Ternium Announces Third Quarter and First Nine Months of 2013 Results

Ternium Announces Third Quarter and First Nine Months of 2013 Results 
LUXEMBOURG -- (Marketwired) -- 11/05/13 --  Ternium S.A. (NYSE: TX)
today announced its results for the third quarter and first nine
months ended September 30, 2013. 
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 2013 Results  


 
                                3Q 2013(1)     2Q 2013(1)      3Q 2012(2)   
                                                                            
Steel Shipments (tons)            2,302,000  2,213,000    4% 2,265,000    2%
Iron Ore Shipments (tons)           930,000  1,218,000  -24%   451,000  106%
Net Sales (USD million)             2,143.8    2,134.4    0%   2,198.0   -2%
Operating Income (USD million)        266.1      276.0   -4%     254.1    5%
EBITDA (USD million)                  358.4      370.5   -3%     341.5    5%
EBITDA per Ton(3) (USD)               155.7      167.4           150.8      
EBITDA Margin (% of net sales)         16.7%      17.4%           15.5%     
Equity in Losses of Non-                                                    
 Consolidated Companies                (0.9)     (10.3)          (16.0)     
Net Income (USD million)              136.0      134.4           135.6      
Equity Holders' Net Income (USD                                             
 million)                              97.8      102.7           112.5      
Earnings per ADS (USD)                 0.50       0.52            0.57      
                                                                            

 
--  EBITDA(4) of USD358.4 million in the third quarter 2013, 3% lower than
    EBITDA in the second quarter 2013.
--  Earnings per American Depositary Share (ADS)(5) of USD0.50 in the
    third quarter 2013. EPADS in the third quarter 2013 included a USD0.12
    deferred income tax loss per ADS related to the introduction of a new
    10% withholding tax on dividend distributions in Argentina.
--  Capital expenditures of USD217.5 million in the third quarter 2013,
    down from USD289.6 million in the second quarter 2013.
--  Net debt position of USD1.6 billion at the end of September 2013, down
    from USD1.7 billion at the end of June 2013.

  
(1) Iron ore shipments in 2013 include Ternium's interest in Pena
Colorada. Starting on January 1, 2013, Pena Colorada and Exiros have
been proportionally consolidated. Comparative amounts for both
companies show them as investments in non-consolidated companies and
their results are included within "Equity in earnings (losses) of
non-consolidated companies" in the consolidated income statement.  
(2) Certain comparative amounts have been reclassified to conform to
changes in presentation in the current period, and also to reflect
the changes in connection with the completion of the purchase price
allocation of Usiminas.  
(3) Consolidated EBITDA divided by steel shipments  
(4) EBITDA in the third quarter 2013 equals operating income of
USD266.1 million adjusted to exclude depreciation and amortization of
USD92.3 million.  
(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.  
Operating income in the third quarter 2013 was USD266.1 million,
slightly lower than in the second quarter 2013 mainly as a result of
seasonally lower iron ore sales to third parties and a decrease in
operating margin offset by higher steel shipments. Ternium's net
income in the third quarter 2013 was USD136.0 million, stable
compared to net income in the second quarter 2013. Higher income tax
expenses, including a deferred income tax charge of USD24.0 million
related to the introduction of a new withholding tax on dividend
distributions in Argentina, were offset by lower net financial
expenses and a better result of non-consolidated companies.  
Operating income in the third quarter 2013 was USD12.0 million higher
than in the third quarter 2012 mainly as a result of an USD11.7
million insurance recovery in Siderar, with slightly higher steel
shipments and a stable operating margin. Net income in the third
quarter 2013 was stable compared to net income in the third quarter
2012. Higher income tax expenses, including the above mentioned
deferred income tax charge in Argentina and a higher effective tax
rate due to higher net income from Siderar, were offset by a better
result of non-consolidated companies, lower net financial expenses
and the above mentioned higher operating income. 
Summary of First nine months of 2013 Results  


 
                                                 9M 2013(1)    9M 2012(2)   
                                                                            
Steel Shipments (tons)                            6,756,000   6,600,000   2%
Iron Ore Shipments (tons)                         3,249,000   1,366,000 138%
Net Sales (USD million)                             6,414.0     6,537.1  -2%
Operating Income (USD million)                        813.9       797.2   2%
EBITDA (USD million)                                1,096.5     1,063.9   3%
EBITDA per Ton (USD)                                  162.3       161.2     
EBITDA Margin (% of net sales)                        17.1%       16.3%     
Equity in Losses of Non-Consolidated Companies       (27.1)      (51.0)     
Net Income (USD million)                              421.9       422.1     
Equity Holders' Net Income (USD million)              329.8       355.8     
Earnings per ADS (USD)                                 1.68        1.81     
                                                                            

 
--  EBITDA(6) of USD1.1 billion in the first nine months of 2013, 3%
    higher than EBITDA in the first nine months of 2012.
--  Earnings per ADS(7) of USD1.68 in the first nine months of 2013,
    USD0.13 lower than in the first nine months of 2012 mainly due to
    higher minority interest results in Siderar and the above mentioned
    USD0.12 per ADS deferred income tax charge in Argentina.
--  Capital expenditures of USD725.1 million in the first nine months of
    2013.

  
Operating income in the first nine months of 2013 was USD813.9 million,
slightly higher than in the first nine months of 2012. Consolidated
steel shipments increased 156,000 tons year-over-year, with shipments
growth mainly seen in the Southern Region, as shipments in Mexico
remained stable. Operating margin remained stable. Steel revenue per
ton decreased USD51 compared to the first nine months of 2012, with
lower revenue per ton in Mexico and stable revenue per ton in the
Southern Region, and was partially offset by a USD44 decrease in
steel operating cost(8) per ton, mainly as a result of lower costs of
raw materials and purchased slabs. In addition, there were higher
iron ore sales to third parties as a result of the proportional
consolidation of Pena Colorada's mining operations in the first nine
months of 2013. 
Net income in the first nine months of 2013 was USD421.9 million,
stable compared to net income in the first nine months of 2012,
mainly due to USD30.1 million higher income tax expenses and USD10.8
million higher net financial expenses, partial
ly offset by a USD23.9
million better result of non-consolidated companies and the above
mentioned USD16.7 million improvement in operating income. Income tax
expense in the first nine months of 2013 included the impact of the
above mentioned introduction of a new withholding tax on dividend
distributions in Argentina. 
(6) EBITDA in the first nine months of 2013 equals operating income
of USD813.9 million adjusted to exclude depreciation and amortization
of USD282.6 million.  
(7) 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.  
(8) Operating cost equals cost of sales plus SG&A.  
Outlook 
Ternium expects steel shipments to slightly decrease in the fourth
quarter 2013 compared to the third quarter 2013 due to the
end-of-year seasonal effect. Activity in the industrial sector in
Mexico remains healthy, while the country's commercial sector, which
is more closely tied to construction, continues to lag. At the same
time, steel demand in the Southern Region remains stable at strong
levels, which the company anticipates will continue into the fourth
quarter. 
Ternium expects a relatively stable operating income in the fourth
quarter 2013 compared to the third quarter 2013 mainly as a result of
slightly higher operating margin, with higher revenue per ton, offset
by the above mentioned decrease in shipments. 
Analysis of Third Quarter 2013 Results  
Net income attributable to Ternium's equity holders in the third
quarter 2013 was USD97.8 million, compared to a net income of
USD112.5 million in the third quarter 2012. Including non-controlling
interest, net income for the third quarter 2013 was USD136.0 million,
relatively stable in comparison with the third quarter 2012. Earnings
per ADS in the third quarter 2013 were USD0.50 compared to Earnings
per ADS of USD0.57 in the third quarter 2012. 
Net sales in the third quarter 2013 were USD2.1 billion, 2% lower
than net sales in the third quarter 2012, mainly as a result of lower
steel products sales in Other Markets and Mexico, partially offset by
higher steel products sales in the Southern Region. The following
table shows Ternium's total consolidated net sales for the third
quarter 2013 and 2012: 


 
                                                              
                                     Net Sales (million USD)  
                                     3Q 2013   3Q 2012   Dif. 
  Mexico                             1,057.1   1,132.0     -7%
  Southern Region                      767.1     702.4      9%
  Other Markets                        309.8     355.5    -13%
                                    --------  --------  ----- 
Total steel products net sales       2,134.0   2,189.9     -3%
  Other products(1)                      9.5       8.1     18%
Total steel segment net sales        2,143.5   2,198.0     -2%
                                                              
Total mining segment net sales          74.7      53.8     39%
Intersegment eliminations              (74.4)    (53.8)    38%
Total net sales                      2,143.8   2,198.0     -2%

 
(1) The item "Other products" primarily includes pig iron and
pre-engineered metal buildings.  
Cost of sales was USD1.7 billion in the third quarter 2013, a
decrease of USD70.7 million compared to the third quarter 2012. This
was principally due to a USD99.3 million, or 7%, decrease in raw
material and consumables used, mainly reflecting a decrease in raw
material and purchase slabs costs, partially offset by a 2% increase
in shipment volumes and higher energy costs; and a USD28.6 million
increase in other costs, including a USD20.1 million increase in
maintenance expenses and a USD3.1 million increase in labor cost. 
Selling, General & Administrative (SG&A) expenses in the third
quarter 2013 were USD209.9 million, or 9.8% of net sales, an increase
of USD12.3 million compared to the third quarter 2012, mainly due to
higher taxes and contributions (other than income tax) and labor
expenses, partially offset by lower services expenses.  
Operating income in the third quarter 2013 was USD266.1 million, or
12.4% of net sales, compared to operating income of USD254.1 million,
or 11.6% of net sales, in the third quarter 2012. The following table
shows Ternium's operating income by segment for the third quarter
2013 and the third quarter 2012: 


 
                                                                            
                                 Mining    Intersegment                     
             Steel segment       segment   eliminations         Total       
    USD                         3Q     3Q    3Q     3Q                      
  million  3Q 2013   3Q 2012   2013   2012  2013   2012   3Q 2013   3Q 2012 
Net Sales  2,143.5   2,198.0   74.7   53.8 (74.4) (53.8)  2,143.8   2,198.0 
Cost of                                                                     
 sales    (1,690.3) (1,768.1) (59.6) (29.5) 70.7   47.7  (1,679.2) (1,749.9)
SG&A                                                                        
 expenses   (205.9)   (196.7)  (4.0)  (1.0)    -      -    (209.9)   (197.6)
Other                                                                       
 operating                                                                  
 income,                                                                    
 net          11.2       3.3    0.1    0.3     -      -      11.3       3.6 
Operating                                                                   
 income                                                                     
 (expense)   258.5     236.5   11.2   23.7  (3.7)  (6.0)    266.1     254.1 
                                                                            
EBITDA       345.1     320.0   17.0   27.6  (3.7)  (6.0)    358.4     341.5 

 
Steel reporting segment 
The steel segment's operating income was USD258.5 million in the
third quarter 2013, an increase of USD22.1 million compared to the
third quarter 2012, reflecting lower operating cost and an USD11.7
million insurance recovery in Siderar in the third quarter 2013
partially offset by lower net sales. 
Net sales of steel products in the third quarter 2013 decreased 2%
compared to the third quarter 2012, reflecting a USD40 decrease in
steel revenue per ton shipped, mainly due to lower steel prices in
Mexico and Other Markets. Shipments increased 37,200 tons, or 2%,
compared to the third quarter 2012, mainly due to higher sales volume
in the Southern Region, partially offset by lower sales volume in
Others Markets. 


 
                                                                            
             Net Sales (million    Shipments (thousand     Revenue / ton    
                    USD)                  tons)              (USD/ton)      
            3Q 2013 3Q 2012 Dif.  3Q 2013 3Q 2012 Dif. 3Q 2013 3Q 2012 Dif. 
  Mexico    1,057.1 1,132.0   -7% 1,269.7 1,276.0    0%    833     887   -6%
  Southern                                                                  
   Region     767.1   702.4    9%   689.0   625.9   10%  1,113   1,122   -1%
  Other                                       
                              
   Markets    309.8   355.5  -13%   343.0   362.6   -5%    903     980   -8%
            ------- ------- ----  ------- ------- ---- ------- ------- ---- 
                                                                            
Total steel                                                                 
 products   2,134.0 2,189.9   -3% 2,301.8 2,264.5    2%    927     967   -4%
  Other                                                                     
   products                                                                 
   (1)          9.5     8.1   18%                                           
            ------- ------- ----                                            
Total steel                                                                 
 segment    2,143.5 2,198.0   -2%                                           
(1) Primarily includes pig iron and pre-engineered metal buildings.         

 
Operating cost decreased 3% due to a 5% decrease in operating cost per
ton, partially offset by a 2% increase in shipment volumes. The
decrease in operating cost per ton was mainly due to lower raw
material and purchased slabs costs, partially offset by an increase
in maintenance expenses and energy. 
Mining reporting segment 
The mining segment's operating income was USD11.2 million in the
third quarter 2013, a decrease of USD12.5 million compared to the
third quarter 2012 mainly reflecting lower iron ore margins,
partially offset by the proportional consolidation of Pena Colorada's
mining operations in the third quarter 2013. 
Net Sales of mining products in the third quarter 2013 were 39%
higher than in the third quarter 2012. Shipments were 930,000 tons,
106% higher than in the third quarter 2012, and revenue per ton was
USD80, 33% lower than in the third quarter 2012. The year-over-year
differences were mainly due to the proportional consolidation of Pena
Colorada, partially offset by lower iron ore prices. 


 
                                                                            
                                                       Mining segment       
                                                  3Q 2013    3Q 2012   Dif. 
Net Sales (million USD)                               74.7       53.8    39%
Shipments (thousand tons)                            930.0      451.2   106%
Revenue per ton (USD/ton)                               80        119   -33%

 
Operating cost increased 109% year-over-year, due to a 106% increase
in shipment volumes and a 1% increase in operating cost per ton,
mainly reflecting a higher operating cost per ton in the third
quarter 2013, largely offset by the proportional consolidation of
Pena Colorada, which has a cost per ton of production lower than that
of Las Encinas'. 
EBITDA in the third quarter 2013 was USD358.4 million, or 16.7% of
net sales, compared with USD341.5 million, or 15.5% of net sales, in
the third quarter 2012. 
Net financial results were a USD25.8 million loss in the third
quarter 2013, compared with a USD37.8 million loss in the third
quarter 2012. 
During the third quarter 2013, Ternium's net interest results totaled
a loss of USD26.6 million, a USD5.1 million better result than in the
third quarter 2012, reflecting lower indebtedness and weighted
average interest rates. 
Equity in results of non-consolidated companies was a loss of USD0.9
million in the third quarter 2013, compared to a loss of USD16.0
million in the third quarter 2012, mainly due to a better result in
Usiminas. 
Income tax expense in the third quarter 2013 was USD103.3 million, or
43% of income before income tax, compared with an income tax expense
of USD64.7 million in the same period in 2012, or 32% of income
before income tax. Income tax expense in the third quarter 2013
included a deferred income tax charge of USD24.0 million based on the
balance of the reserve for future dividends at our Argentine
subsidiaries, related to the introduction of a new 10% withholding
tax on dividend distributions by Argentine companies to foreign
beneficiaries. 
Analysis of First nine months of 2013 Results  
Net income attributable to Ternium's equity holders in the first nine
months of 2013 was USD329.8 million, compared to a net income of
USD355.8 million in the first nine months of 2012. Including
non-controlling interest, net income for the first nine months of
2013 was USD421.9 million, relatively stable in comparison with the
first nine months of 2012. Earnings per ADS in the first nine months
of 2013 were USD1.68, compared to earnings of USD1.81 in the first
nine months of 2012. 
Net sales in the first nine months of 2013 were USD6.4 billion, 2%
lower than net sales in the first nine months of 2012, mainly as a
result of lower steel products sales in Mexico and Other Markets,
partially offset by higher steel products sales in the Southern
Region and higher iron ore sales to third parties. The following
table shows Ternium's total consolidated net sales for the first nine
months of 2013 and 2012: 


 
                                                                            
                                                 Net Sales (million USD)    
                                               9M 2013      9M 2012    Dif. 
  Mexico                                        3,150.0      3,416.2     -8%
  Southern Region                               2,197.7      2,045.9      7%
  Other Markets                                   980.2      1,053.5     -7%
                                              ---------   ----------  ----- 
Total steel products net sales                  6,327.8      6,515.6     -3%
  Other products(1)                                23.4         21.3     10%
Total steel segment net sales                   6,351.3      6,536.9     -3%
                                                                            
Total mining segment net sales                    276.3        143.6     92%
Intersegment eliminations                        (213.6)      (143.4)    49%
Total net sales                                 6,414.0      6,537.1     -2%

 
(1) The item "Other products" primarily includes pig iron and
pre-engineered metal buildings.  
Cost of sales was USD5.0 billion in the first nine months of 2013, a
decrease of USD145.4 million compared to the first nine months of
2012. This was principally due to a USD219.3 million, or 5%, decrease
in raw material and consumables used, mainly reflecting a decrease in
raw material and purchased slabs costs, partially offset by a 2%
increase in shipment volumes and higher energy costs; and a USD73.9
million increase in other costs, including a USD38.2 million increase
in maintenance expenses and a USD31.6 million increase in labor cost. 
Selling, General & Administrative (SG&A) expenses in the first nine
months of 2013 were USD632.9 million, or 9.9% of net sales, an
increase of USD20.7 million compared to the first nine months of
2012, mainly including higher taxes and contributions (other than
income tax), labor expenses and freight and transportation expenses,
partially offset by lower services and fees expenses. 
Operating income in the first nine months of 2013 was USD813.9
million, or 12.7% of net sales, compared to operating income of
USD797.2 million, or 12.2% of net sales, in the first nine months of
2012. The following table shows Ternium's operating income by segment
for the first nine months of 2013 and the first nine months of 2012: 


 
                                                                            
                                       Steel segment      Mining segment    
             USD million             9M 2013   9M 2012   9M 2013   9M 2012  
  Net Sales                          6,351.3   6,536.9     276.3     143.6  
  Cost of sales                     (4,998.9) (5,163.8)   (201.9)   (107.7) 
  SG&A expenses                       (614.8)   (608.1)    (18.1)     (4.1) 
  Other operating income, net           22.7       7.4       0.1       0.4  
Operating income (expense)             760.3     772.4      56.5      32.2  
                                                                            
EBITDA                               1,021.7   1,027.8      77.7      43.6  
                                                                            
 
                                                                           
                                       Intersegment                        
                                       eliminations            Total       
             USD million             9M 2013   9M 2012   9M 2013   9M 2012 
  Net Sales                           (213.6)   (143.4)  6,414.0   6,537.1 
  Cost of sales                        210.7     136.0  (4,990.1) (5,135.5)
 
  SG&A expenses                            -         -    (632.9)   (612.2)
  Other operating income, net              -         -      22.8       7.8 
Operating income (expense)              (2.9)     (7.4)    813.9     797.2 
                                                                           
EBITDA                                  (2.9)     (7.4)  1,096.5   1,063.9 

 
Steel reporting segment 
The steel segment's operating income was USD760.3 million in the
first nine months of 2013, a decrease of USD12.1 million compared to
the first nine months of 2012, reflecting lower net sales partially
offset by lower operating cost. 
Net sales of steel products in the first nine months of 2013
decreased 3% compared to the first nine months of 2012, reflecting a
USD51 decrease in steel revenue per ton shipped, mainly due to lower
steel prices in Mexico and Other Markets. Shipments increased 156,100
tons, or 2%, compared to the first nine months of 2012, mainly due to
higher sales volume in Southern Region and Other Markets. 


 
                                                                            
            Net Sales (million    Shipments (thousand      Revenue / ton    
                   USD)                  tons)               (USD/ton)      
           9M 2013 9M 2012 Dif.  9M 2013 9M 2012  Dif. 9M 2013 9M 2012 Dif. 
  Mexico   3,150.0 3,416.2   -8% 3,710.3 3,732.7    -1%    849     915   -7%
  Southern                                                                  
   Region  2,197.7 2,045.9    7% 1,960.3 1,846.9     6%  1,121   1,108    1%
  Other                                                                     
   Markets   980.2 1,053.5   -7% 1,085.4 1,020.4     6%    903   1,032  -13%
           ------- ------- ----  ------- ------- ----- ------- ------- ---- 
                                                                            
Total steel                                                                 
 products  6,327.8 6,515.6   -3% 6,756.1 6,600.0     2%    937     987   -5%
  Other                                                                     
   products                                                                 
   (1)        23.4    21.3   10%                                            
           ------- ------- ----                                             
Total steel                                                                 
 segment   6,351.3 6,536.9   -3%                                            
(1) Primarily includes pig iron and pre-engineered metal buildings.         

 
Operating cost decreased 3%, due to a 5% decrease in operating cost
per ton, partially offset by a 2% increase in shipment volumes. The
decrease in operating cost per ton was mainly due to lower raw
material costs and purchased slabs costs, partially offset by higher
energy cost. 
Mining reporting segment 
The mining segment's operating income was USD56.5 million in the
first nine months of 2013, an increase of USD24.2 million compared to
the first nine months of 2012 mainly reflecting the proportional
consolidation of Pena Colorada's mining operations in the first nine
months of 2013 and higher sales, partially offset by lower margins. 
Net Sales of mining products in the first nine months of 2013 were
92% higher than in the first nine months of 2012. Shipments were 3.2
million tons, 138% higher than in the first nine months of 2012, and
revenue per ton was USD85, 19% lower than in the first nine months of
2012. The year-over-year differences were mainly due to the
proportional consolidation of Pena Colorada and higher shipments,
partially offset by lower prices. 


 
                                                                            
                                                       Mining segment       
                                                  9M 2013    9M 2012   Dif. 
Net Sales (million USD)                              276.3      143.6    92%
Shipments (thousand tons)                          3,248.9    1,365.8   138%
Revenue per ton (USD/ton)                               85        105   -19%

 
Operating cost increased 97% year-over-year, due to a 138% increase in
shipment volumes, partially offset by a 17% decrease in operating
cost per ton, mainly reflecting the proportional consolidation of
Pena Colorada, which has a cost per ton of production lower than that
of Las Encinas'. 
EBITDA in the first nine months of 2013 was USD1.1 billion, or 17.1%
of net sales, compared with USD1.1 billion, or 16.3% of net sales, in
the first nine months of 2012. 
Net financial results were a USD105.1 million loss in the first nine
months of 2013, compared with a USD94.3 million loss in the first
nine months of 2012. 
During the first nine months of 2013, Ternium's net interest results
totaled a loss of USD83.8 million, USD13.8 million lower than in the
first nine months of 2012, reflecting lower indebtedness and weighted
average interest rates. 
Equity in results of non-consolidated companies was a loss of USD27.1
million in the first nine months of 2013, compared to a loss of
USD51.0 million in the first nine months of 2012, mainly as a result
of a better result in Usiminas partially offset by the proportional
consolidation of Pena Colorada in 2013. 
Income tax expense in the first nine months of 2013 was USD259.9
million, or 38% of income before income tax, compared with an income
tax expense of USD229.8 million in the same period in 2012, or 35% of
income. Income tax expense in the first nine months of 2013 included
a deferred income tax charge of USD24.0 million related to the
introduction of a new withholding tax on dividend distributions in
Argentina and a USD13.7 million non-recurring income tax charge in
connection with the settlement of a claim from the Mexican tax
authorities. Income tax expense in the first nine months of 2012
included a USD10.5 million non-recurring loss related to an amendment
of a previous period tax return in Mexico. 
Cash Flow and Liquidity 
Net cash provided by operating activities in the first nine months of
2013 was USD845.5 million. Working capital decreased USD124.3 million
in the first nine months of 2013 as a result of a USD71.5 million
decrease in inventories, an aggregate USD30.9 million net decrease in
trade and other receivables and an aggregate USD21.8 million net
increase in accounts payable and other liabilities. Inventories
decreased in the first nine months of 2013 mainly reflecting lower
volumes of finished goods, goods in process and purchased steel,
partially offset by higher costs and volumes of raw materials. 
Capital expenditures in the first nine months of 2013 were USD725.1
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 (Pesqueria/Tenigal projects, in
ramp-up period) 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 at the hot strip
mill. 
In the first nine months of 2013, Ternium had free cash flow of
USD120.4 million(9). The company's net repayments of borrowings in
the first nine months of 2013 were USD217.9 million, mainly due to a
USD400.0 million repayment of Ternium Mexico's syndicated loan
facility and a USD349.3 million repayment of Ternium's syndicated
loan facility, partially offset by net borrowings of short-term debt.
In addition, net dividends paid to shareholders were USD127.6 million
and net dividends paid to minority shareholders were USD27.4 million.
As of September 30, 2013, Ternium's net debt position was USD1.6
billion(10). 
Net cash provided by operating activities in the third quarte
r 2013
was USD290.0 million. Working capital decreased USD2.8 million in the
third quarter 2013 as a result of a USD28.4 million decrease in
inventories and an aggregate USD3.4 million net decrease in trade and
other receivables, partially offset by an aggregate USD29.0 million
net decrease in accounts payable and other liabilities. Inventories
decreased in the third quarter 2013 mainly reflecting lower volumes
of finished goods and goods in process, partially offset by higher
costs and volumes of raw materials. Ternium had free cash flow of
USD72.5 million(11) in the period. 
(9) Free cash flow in the first nine months of 2013 equals net cash
provided by operating activities of USD845.5 million less capital
expenditures of USD725.1 million.  
(10) Net debt position at September 30, 2013 equals borrowings of
USD2.1 billion less cash and equivalents plus other investments of
USD0.5 billion.  
(11) Free cash flow in the third quarter 2013 equals net cash
provided by operating activities of USD290.0 million less capital
expenditures of USD217.5 million.  
Forward Looking Statements 
Some of the statements contained in this press release are
"forward-looking statements". Forward-looking statements are based on
management's current views and assumptions and involve known and
unknown risks that could cause actual results, performance or events
to differ materially from those expressed or implied by those
statements. These risks include but are not limited to risks arising
from uncertainties as to gross domestic product, related market
demand, global production capacity, tariffs, cyclicality in the
industries that purchase steel products and other factors beyond
Ternium's control. 
About Ternium 
Ternium is a leading steel producer in Latin America, with an annual
production capacity of approximately 10.8 million tons of finished
steel products. The company manufactures and processes a broad range
of value-added steel products for customers active in the
construction, automotive, home appliances, capital goods, container,
food and energy industries. With production facilities located in
Mexico, Argentina, Colombia, the southern United States and
Guatemala, 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. 


 
                                                                            
                                                                            
Consolidated Income Statement                                               
                                                                            
           USD million            3Q 2013    3Q 2012    9M 2013    9M 2012  
                                      (Unaudited)           (Unaudited)     
  Net sales                        2,143.8    2,198.0    6,414.0    6,537.1 
  Cost of sales                   (1,679.2)  (1,749.9)  (4,990.1)  (5,135.5)
                                 ---------  ---------  ---------  --------- 
Gross profit                         464.6      448.1    1,423.9    1,401.6 
  Selling, general and                                                      
   administrative expenses          (209.9)    (197.6)    (632.9)    (612.2)
  Other operating income, net         11.3        3.6       22.8        7.8 
                                 ---------  ---------  ---------  --------- 
Operating income                     266.1      254.1      813.9      797.2 
                                                                            
  Interest expense                   (29.6)     (35.2)     (93.4)    (112.5)
  Interest income                      3.0        3.4        9.6       14.9 
  Other financial (expenses)                                                
   income, net                         0.8       (6.0)     (21.3)       3.3 
  Equity in losses of non-                                                  
   consolidated companies             (0.9)     (16.0)     (27.1)     (51.0)
                                 ---------  ---------  ---------  --------- 
Income before income tax expense     239.3      200.3      681.7      651.9 
Income tax expense                  (103.3)     (64.7)    (259.9)    (229.8)
Profit for the period                136.0      135.6      421.9      422.1 
                                                                            
Attributable to:                                                            
  Equity holders of the Company       97.8      112.5      329.8      355.8 
  Non-controlling interest            38.2       23.1       92.0       66.3 
  Profit for the period              136.0      135.6      421.9      422.1 
                                                                            
                                                                            
                                                                            
Consolidated Statement of Financial Position                                
                                                                            
                                               September 30,   December 31, 
                  USD million                       2013           2012     
                                                 (Unaudited)                
                                                                            
  Property, plant and equipment, net                  4,763.4        4,438.1
  Intangible assets, net                                964.8          965.2
  Investments in non-consolidated companies           1,443.9        1,710.7
  Other investments                                         -            7.0
  Derivative financial instruments                        1.0              -
  Deferred tax assets                                    14.6           12.5
  Receivables, net                                       31.9           72.8
  Trade receivables, net                                  2.5            5.0
                                               -------------- --------------
Total non-current assets                              7,222.3        7,211.4
                                                                            
  Receivables                                           165.0          187.2
  Derivative financial instruments                          -            0.1
  Inventories, net                                    1,831.4        2,000.1
  Trade receivables, net                                751.9          735.1
  Other investments                                     161.1          160.8
  Cash and cash equivalents                             323.4          560.3
                                               -------------- --------------
Total current assets                                  3,232.8        3,643.6
                                                                            
Non-current assets classified as held for sale           16.3           12.0
                                               -------------- --------------
                                                                            
Total assets                                         10,471.4       10,867.0
                                                                            
Capital and reserves attributable to the                                    
 company's equity holders                             5,346.8        5,369.2
Non-controlling interest                              1,044.7        1,065.7
                                                                            
Total Equity                                          6,391.5        6,435.0
                                                                            
  Provisions                                             14.8           17.5
  Deferred income tax                               
    629.2          657.2
  Other liabilities                                     333.9          310.6
  Trade payables                                         16.0           18.3
  Derivative financial instruments                          -            0.3
  Borrowings                                            653.1        1,302.8
                                               -------------- --------------
Total non-current liabilities                         1,647.1        2,306.6
                                                                            
  Current tax liabilities                               179.8          153.1
  Other liabilities                                     128.2           88.5
  Trade payables                                        682.1          762.2
  Borrowings                                          1,442.7        1,121.6
                                               -------------- --------------
Total current liabilities                             2,432.8        2,125.4
                                               -------------- --------------
Total liabilities                                     4,079.9        4,432.1
                                                                            
Total equity and liabilities                         10,471.4       10,867.0
                                                                            
                                                                            
                                                                            
Consolidated Statement of Cash Flows                                        
                                                                            
           USD million            3Q 2013    3Q 2012    9M 2013    9M 2012  
                                      (Unaudited)           (Unaudited)     
                                                                            
Profit for the period                136.0      135.6      421.9      422.1 
Depreciation and amortization         92.3       87.4      282.6      266.7 
Equity in losses of non-                                                    
 consolidated companies                0.9       16.0       27.1       51.0 
Changes in provisions                 (2.5)       0.7        5.5        4.7 
Net foreign exchange results and                                            
 others                               32.3       32.5       56.4       61.6 
Interest accruals less payments       (3.2)     (18.3)     (18.5)     (13.1)
Income tax accruals less                                                    
 payments                             31.4       (7.9)     (53.8)      65.8 
Changes in working capital             2.8       89.9      124.3      (80.2)
                                 ---------  ---------  ---------  --------- 
                                                                            
Net cash provided by operating                                              
 activities                          290.0      335.9      845.5      778.6 
                                                                            
Capital expenditures                (217.5)    (303.7)    (725.1)    (710.2)
Proceeds from the sale of                                                   
 property, plant & equipment           0.6        0.5        1.6        1.5 
Acquisition of business                                                     
  Purchase consideration                 -          -          -   (2,243.6)
Acquisition of non-controlling                                              
 interest                                -          -       (0.9)         - 
Dividends received from non-                                                
 consolidated companies                  -          -          -        4.7 
(Increase) / Decrease in Other                                              
 Investments                         (49.5)      14.6        6.6      126.5 
                                 ---------  ---------  ---------  --------- 
                                                                            
Net cash used in investing                                                  
 activities                         (266.5)    (288.6)    (717.9)  (2,821.2)
                                                                            
Dividends paid in cash to                                                   
 company's shareholders                  -          -     (127.6)    (147.2)
Dividends paid in cash by                                                   
 subsidiary companies                    -          -      (27.4)     (15.9)
Contributions from non-                                                     
 controlling shareholders                                                   
 inconsolidated subsidiaries             -       12.3          -       41.7 
Proceeds from borrowings             443.9      140.3      973.0    1,038.2 
Repayments of borrowings            (528.1)    (357.5)  (1,190.9)    (699.8)
                                 ---------  ---------  ---------  --------- 
                                                                            
Net cash (used in) provided by                                              
 financing activities                (84.2)    (205.0)    (373.0)     216.9 
                                                                            
Decrease in cash and cash                                                   
 equivalents                         (60.7)    (157.8)    (245.4)  (1,825.6)
                                                                            
                                                                            
                                                                            
                                      Shipments                             
Thousand tons                   3Q 2013  3Q 2012  2Q 2013  9M 2013  9M 2012 
                                                                            
  Mexico                        1,269.7  1,276.0  1,191.4  3,710.3  3,732.7 
  Southern Region                 689.0    625.9    662.6  1,960.3  1,846.9 
  Other Markets                   343.0    362.6    358.9  1,085.4  1,020.4 
                                -------  -------  -------  -------  ------- 
Total steel segment             2,301.8  2,264.5  2,212.9  6,756.1  6,600.0 
                                                                            
                                -------  -------  -------  -------  ------- 
Total mining segment              930.0    451.2  1,217.6  3,248.9  1,365.8 
                                                                            
                                                                            
                                    Revenue / ton                           
USD/ton                         3Q 2013  3Q 2012  2Q 2013  9M 2013  9M 2012 
                                                                            
  Mexico                            833      887      863      849      915 
  Southern Region                 1,113    1,122    1,120    1,121    1,108 
  Other Markets                     903      980      902      903    1,032 
                                -------  -------  -------  -------  ------- 
Total steel segment                 927      967      946      937      987 
                                                                            
                                -------  -------  -------  -------  ------- 
Total mining segment                 80      119       84       85      105 
                                                                            
                                                                            
                                      Net Sales                             
USD million                     3Q 2013  3Q 2012  2Q 2013  9M 2013  9M 2012 
                                                                            
  Mexico                        1,057.1  1,132.0  1,028.2  3,150.0  3,416.2 
  Southern Region                 767.1    702.4    741.9  2,197.7  2,045.9 
  Other Markets                   309.8    355.5    323.7    980.2  1,053.5 
                                -------  -------  -------  -------  ------- 
Total steel products            2,134.0  2,189.9  2,093.8  6,327.8  6,515.6 
  Other products(1)                 9.5      8.1      6.8     23.4     21.3 
                                -------  -------  -------  -------  ------- 
Total steel segment             2,143.5  2,198.0  2,100.6  6,351.3  6,536.9 
                                                                            
                                -------  -------  -------  -------  ------- 
Total mining segment               74.7     53.8    101.8    276.3    143.6 
                                                                            
                                -------  -------  -------  -----
--  ------- 
Total steel and mining segments 2,218.2  2,251.8  2,202.4  6,627.6  6,680.5 
                                                                            
Intersegment eliminations         (74.4)   (53.8)   (68.0)  (213.6)  (143.4)
                                -------  -------  -------  -------  ------- 
                                                                            
Total net sales                 2,143.8  2,198.0  2,134.4  6,414.0  6,537.1 
                                                                            
(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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