Published:
Ternium Announces Third Quarter and First Nine Months of 2009 Results
Ternium S.A. (NYSE: TX) today announced its
results for the third quarter and nine-month period ended September 30,
2009.
The financial and operational information contained in this press release
is based on Ternium S.A.'s consolidated financial statements prepared in
accordance with International Financial Reporting Standards (IFRS) and
presented in U.S. dollars and metric tons.
Summary of Third Quarter 2009 Results
3Q 2009 2Q 2009 3Q 2008
Shipments (tons) 1,683,000 1,519,000 11% 1,844,000 -9%
Net Sales (US$ million) 1,278.8 1,140.3 12% 2,436.9 -48%
Operating Income (Loss) (US$
million) 158.9 (52.1) 524.2 -70%
EBITDA (US$ million) 254.3 43.4 486% 636.0 -60%
EBITDA Margin (% of net sales) 20% 4% 26%
EBITDA per Ton, Flat & Long
Steel (US$) 147 18 717% 327 -55%
Net Foreign Exchange Result
(US$ million) (47.6) 219.1 (150.1)
Discontinued Operations Result
(US$ million) - 428.0 (2.8)
Net Income (US$ million) 104.7 584.7 -82% 247.3 -58%
Equity Holders' Net Income
(US$ million) 88.5 562.8 -84% 211.7 -58%
Earnings per ADS (US$) 0.44 2.81 -84% 1.06 -58%
-- EBITDA(1) of US$254.3 million in the third quarter 2009, up US$210.9
million quarter-over-quarter, mainly as a result of a US$113 decrease in
operating cost per ton and a 11% increase in shipments compared to the
second quarter 2009, as revenue per ton remained relatively stable.
-- Earnings per American Depositary Share (ADS)(2) of US$0.44 in the
third quarter 2009, which includes a US$0.17 gain as a result of the
transfer of the Sidor shares to Venezuela compared to a US$2.31 gain in the
second quarter 2009. Additionally, the third quarter 2009 includes a
US$0.18 non-cash foreign exchange loss per ADS on Ternium's Mexican
subsidiary's US dollar denominated debt, compared to a US$0.76 gain in the
second quarter 2009.
-- Positive free cash flow(3) of US$248.2 million in the third quarter
2009. In addition, Ternium collected a first installment of US$266.5
million in connection with the transfer of the Sidor shares to Venezuela.
-- Net financial debt(4) of US$485.7 million at the close of the third
quarter 2009, a decrease of US$520.9 million compared to the company's net
financial debt at the close of the second quarter 2009.
Ternium's operating result in the third quarter 2009 was a gain of US$158.9
million, compared to a loss of US$52.1 million in the second quarter 2009,
mainly due to higher shipments and lower operating cost per ton. Ternium's
cost of sales in the third quarter 2009 was impacted less than it was in
the second quarter 2009 by higher cost inventories manufactured with
raw-materials and semi-finished products purchased before input prices
declined as a result of the financial crisis. Operating income in the
third quarter 2009 was US$365.3 million lower than in the third quarter
2008, mainly due to a 161,000 tons decrease in shipments and a US$530
decrease in revenue per ton, partially offset by a US$356 decrease in
operating cost per ton.
Net income was US$104.7 million in the third quarter 2009, compared to net
income of US$584.7 million in the second quarter 2009. Net income before
discontinued operations and net foreign exchange results was US$214.7
million higher in the third quarter 2009 than in the second quarter 2009,
mainly as a result of higher operating income. Additionally, there was a
US$428.0 million discontinued operations gain in the second quarter 2009
related to the transfer of the Sidor shares to Venezuela. There also was a
US$266.7 million non-cash sequential decrease in net foreign exchange
results in the third quarter 2009 from the second quarter 2009 that was
offset by changes in Ternium's net equity position in the currency
translation adjustments line.
Net income in the third quarter 2009 was US$142.6 million lower than in the
third quarter 2008. The year-over-year decrease was mainly due to a
US$365.3 million decline in operating income, partially offset by a net
foreign exchange loss that was US$102.5 million lower, a reduction of
US$62.5 million in income tax expense and interest income in connection
with the Sidor financial asset that was US$38.3 million higher.
Summary of First Nine Months of 2009 Results
9M 2009 9M 2008
Shipments (tons) 4,706,000 5,996,000 -22%
Net Sales (US$ million) 3,593.8 6,743.8 -47%
Operating Income (US$ million) 80.3 1,489.8 -95%
EBITDA (US$ million) 392.6 1,808.4 -78%
EBITDA Margin (% of net sales) 11% 27%
EBITDA per Ton, Flat & Long Steel (US$) 76 289 -74%
Net Foreign Exchange Result (US$ million) 10.9 (10.2)
Discontinued Operations Result (US$ million) 428.0 157.1
Net Income (US$ million) 572.3 1,223.6 -53%
Equity Holders' Net Income (US$ million) 558.1 1,049.4 -47%
Earnings per ADS (US$) 2.78 5.23 -47%
-- EBITDA(5) of US$392.6 million in the first nine months of 2009, down
78% compared to the first nine months of 2008, mainly due to lower
shipments and revenue per ton, partially offset by lower operating cost per
ton.
-- Earnings per American Depositary Share (ADS) of US$2.78 in the first
nine months of 2009, which includes a discontinued operations gain of
US$2.31 per ADS as a result of the transfer of the Sidor shares to
Venezuela.
-- Positive free cash flow(6) of US$943.4 million in the first nine
months of 2009. Ternium reduced its steel inventories by 550,000 tons and
its capital expenditures by 65% compared to the first nine months of 2008.
In addition, Ternium collected US$666.5 million in connection with the
transfer of the Sidor shares to Venezuela.
Ternium's operating result in the first nine months of 2009 was a gain of
US$80.3 million, compared to a gain of US$1.5 billion in the first nine
months of 2008, as shipments decreased by 1.3 million tons and revenue per
ton decreased US$348 year-over-year, while operating cost per ton decreased
US$123.
Net income was US$572.3 million in the first nine months of 2009, compared
to US$1.2 billion in the first nine months of 2008. The year-over-year
decrease was mainly due to a US$1.4 billion reduction in operating income,
partially offset by a US$331.8 million change in income tax results, a
US$270.9 million increase in discontinued operations gain and a US$95.4
million higher interest income in connection with the Sidor financial
asset.
Outlook
The economic recovery underway in all regions of the world, driven by the
government led stimulus packages and the strong performance of the Asian
economies, is also benefiting the Latin-American economies. Mexico is
still affected by the more gradual recovery in the US, while Argentina is
recovering faster, partly as a result of the high price of commodities.
Ternium expects a slight increase in operating income in the fourth quarter
2009 compared to the operating income it achieved in the third quarter 2009
as a result of higher revenue per ton, relatively stable cost per ton and
slightly lower shipments mainly due to the year-end seasonal effect.
Analysis of Third Quarter 2009 Results
Net income attributable to the Company's equity holders in the third
quarter 2009 was US$88.5 million, compared to US$211.7 million in the third
quarter 2008. Including minority interest, net income in the third quarter
2009 was US$104.7 million, compared to US$247.3 million in the third
quarter 2008. Earnings per ADS in the third quarter 2009 were US$0.44,
compared to US$1.06 in the third quarter 2008.
Net sales in the third quarter 2009 were US$1.3 billion, 48% lower than net
sales in the third quarter 2008. Shipments of flat and long products were
1.7 million tons during the third quarter 2009, a decrease of 9% compared
to shipment levels in the third quarter 2008, mainly due to a decrease in
demand in Ternium's main steel markets. Revenue per ton shipped was US$747
in the third quarter 2009, a decrease of 42% compared to the same quarter
in 2008, mainly as a result of lower prices.
Revenue / ton
Shipments (US$/ton)
Net Sales (million US$) (thousand tons) 3Q 3Q
3Q 2009 3Q 2008 Dif. 3Q 2009 3Q 2008 Dif. 2009 2008 Dif.
South & Central
America 443.3 784.4 -43% 513.8 680.4 -24% 863 1,153 -25%
North America 652.1 1,273.4 -49% 872.8 901.8 -3% 747 1,412 -47%
Europe & other 15.6 2.6 25.3 2.8 616 933
------- ------- ---- ------- ------- ---- ---- ----- ----
Total flat
products 1,111.0 2,060.4 -46% 1,411.9 1,585.1 -11% 787 1,300 -39%
South & Central
America 12.6 104.2 -88% 26.3 86.0 -69% 478 1,212 -61%
North America 134.0 192.0 -30% 244.6 173.3 41% 548 1,108 -51%
Europe & other - - - - - -
------- ------- ---- ------- ------- ---- ---- ----- ----
Total long
products 146.6 296.2 -50% 271.0 259.2 5% 541 1,142 -53%
Total flat and
long products 1,257.6 2,356.6 -47% 1,682.8 1,844.3 -9% 747 1,278 -42%
Other
products (1) 21.2 80.3 -74%
------- ------- ----
Total Net
Sales 1,278.8 2,436.9 -48%
(1) Primarily includes iron ore, pig iron and pre-engineered metal
buildings.
Sales of flat products during the third quarter 2009 totaled US$1.1
billion, a decrease of 46% compared with the same quarter in 2008. Net
sales decreased as a result of lower shipments and revenue per ton.
Shipments of flat products totaled 1.4 million tons in the third quarter
2009, a decrease of 11% compared with the same period in 2008, mainly due
to less demand in the South & Central American region. Revenue per ton
shipped of flat products decreased 39% to US$787 in the third quarter 2009
compared with the same period in 2008, mainly due to lower steel prices.
Sales of long products were US$146.6 million in the third quarter 2009, a
decrease of 50% compared to the same period in 2008 mainly due to lower
prices, partially offset by higher volumes. Shipments of long products
totaled 271,000 tons in the third quarter 2009, a 5% increase versus the
same quarter in 2008, due to higher shipments in North America partially
offset by lower shipments in South & Central America. Revenue per ton
shipped was US$541 in the third quarter 2009, a decrease of 53% compared to
the third quarter 2008, mainly due to lower steel prices.
Sales of other products totaled US$21.2 million during the third quarter
2009, compared with US$80.3 million during the third quarter 2008. The
decrease was mainly driven by lower iron ore shipments and prices and lower
sales of pig iron and pre-engineered metal building systems.
Sales of flat and long products in the North America Region were US$786.2
million in the third quarter 2009, a decrease of 46% versus the same period
in 2008, due to lower prices partially offset by higher shipments.
Shipments in the region totaled 1,117,000 tons during the third quarter
2009, or 4% higher than in the same period in 2008. Revenue per ton
shipped in the region decreased 48% to US$704 in the third quarter 2009
over the same quarter in 2008, mainly due to lower prices.
Flat and long product sales in the South & Central America Region were
US$455.9 million during the third quarter 2009, a decrease of 49% versus
the same period in 2008, due to lower shipments and prices. Shipments in
the region totaled 540,000 tons during the third quarter 2009, or 30% lower
than in the third quarter 2008, due to a lower overall steel demand in the
region. Revenue per ton shipped was US$844 in the third quarter 2009, a
decrease of 27% compared to the same quarter in 2008, mainly due to lower
prices.
Cost of sales totaled US$1.0 billion in the third quarter 2009, compared to
US$1.7 billion in the third quarter 2008. Cost of sales decreased mainly
as a result of lower shipments and lower cost per ton. Cost per ton in the
third quarter 2009 decreased year-over-year due to lower cost of raw
materials and semi-finished products, the effect of write-down charges in
the third quarter 2008, the impact on costs of the Mexican Peso's and
Argentine Peso's year-over-year devaluation versus the US dollar and lower
energy costs, partially offset by the impact on fixed costs per ton
resulting from lower production volumes in the third quarter 2009.
Selling, General and Administrative (SG&A) expenses in the third quarter
2009 were US$114.6 million, or 9% of net sales, compared with US$184.8
million, or 8% of net sales, in the third quarter 2008. The decrease in
SG&A was mainly due to the initiatives that Ternium launched to mitigate
the downturn, the impact on costs of the Mexican Peso's and Argentine
Peso's devaluation versus the US Dollar, lower tax charges and lower
freight volumes and prices as a result of lower activity levels.
Operating results in the third quarter 2009 were a gain of US$158.9
million, or 12% of net sales, compared with a gain of US$524.2 million, or
22% of net sales, in the third quarter 2008.
EBITDA(7) in the third quarter 2009 was US$254.3 million, or 20% of net
sales, compared with US$636.0 million, or 26% of net sales, in the third
quarter 2008.
Net financial results were a loss of US$26.5 million in the third quarter
2009, compared with a loss of US$183.4 million in the third quarter 2008.
During the third quarter 2009, Ternium's net interest expenses totaled
US$19.8 million, a decrease of US$7.0 million compared to the third quarter
2008 due to lower net indebtedness.
Net foreign exchange result was a loss of US$47.6 million in the third
quarter 2009 compared to a loss of US$150.1 million in the same period in
2008. The results were primarily due to the impact of the Mexican Peso's
2% devaluation during the third quarter 2009 and 5% devaluation during the
third quarter 2008 on Ternium's Mexican subsidiary's US dollar denominated
debt. These results are non-cash when measured in US dollars and are
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 is not altered by the Mexican Peso's fluctuation when
stated in US dollars in Ternium's consolidated financial statements. In
accordance with IFRS, Ternium Mexico prepares its financial statements in
Mexican Pesos and registers foreign exchange results on its net non-Mexican
Pesos positions when the Mexican Peso revaluates or devaluates relative to
other currencies.
Interest income on the Sidor financial asset was US$38.3 million in the
third quarter 2009. This result is attributable to the Sidor financial
asset in connection with the transfer of the Sidor shares to Venezuela on
May 7, 2009.
Fair value result of derivative instruments was a gain of US$5.4 million in
the third quarter 2009 compared to a loss of US$2.4 million in the third
quarter 2008. The result was related to certain derivative instruments
entered into mainly to mitigate the impact of interest rate and currency
fluctuations.
Income tax expense for the third quarter 2009 was US$28.0 million, or 21%
of income before income tax, discontinued operations and minority interest,
compared with US$90.5 million in the third quarter 2008, or 27% of income
before income tax, discontinued operations and minority interest.
Income attributable to minority interest for the third quarter 2009 was
US$16.2 million, compared with US$35.6 million in the third quarter 2008,
mainly due to a lower result attributable to minority interest in Siderar.
Analysis of First Nine Months of 2009 Results
Net income attributable to the Company's equity holders for the first nine
months of 2009 was US$558.1 million, compared with US$1.0 billion for the
first nine months of 2008. Including minority interest, net income for the
first nine months of 2009 was US$572.3 million, compared with US$1.2
billion for the first nine months of 2008. Earnings per ADS(8) were
US$2.78 in the first nine months of 2009, compared with US$5.23 in the
first nine months of 2008.
Net sales in the first nine months of 2009 were US$3.6 billion, 47% lower
than net sales in the first nine months of 2008. Shipments of flat and
long products were 4.7 million tons during the first nine months of 2009, a
decrease of 22% compared to shipments in the first nine months of 2008,
mainly due to less demand in Ternium's main steel markets. Revenue per ton
shipped was US$745 in the first nine months of 2009, a decrease of 32%
compared to the same period in 2008, mainly as a result of lower prices.
Revenue / ton
Shipments (US$/ton)
Net Sales (million US$) (thousand tons) 9M 9M
9M 2009 9M 2008 Dif. 9M 2009 9M 2008 Dif. 2009 2008 Dif.
South & Central
America 1,170.2 2,140.2 -45% 1,301.7 2,044.3 -36% 899 1,047 -14%
North America 1,755.5 3,559.0 -51% 2,342.3 3,024.0 -23% 749 1,177 -36%
Europe & other 154.5 17.4 273.6 19.1 565 910
------- ------- ---- ------- ------- ---- ---- ----- ----
Total flat
products 3,080.2 5,716.6 -46% 3,917.5 5,087.5 -23% 786 1,124 -30%
South & Central
America 37.4 202.7 -82% 81.0 210.6 -62% 461 963 -52%
North America 387.4 632.1 -39% 704.7 688.1 2% 550 919 -40%
Europe & other 2.0 5.8 3.0 9.8 667 591
------- ------- ---- ------- ------- ---- ---- ----- ----
Total long
products 426.8 840.6 -49% 788.6 908.5 -13% 541 925 -42%
Total flat and
long products 3,507.0 6,557.1 -47% 4,706.2 5,995.9 -22% 745 1,094 -32%
Other
products (1) 86.8 186.6 -54%
------- ------- ----
Total Net
Sales 3,593.8 6,743.8 -47%
(1) Primarily includes iron ore, pig iron and pre-engineered metal
buildings.
Sales of flat products during the first nine months of 2009 totaled US$3.1
billion, a decrease of 46% compared with the first nine months of 2008.
Net sales decreased as a result of lower shipments and revenue per ton.
Shipments of flat products totaled 3.9 million tons in the first nine
months of 2009, a decrease of 23% compared with the same period in 2008,
mainly due to less demand in Ternium's main steel markets. Revenue per ton
shipped decreased 30% to US$786 in the first nine months of 2009 compared
with the same period in 2008, mainly due to lower steel prices.
Sales of long products were US$426.8 million in the first nine months of
2009, a decrease of 49% compared to the same period in 2008, mainly due to
lower volumes and prices. Shipments of long products totaled 789,000 tons
in the first nine months of 2009, a 13% decrease versus the first nine
months of 2008, mainly due to lower billet shipments. Revenue per ton
shipped was US$541 in the first nine months of 2009, a decrease of 42%
compared to the first nine months of 2008, mainly due to lower steel
prices.
Sales of other products totaled US$86.8 million during the first nine
months of 2009, compared to US$186.6 million during the first nine months
of 2008. The decrease was mainly driven by lower iron ore shipments and
prices and lower sales of pig iron and pre-engineered metal building
systems.
Sales of flat and long products in the North America Region were US$2.1
billion in the first nine months of 2009, a decrease of 49% versus the same
period in 2008, due to lower shipments and prices. Shipments in the region
totaled 3.0 million tons during the first nine months of 2009, or 18% lower
than in the same period in 2008, as a result of lower demand in the
region's main markets. Revenue per ton shipped in the region decreased 38%
to US$703 in the first nine months of 2009 over the same period in 2008,
mainly due to lower prices.
Flat and long product sales in the South & Central America Region were
US$1.2 billion during the first nine months of 2009, a decrease of 48%
versus the same period in 2008, due to lower shipments and prices.
Shipments in the region totaled 1.4 million tons during the first nine
months of 2009, or 39% lower than in the first nine months of 2008, due to
the lower overall steel demand in the region. Revenue per ton shipped was
US$873 in the first nine months of 2009, a decrease of 16% compared to the
same period in 2008, mainly due to lower prices, partially offset by a more
favorable product mix.
Cost of sales was US$3.1 billion in the first nine months of 2009 compared
to US$4.8 billion in the first nine months of 2008. Cost of sales
decreased mainly as a result of lower shipments and lower cost per ton.
Cost per ton in the first nine months of 2009 decreased year-over-year due
to lower raw materials and semi-finished product costs, lower energy costs,
the effect in the first nine months of 2009 of inventory write-downs
performed in the second half of 2008 and the impact on costs of the Mexican
Peso's and Argentine Peso's year-over-year devaluation versus the US
dollar, partially offset by the impact on fixed costs per ton from lower
production volumes and higher personnel reduction charges in the first nine
months of 2009.
Selling, General and Administrative (SG&A) expenses in the first nine
months of 2009 were US$393.7 million, or 11% of net sales, compared with
US$509.9 million, or 8% of net sales, in the first nine months of 2008.
The decrease in SG&A was mainly due to the initiatives that Ternium
launched to mitigate the downturn, the impact on costs of the Mexican
Peso's and Argentine Peso's devaluation versus the US Dollar, lower tax
charges and lower freight volumes and prices as a result of lower activity
levels, partially offset by higher personnel reduction charges.
Operating results in the first nine months of 2009 were a gain of US$80.3
million, or 2% of net sales, compared with a gain of US$1.5 billion, or 22%
of net sales, in the first nine months of 2008.
EBITDA(9) in the first nine months of 2009 was US$392.6 million, or 11% of
net sales, compared to US$1.8 billion, or 27% of net sales, in the first
nine months of 2008.
Net financial results were a gain of US$39.9 million in the first nine
months of 2009, compared with a loss of US$115.4 million in the first nine
months of 2008. During the first nine months of 2009, Ternium's net
interest expenses totaled US$69.3 million, lower than they were during the
first nine months of 2008. Lower net indebtedness was partially offset by
lower interest rates on Ternium's cash position.
Net foreign exchange result was a gain of US$10.9 million in the first nine
months of 2009 compared to a loss of US$10.2 million in the same period in
2008.
Interest income on the Sidor financial asset was US$95.4 million in the
first nine months of 2009. This result is attributable to the Sidor
financial asset in connection with the transfer of the Sidor shares to
Venezuela on May 7, 2009.
Fair value result of derivatives was a gain of US$11.6 million in the first
nine months of 2009 compared to a loss of US$3.5 million in the first nine
months of 2008. The results were related to certain derivative instruments
entered into mainly to mitigate the impact of interest rate and currency
fluctuations.
Income tax benefit for the first nine months of 2009 was US$23.2 million,
compared with an income tax expense of US$308.6 million, or 22% of income
before income tax, discontinued operations and minority interest in the
first nine months of 2008. The first nine months of 2009 result included a
non-recurring gain of US$35.4 million due to a favorable resolution on a
tax-related dispute in Mexico, while the first nine months of 2008 result
included a non-recurring gain of US$96.3 million on account of a reversal
of deferred statutory profit sharing.
Net result of discontinued operations for the first nine months of 2009 was
a gain of US$428.0 million related to the transfer of the Sidor shares to
Venezuela on May 7, 2009. Net result of discontinued operations for the
first nine months of 2008 was a gain of US$157.1 million, including results
from non-core US assets that were sold during the first quarter 2008 and
from Ternium's participation in Sidor until March 31, 2008.
Income attributable to minority interest for the first nine months of 2009
was US$14.2 million, compared with a gain attributable to minority interest
of US$174.2 million in the first nine months of 2008, mainly due to a lower
result attributable to minority interest in Siderar and Ternium Mexico.
Cash Flow and Liquidity
Net cash provided by operating activities in the first nine months of 2009
was US$1.1 billion, compared to net cash used in operating activities of
US$58.6 million in the first nine months of 2008. The difference was
mainly due to a working capital decrease of US$847.4 million in the first
nine months of 2009, compared to a working capital increase of US$1.5
billion in the first nine months of 2008, partially offset by lower
operating results. The decrease in working capital in the first nine
months of 2009 resulted mainly from a US$660.5 million inventory reduction,
a US$151.0 million decrease in trade receivables and a US$101.3 million
decrease in other receivables, mainly tax credits, partially offset by a
US$37.0 million decrease in other liabilities, mainly labor liabilities,
and a US$28.4 million decrease in tax liabilities. Inventories decreased
principally as a result of a lower volume of finished goods, goods in
process and raw materials, as Ternium implemented a de-stocking process
during the first half of 2009 in response to lower demand for steel
products, and lower costs. Trade receivables decreased due to lower
volumes and sale prices and a lower days' sales ratio during the first nine
months of 2009. In the first nine months of 2008, working capital
increased by US$1.5 billion mainly as a result of the higher inventory
value of goods in process and raw materials and higher trade receivables,
partially offset by higher accounts payable, reflecting an increase in
inventory volumes, steel prices and costs.
Capital expenditures in the first nine months of 2009 were US$145.8
million, compared to US$415.3 million in the first nine months of 2008.
Capital expenditures during the first nine months of 2009 were mainly
related to the relining of a blast furnace and the revamping of two coking
batteries in Argentina, and to iron ore mining and processing activities in
Mexico.
In the first nine months of 2009, Ternium had free cash flow(10) of
US$943.4 million, compared to negative free cash flow(10) of US$474.0
million in the first nine months of 2008. In the period, the payments by
Corporación Venezolana de Guayana to Ternium for the transfer of the Sidor
shares to Venezuela were US$666.5 million. Ternium's net repayment of
borrowings in the first nine months of 2009 was US$811.5 million, mostly
related to the scheduled repayments of Ternium Mexico's outstanding debt.
Net cash provided by operating activities in the third quarter 2009 was
US$283.3 million, compared to the US$11.9 million net cash used in
operating activities in the third quarter 2008. Working capital decreased
US$67.9 million in the third quarter 2009, compared to a working capital
increase of US$550.7 million in the third quarter 2008. The decrease in
working capital in the third quarter 2009 was mainly due to a US$38.9
million decrease in inventories, a US$38.5 million decrease in other
receivables, mainly tax credits, and a US$25.8 million increase in accounts
payable, partially offset by a US$29.9 million decrease in other
liabilities, mainly labor liabilities.
Capital expenditures in the third quarter 2009 were US$35.1 million,
compared to US$168.3 million in the third quarter 2008. In the third
quarter 2009, Ternium's free cash flow(11) was US$248.2 million, compared
to negative free cash flow(11) of US$180.2 million in the third quarter
2008. In addition, Ternium collected a first installment of US$266.5
million in connection with the transfer of the Sidor shares to Venezuela.
As of September 30, 2009, Ternium's financial debt was US$2.4 billion,
while its cash and cash equivalents and other investments totaled US$2.0
billion. Financial debt is mainly comprised of a syndicated loan with
scheduled capital repayments of approximately US$500 million in 2010 and
2011, and US$1.3 billion in 2012. Ternium's net debt position(12) of
US$485.7 million as of September 30, 2009 decreased by US$1.6 billion
compared to its net debt position as of December 31, 2008. The Company
maintains sufficient cash and marketable securities and credit facilities
to finance normal operations. Although Ternium believes it has access to
the credit markets, it has not negotiated additional credit facilities.
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, manufacturing and
processing 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. The
Company has an annual production capacity of approximately nine million
tons of finished steel products. More information about Ternium is
available at www.ternium.com.
(1) EBITDA in the third quarter 2009 equals operating income of US$158.9
million plus depreciation and amortization of US$95.4 million.
(2) 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 of 2,004,743,442.
(3) Free cash flow for the third quarter 2009 equals net cash provided by
operations of US$283.3 million less capital expenditures of US$35.1
million.
(4) Net financial debt in the third quarter 2009 equals borrowings of
US$2.4 billion less cash and cash equivalents of US$1.9 billion and other
investments of US$69.5 million.
(5) EBITDA in the first nine months of 2009 equals operating income of
US$80.3 million plus depreciation and amortization of US$285.3 million and
impairment charges related to intangible assets of US$27.0 million.
(6) Free cash flow for the first nine months of 2009 equals net cash
provided by operations of US$1.1 billion less capital expenditures of
US$145.8 million.
(7) EBITDA in the third quarter 2009 equals operating income of US$158.9
million plus depreciation and amortization of US$95.4 million.
(8) 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 of 2,004,743,442.
(9) EBITDA in the first nine months of 2009 equals operating income of
US$80.3 million plus depreciation and amortization of US$285.3 million and
impairment charges related to intangible assets of US$27.0 million.
(10) Free cash flow for the first nine months of 2009 equals net cash
provided by operating activities of US$1.1 billion less capital
expenditures of US$145.8 million, while negative free cash flow for the
first nine months of 2008 equals net cash used in operating activities of
US$58.6 million less capital expenditures of US$415.3 million.
(11) Free cash flow for the third quarter 2009 equals net cash provided by
operating activities of US$283.3 million less capital expenditures of
US$35.1 million, while negative free cash flow for the third quarter 2008
equals net cash used in operating activities of US$11.9 million less
capital expenditures of US$168.3 million.
(12) Net debt position as of September 30, 2009 equals borrowings of US$
2.4 billion less cash and cash equivalents of US$1.9 billion and other
investments of US$69.5 million.
Consolidated income statement
US$ million 3Q 2009 3Q 2008 Dif. 9M 2009 9M 2008 Dif.
Net sales 1,278.8 2,436.9 (1,158.1) 3,593.8 6,743.8 (3,150.0)
Cost of sales (1,005.4) (1,724.1) 718.7 (3,098.6) (4,751.3) 1,652.7
-------- -------- -------- -------- -------- --------
Gross profit 273.5 712.8 (439.3) 495.2 1,992.5 (1,497.3)
Selling, general
and
administrative
expenses (114.6) (184.8) 70.2 (393.7) (509.9) 116.2
Other operating
(expenses)
income, net (0.0) (3.8) 3.8 (21.1) 7.2 (28.3)
-------- -------- -------- -------- -------- --------
Operating income 158.9 524.2 (365.3) 80.3 1,489.8 (1,409.5)
Interest expense (25.6) (29.1) 3.5 (85.4) (103.4) 18.0
Interest income 5.8 2.2 3.6 16.1 26.3 (10.2)
Interest income
- Sidor financial
asset 38.3 - 38.3 95.4 - 95.4
Other financial
(expenses)
income, net (44.9) (156.5) 111.6 13.8 (38.3) 52.1
Equity in
earnings
of associated
companies 0.3 (0.1) 0.4 0.9 0.8 0.2
-------- -------- -------- -------- -------- --------
Income before
income tax
expense 132.7 340.6 (208.0) 121.2 1,375.1 (1,254.0)
Income tax
(expense)
benefit
Current and
deferred income
tax (expense)
benefit (28.0) (90.5) 62.5 23.2 (404.9) 428.0
Reversal of
deferred
statutory
profit sharing - - - - 96.3 (96.3)
Discontinued
operations - (2.8) 2.8 428.0 157.1 270.9
Net income for
the period 104.7 247.3 (142.6) 572.3 1,223.6 (651.3)
Attributable
to:
Equity holders
of the Company 88.5 211.7 (123.2) 558.1 1,049.4 (491.3)
Minority
interest 16.2 35.6 (19.4) 14.2 174.2 (160.0)
-------- -------- -------- -------- -------- --------
104.7 247.3 (142.6) 572.3 1,223.6 (651.3)
Consolidated balance sheet
September 30, December 31,
US$ million 2009 2008
Property, plant and equipment, net 3,967.0 4,212.3
Intangible assets, net 1,063.6 1,136.4
Investment in associated companies 6.4 5.6
Sidor financial asset 258.2 -
Other investments, net 18.5 16.9
Receivables, net 167.1 120.2
------------- -------------
Total non-current assets 5,480.8 5,491.4
Receivables 125.2 249.0
Derivative financial instruments 3.9 1.5
Inventories, net 1,093.0 1,826.5
Trade receivables, net 467.1 623.0
Sidor financial asset 952.7 -
Available for sale assets-discontinued
operations - 1,318.9
Other investments 69.5 90.0
Cash and cash equivalents 1,884.4 1,065.6
------------- -------------
Total current assets 4,595.7 5,174.5
Non-current assets classified as held for sale 10.3 5.3
Total assets 10,086.9 10,671.2
Shareholders' equity 5,073.6 4,597.4
Minority interest in subsidiaries 916.8 964.1
Minority interest & shareholders' equity 5,990.4 5,561.5
Provisions 20.7 24.4
Deferred income tax 826.8 810.2
Other liabilities 154.9 148.7
Derivative financial instruments 35.2 65.8
Borrowings 1,806.5 2,325.9
------------- -------------
Total non-current liabilities 2,844.1 3,375.0
Current tax liabilities 79.3 194.1
Other liabilities 62.6 103.4
Trade payables 435.5 438.7
Derivative financial instruments 41.8 57.2
Borrowings 633.1 941.5
------------- -------------
Total current liabilities 1,252.3 1,734.8
------------- -------------
Total liabilities 4,096.5 5,109.8
Total liabilities, minority interest &
shareholders' equity 10,086.9 10,671.2
Consolidated cash flow statement
3Q 3Q
US$ million 2009 2008 Dif. 9M 2009 9M 2008 Dif.
Net income from
continuing operations 104.7 250.1 (145.4) 144.3 1,066.5 (922.2)
Adjustments for:
Depreciation and
amortization 95.4 111.8 (16.4) 285.3 318.7 (33.4)
Equity in earnings of
associated companies (0.3) 0.1 (0.4) (0.9) (0.8) (0.2)
Changes in provisions 0.2 2.8 (2.7) 2.6 4.7 (2.1)
Net foreign exchange
results and others 31.7 137.3 (105.6) 3.2 (20.3) 23.4
Interest accruals
less payments (3.4) (1.1) (2.4) (3.8) (85.7) 81.9
Interest income -
Sidor financial asset (38.3) - (38.3) (95.4) - (95.4)
Income tax accruals
less payments 25.5 37.7 (12.2) (120.5) 110.0 (230.5)
Impairment charge - - - 27.0 - 27.0
Changes in working
capital 67.9 (550.7) 618.6 847.4 (1,451.9) 2,299.3
------ ------ ------ -------- -------- -------
Net cash provided by
(used in) operating
activities 283.3 (11.9) 295.2 1,089.2 (58.6) 1,147.9
Capital expenditures (35.1) (168.3) 133.2 (145.8) (415.3) 269.5
Proceeds from sale of
property, plant &
equipment 1.6 0.4 1.2 2.3 1.4 0.8
Acquisition of
business - - - (0.2) - (0.2)
(Increase) Decrease in
Other Investments (69.5) (89.1) 19.6 20.5 (23.8) 44.2
Proceeds from Sidor
financial assets 266.5 - 266.5 666.5 - 666.5
Proceeds from sale of
discontinued
operations - (3.9) 3.9 - 718.6 (718.6)
Discontinued operations - 152.6 (152.6) - 242.4 (242.4)
------ ------ ------ -------- -------- -------
Net cash provided by
(used in) investing
activities 163.6 (108.3) 271.9 543.4 523.4 20.0
Dividends paid in cash
and other
distributions
to company's equity
shareholders - - - - (100.2) 100.2
Dividends paid in
cash and other
distributions to
minority shareholders - - - - (19.6) 19.6
Proceeds from
borrowings 43.9 190.7 (146.8) 205.9 372.0 (166.1)
Repayment of
borrowings (421.0) (142.5) (278.5) (1,017.4) (1,074.0) 56.5
------ ------ ------ -------- -------- -------
Net cash (used in)
provided by financing
activities (377.1) 48.1 (425.3) (811.5) (821.8) 10.3
Increase (Decrease) in
cash and cash
equivalents 69.7 (72.1) 141.8 821.0 (357.1) 1,178.1
Shipments
Thousand tons 3Q 2009 3Q 2008 2Q 2009 9M 2009 9M 2008
South & Central America 513.8 680.4 424.2 1,301.7 2,044.3
North America 872.8 901.8 765.5 2,342.3 3,024.0
Europe & other 25.3 2.8 77.5 273.6 19.1
------- ------- ------- ------- -------
Total flat products 1,411.9 1,585.1 1,267.1 3,917.5 5,087.5
South & Central America 26.3 86.0 31.5 81.0 210.6
North America 244.6 173.3 220.6 704.7 688.1
Europe & other - - 0.0 3.0 9.8
------- ------- ------- ------- -------
Total long products 271.0 259.2 252.2 788.6 908.5
Total flat and long products 1,682.8 1,844.3 1,519.3 4,706.2 5,995.9
Revenue / ton
US$/ton 3Q 2009 3Q 2008 2Q 2009 9M 2009 9M 2008
South & Central America 863 1,153 870 899 1,047
North America 747 1,412 729 749 1,177
Europe & other 616 933 590 565 910
------- ------- ------- ------- -------
Total flat products 787 1,300 767 786 1,124
South & Central America 478 1,212 425 461 963
North America 548 1,108 538 550 919
Europe & other - - 717 667 591
------- ------- ------- ------- -------
Total long products 541 1,142 524 541 925
Total flat and long products 747 1,278 727 745 1,094
Net Sales
US$ million 3Q 2009 3Q 2008 2Q 2009 9M 2009 9M 2008
South & Central America 443.3 784.4 368.9 1,170.2 2,140.2
North America 652.1 1,273.4 557.8 1,755.5 3,559.0
Europe & other 15.6 2.6 45.7 154.5 17.4
------- ------- ------- ------- -------
Total flat products 1,111.0 2,060.4 972.4 3,080.2 5,716.6
South & Central America 12.6 104.2 13.4 37.4 202.7
North America 134.0 192.0 118.6 387.4 632.1
Europe & other - - 0.0 2.0 5.8
------- ------- ------- ------- -------
Total long products 146.6 296.2 132.0 426.8 840.6
------- ------- ------- ------- -------
Total flat and long products 1,257.6 2,356.6 1,104.4 3,507.0 6,557.1
Other products (1) 21.2 80.3 35.9 86.8 186.6
------- ------- ------- ------- -------
Total net sales 1,278.8 2,436.9 1,140.3 3,593.8 6,743.8
(1) Primarily includes iron ore, pig iron and pre-engineered metal
buildings.
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