Ternium Sees Lower Operating Profit as Net Misses Estimates

Ternium SA (TX), Latin America’s second- largest steelmaker, reported fourth-quarter profit that missed analysts’ estimates amid foreign-exchange losses and said it expects lower operating income this quarter.

Net income attributable to shareholders rose to $104.7 million, or 53 cents per American depositary share, from $77.5 million, or 39 cents, a year earlier, Luxembourg-based Ternium said today in a statement. Earnings of 53 cents per ADR included a 25 cent foreign-exchange loss.

The company was expected to post profit of 59 cents a share, the average of five analyst estimates compiled by Bloomberg. Earnings before interest, taxes, depreciation and amortization rose to $369.6 million, beating the average estimate of $315.8 million from four analysts.

The company said it expects operating income to fall in the three months through March from the fourth quarter as shipments remain “relatively stable” and costs rise. Ternium expects weaker shipments in Argentina and higher sales in Mexico.

“It was a negative surprise that they’re expecting a worse result for the first quarter,” Christian Reos, an analyst at Allaria Ledesma & Cia. brokerage in Buenos Aires, said by telephone today. “I expected stable costs and the company said costs are going to rise.”

Net sales rose 14 percent to $2.2 billion in the three- month period because of higher steel prices and demand from Latin America. Ternium posted a foreign-exchange loss in the quarter after the depreciation of the Mexican peso boosted the value of the unit’s U.S. dollar denominated debt.

Ternium, which earlier fell as much as 10.6 percent, declined 0.9 to $22.27 at the close of New York trading. The shares dropped 36 percent in the 12 months through yesterday’s close.

-- With assistance from Alex Emery in Lima. Editors: Dale Crofts, Jessica Resnick-Ault

To contact the reporter on this story: Laura Price in Buenos Aires at lprice3@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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