2,980.3    -8%
  Other Markets                                1,386.3        1,597.8   -13%
                                        -------------- -------------- ----- 
                                                                            
Total steel an
d mining segments                8,608.1        9,122.8    -6%

 
Cost of sales was USD6.9 billion in 2012, a decrease of USD149.0
million, or 2%, compared to 2011. This was due to a USD195.7 million,
or 3%, decrease in raw material and consumables used, mainly
reflecting a decrease in raw material costs and lower sales volumes,
partially offset by a USD46.6 million increase in other costs,
including a USD55.3 million increase in maintenance expenses, a
USD21.2 million increase in labor costs, a USD13.0 million decrease
in depreciation of property, plant and equipment and amortization of
intangible assets, and a USD9.6 million decrease in services and fees
expenses. 
Selling, General & Administrative (SG&A) expenses in 2012 were
USD809.2 million, or 9.4% of net sales, a decrease of USD30.2 million
compared to 2011, mainly including a USD12.1 million decrease in
depreciation of property, plant and equipment and amortization of
intangible assets, a USD10.7 million decrease in maintenance
expenses, a USD6.5 million decrease in freight and transportation
expenses and a USD6.1 million decrease in fiscal expenses, partially
offset by a USD6.9 million increase in labor expenses. 
Operating income in 2012 was USD915.9 million, or 11% of net sales,
compared to operating income of USD1,251.8 million, or 14% of net
sales, in 2011. The following table shows Ternium's operating income
by segment for 2012 and 2011. 


 
                                                                            
                                            Intersegment                    
             Steel segment  Mining segment  eliminations         Total      
    USD                                                                     
  million    2012     2011    2012   2011    2012   2011     2012     2011  
                                                                            
Net Sales   8,601.1  9,058.9  190.7  213.2 (183.8)(149.3)   8,608.1  9,122.8
Cost of                                                                     
 sales    (6,914.7)(7,000.7)(132.4)(164.3)   175.9  144.9 (6,871.1)(7,020.1)
SG&A                                                                        
 expenses   (804.7)  (833.4)  (4.5)  (5.9)       -      -   (809.2)  (839.4)
Other                                                                       
 operating                                                                  
 (expenses)                                                                  
 income,                                                                  
 net         (12.3)   (10.8)    0.4  (0.7)       -      -    (11.9)   (11.5)
                                                                            
Operating                                                                   
 income       869.5  1,214.1   54.2   42.3   (7.9)  (4.5)     915.9  1,251.8
                                                                            
EBITDA      1,224.8  1,593.4   69.8   58.9   (7.9)  (4.5)   1,286.8  1,647.8
                                                                            
EBITDA per                                                                  
 ton            140      181     37     29                                  

 
Steel reporting segment 


 
                                                                            
                   Net Sales (million   Shipments (thousand   Revenue / ton 
                          USD)                 tons)            (USD/ton)   
                                                                            
                    2012    2011  Dif.   2012    2011  Dif.  2012  2011 Dif.
                                                                            
  Mexico          4,457.3 4,501.8  -1% 4,952.4 4,683.2   6%   900   961  -6%
  Southern Region 2,737.4 2,962.3  -8% 2,444.5 2,635.3  -7% 1,120 1,124   0%
  Other Markets   1,377.2 1,545.8 -11% 1,371.2 1,505.0  -9% 1,004 1,027  -2%
                  ------- ------- ---- ------- ------- ---- ----- ----- ----
                                                                            
Total Steel                                                                 
 products         8,572.0 9,009.9  -5% 8,768.2 8,823.6  -1%   978 1,021  -4%
  Other products                                                            
   (1)               29.1    49.0 -41%                                      
                  ------- ------- ----                                      
                                                                            
Total Steel                                                                 
 segment          8,601.1 9,058.9  -5%                                      
(1) Primarily includes pig iron and                                         
 pre-engineered metal buildings.                                            

 
Net sales of steel products in 2012 decreased 5% compared to 2011,
reflecting a USD43 decrease in revenue per ton, mainly due to lower
steel prices in Mexico and a 55,000 tons decrease in shipments mainly
as a result of lower sales volume in the Southern Region and Other
Markets, partially offset by higher shipments in Mexico. 
Operating income was USD869.5 million in 2012, a decrease of USD344.6
million compared to 2011, mainly reflecting lower shipments and
revenue per ton, partially offset by a slightly lower operating cost
per ton. 
Mining reporting segment 
Sales of mining products in 2012 were 11% lower than in 2011 mainly
due to lower shipments, as revenue per ton was relatively stable.
Shipments were 1,863,000 tons, 9% lower than in 2011. 
Operating income was USD54.2 million in 2012, USD12.0 million higher
when compared to operating income in 2011, mainly reflecting lower
operating cost per ton partially offset by lower shipments. 
EBITDA in 2012 was USD1.3 billion, or 14.9% of net sales, compared to
USD1.6 million, or 18.1% of net sales, in 2011. 
Net financial results were a USD117.3 million loss in 2012, compared
to a USD300.4 million loss in 2011. 
In 2012, Ternium's net interest results totaled a USD125.2 million
loss, a USD64.5 million higher loss than in 2011, mainly reflecting
higher net indebtedness and weighted average cost of debt. 
Net foreign exchange result was a gain of USD11.4 million in 2012
compared to a USD236.1 million loss in 2011. The 2011 loss was
primarily due to the impact of the Mexican Peso's 13.1% 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 2012 was an USD11.0 million gain, compared with
an USD8.0 million gain in 2011. These results were mainly related to
certain derivative instruments entered into by Ternium to cover
currency and interest rate exposure in its subsidiaries and to
results from the fair value of financial investments. 
Equity in results of non-consolidated companies was a loss of
USD346.8 million in 2012, compared to a gain of USD10.1 million in
2011. Equity in results of non-consolidated companies in 2012
included a USD363.9 million loss rela
ted to Ternium's acquisition of
an equity stake in Usiminas, which is accounted for under the equity
method, and a USD14.1 million gain related to the company's
participation in Pena Colorada.  
Income tax expense in 2012 was USD264.6 million, compared with an
income tax expense of USD311.7 million in 2011.  
Net income attributable to non-controlling interest in 2012 was
USD47.9 million, compared to USD136.4 million in 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 2012 was USD1.1 billion.
Working capital decreased USD23.5 million in 2012 as a result of an
aggregate USD51.4 million net increase in accounts payable and other
liabilities, and a USD20.2 million decrease in inventories, partially
offset by an aggregate USD48.1 million net increase in trade and
other receivables. Inventories decreased in 2012 mainly reflecting
lower costs, partially offset by higher volumes, of purchased steel
and raw materials. 
Capital expenditures in 2012 were USD1.0 billion. 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, the revamping of a pickling line and the development
of mining activities, and, in Argentina, the expansion of specialty
steel production capacity, 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, one in Argentina
and one in Guatemala. 
In 2012, Ternium had a free cash flow of USD32.5 million(8). In
addition, the company received a USD136.7 million final payment in
connection with the agreed-upon compensation for the May 2009
transfer of its interest in Sidor. Ternium acquired, during the first
quarter 2012, an equity stake in Usiminas' control group for USD2.2
billion. The company's net proceeds from borrowings in 2012 were
USD469.7 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 December 31, 2012, Ternium's net debt position was USD1.7(9)
billion.  
Net cash provided by operating activities in the fourth quarter 2012
was USD276.5 million. Working capital decreased USD103.7 million in
the fourth quarter 2012 as a result of a USD58.7 million decrease in
inventories, an aggregate USD29.7 million net decrease in trade and
other receivables, and an aggregate USD15.3 million net increase in
accounts payable and other liabilities. Inventories decreased in the
fourth quarter 2012 mainly reflecting lower prices of purchased steel
and lower prices and volumes of raw materials, partially offset by
higher volumes of purchased steel. Capital expenditures in the fourth
quarter 2012 were USD312.4 million. Ternium had negative free cash
flow of USD35.9 million(10) in the quarter. 
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 fourth quarter 2012 equals operating income
of USD122.7 million adjusted to exclude depreciation and amortization
of USD104.2 million.
 (4) Operating cost per ton is equal to cost of
sales plus SG&A, divided by shipments.
 (5) 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.
 (6) EBITDA in
2012 equals operating income of USD915.9 million adjusted to exclude
depreciation and amortization of USD370.9 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 2012 and
1,968,327,917 in 2011.
 (8) Free cash flow in 2012 equals net cash
provided by operating activities of USD1.1 billion less capital
expenditures of USD1,0 billion.
 (9) Net debt position at December
31, 2012 equals borrowings of USD2.4 billion less cash and
equivalents plus other investments of USD0.7 billion.
 (10) Free cash
flow in the fourth quarter 2012 equals net cash provided by operating
activities of USD276.5 million less capital expenditures of USD312.4
million. 
Consolidated income statement 


 
                                                                            
             USD million              4Q 2012   4Q 2011    2012      2011   
                                                                            
 Net sales                            2,071.0   2,200.6   8,608.1   9,122.8 
 Cost of sales                       (1,731.6) (1,732.5) (6,871.1) (7,020.1)
                                     --------  --------  --------  -------- 
Gross profit                            339.3     468.1   1,737.0   2,102.7 
 Selling, general and administrative                                        
  expenses                             (197.0)   (196.0)   (809.2)   (839.4)
 Other operating income (expenses),                                         
  net                                   (19.7)     (0.5)    (11.9)    (11.5)
                                     --------  --------  --------  -------- 
Operating income                        122.7     271.5     915.9   1,251.8 
                                                                            
 Interest expense                       (31.9)    (32.0)   (144.4)   (100.7)
 Interest income                          4.3       6.1      19.2      40.0 
 Other financial (expenses) income,                                         
  net                                    (1.1)    (42.4)      7.9    (239.7)
Equity in (losses) earnings of non-                                         
 consolidated companies                (337.5)      2.6    (346.8)     10.1 
       
                              --------  --------  --------  -------- 
(Loss) Income before income tax                                             
 expense                               (243.6)    205.9     451.7     961.6 
Income tax expense                      (31.4)    (69.4)   (264.6)   (311.7)
(Loss) Profit for the period           (275.0)    136.4     187.2     649.9 
                                                                            
Attributable to:                                                            
   Equity holders of the Company       (253.8)    104.7     139.2     513.5 
   Non-controlling interest             (21.2)     31.7      47.9     136.4 
   (Loss) Profit for the period        (275.0)    136.4     187.2     649.9 

 
Consolidated balance sheet 


 
                                                                            
                                                  December 31,  December 31,
                   USD million                        2012          2011    
                                                                            
  Property, plant and equipment, net                   4,438.1       3,969.2
  Intangible assets, net                                 965.2         977.7
  Investments in non-consolidated companies            1,710.5          94.9
  Other investments                                        7.1          14.1
  Deferred tax assets                                     12.5           8.1
  Receivables, net                                        72.8         124.2
  Trade receivables, net                                   5.0           7.5
                                                  ------------  ------------
Total non-current assets                               7,211.4       5,195.7
                                                                            
  Receivables                                            187.2 
         91.5
  Derivative financial instruments                         0.1           0.1
  Inventories, net                                     2,000.1       2,123.5
  Trade receivables, net                                 735.1         745.9
  Sidor financial asset                                      -         136.3
  Other investments                                      160.8         281.7
  Cash and cash equivalents                              560.3       2,158.0
                                                  ------------  ------------
Total current assets                                   3,643.6       5,537.0
                                                                            
Non-current assets classified as held for sale            12.0          10.4
                                                  ------------  ------------
                                                                            
Total assets                                          10,867.0      10,743.1
                                                                            
Capital and reserves attributable to the                                    
 company's equity holders                              5,420.9       5,756.4
Non-controlling interest                               1,074.8       1,084.8
                                                                            
Total Equity                                           6,495.7       6,841.2
                                                                            
  Provisions                                              17.5          15.3
  Deferred income tax                                    682.1         740.6
  Other liabilities                                      225.0         197.0
  Trade payables                                          18.3          21.1
  Derivative financial instruments                         0.3             -
  Borrowings                                           1,302.8         948.5
                                                  ------------  ------------
Total non-current liabilities                          2,245.9       1,922.5
                                                                            
  Current tax liabilities                                153.1         106.6
  Other liabilities                                       88.5         112.9
  Trade payables                                         762.2         682.3
  Derivative financial instruments                           -          29.9
  Borrowings                                           1,121.6       1,047.6
                                                  ------------  ------------
Total current liabilities                              2,125.4       1,979.4
                                                                            
                                                  ------------  ------------
Total liabilities                                      4,371.3       3,901.9
                                                                            
Total equity and liabilities                          10,867.0      10,743.1

 
Consolidated cash flow statement 


 
                                                                            
             USD million              4Q 2012   4Q 2011    2012      2011   
                                                                            
                                                                            
(Loss) Profit for the period           (275.0)    136.4     187.2     649.9 
                                                                            
  Depreciation and amortization         104.2      93.7     370.9     396.0 
  Equity in losses (earnings) of                                            
   non-consolidatedcompanies            337.5      (2.6)    346.8     (10.1)
  Changes in provisions                   1.1       1.9       5.8      29.9 
  Net foreign exchange results and                                          
   others                                15.9      21.9      75.8     173.2 
  Interest accruals less payments        13.9      24.9       0.8      43.0 
  Income tax accruals less payments     (24.8)    (10.1)     44.4    (260.3)
  Changes in working capital            103.7     174.2      23.5    (399.3)
                                     --------  --------  --------  -------- 
                                                                            
Net cash provided by operating                                              
 activities                             276.5     440.2   1,055.1     622.4 
                                                                            
  Capital expenditures                 (312.4)   (150.6) (1,022.6)   (577.0)
  Proceeds from the sale of                                                 
   property, plant & equipment            0.7       0.3       2.1       1.7 
  Acquisition of business                                                   
    Purchase consideration                  -         -  (2,243.6)        - 
  Dividends received from non-                                              
   consolidated companies                   -         -       4.7         - 
  Decrease in Other Investments           1.4     395.2     127.9     588.2 
  Proceeds from Sidor financial                                             
   asset                                136.7         -     136.7     133.1 
                                     --------  --------  --------  -------- 
                                                                            
Net cash (used in) provided by                                              
 investing activities                  (173.6)    244.9  (2,994.7)    146.0 
                                                                            
  Dividends paid in cash to                                                
 
   company's shareholders                   -         -    (147.2)   (147.2)
  Dividends paid in cash by                                                 
   subsidiary companies                     -         -     (15.9)   (140.6)
  Contributions from non-controlling                                        
   shareholders inconsolidated                                              
   subsidiaries                             -         -      41.7      39.2 
  Repurchase of treasury shares             -         -         -    (150.0)
  Proceeds from borrowings              246.4      54.0   1,284.7     666.2 
  Repayments of borrowings             (115.1)    (60.1)   (815.0)   (632.1)
                                     --------  --------  --------  -------- 
                                                                            
Net cash provided by (used in)                                              
 financing activities                   131.3      (6.1)    348.2    (364.6)
                                                                            
Increase (Decrease) in cash and cash                                        
 equivalents                            234.2     679.0  (1,591.5)    403.8 
                                                                            
                                                                            
                                  Shipments                                 
       Thousand tons         4Q 2012   4Q 2011   3Q 2012    2012      2011  
                                                                            
  Mexico                     1,219.7   1,182.2   1,276.0   4,952.4   4,683.2
  Southern Region              597.7     676.3     625.9   2,444.5   2,635.3
  Other Markets                350.8     295.4     362.6   1,371.2   1,505.0
                            --------  --------  --------  --------  --------
Total steel segment          2,168.2   2,153.9   2,264.5   8,768.2   8,823.6
                 
                                                           
  Mexico                       432.2     366.2     451.2   1,798.0   1,734.6
  Other Markets                 64.6     100.2         -      64.6     315.9
                            --------  --------  --------  --------  --------
Total mining segment           496.8     466.4     451.2   1,862.6   2,050.5
                                                                            
                                Revenue / ton                               
          USD/ton            4Q 2012   4Q 2011   3Q 2012    2012      2011  
                                                                            
  Mexico                         854       913       887       900       961
  Southern Region              1,157     1,131     1,122     1,120     1,124
  Other Markets                  923     1,080       980     1,004     1,027
                            --------  --------  --------  --------  --------
Total steel segment              948     1,005       967       978     1,021
                                                                            
  Mexico                          93        95       119       102        94
  Other Markets                  103       150         -       105       157
                            --------  --------  --------  --------  --------
Total mining segment              95       107       119       102       104
                                                                            
                                  Net Sales                                 
        USD million          4Q 2012   4Q 2011   3Q 2012    2012      2011  
                                                                            
  Mexico                     1,041.1   1,079.3   1,132.0   4,457.3   4,501.8
  Southern Region              691.5     765.2     702.4   2,737.4   2,962.3
  Other Markets                323.8     319.1     355.5   1,377.2   1,545.8
                            --------  --------  --------  --------  --------
Total steel products         2,056.4   2,163.6   2,189.9   8,572.0   9,009.9
  Other products (1)             7.9       7.7       8.1      29.1      49.0
                            --------  --------  --------  --------  --------
Total steel segment          2,064.3   2,171.4   2,198.0   8,601.1   9,058.9
                                                                            
  Mexico                        40.4      34.9      53.8     183.9     163.5
  Other Markets                  6.7      15.0         -       6.8      49.7
                            --------  --------  --------  --------  --------
Total mining segment            47.1      49.9      53.8     190.7     213.2
                                                                            
                            --------  --------  --------  --------  --------
Total steel and mining                                                      
 segments                    2,111.3   2,221.3   2,251.7   8,791.8   9,272.2
Intersegment eliminations      -40.4     -20.7     -53.8    -183.8    -149.3
                            --------  --------  --------  --------  --------
                                                                            
Total net sales              2,071.0   2,200.6   2,198.0   8,608.1   9,122.8
(1) Primarily includes 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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