LUXEMBOURG -- (Marketwire) -- 05/04/09 -- Ternium S.A. (NYSE: TX) today announced its
results for the first quarter ended March 31, 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 First Quarter 2009 Results(1)
1Q 2009 4Q 2008 1Q 2008
Shipments (tons) 1,504,000 1,547,000 -3% 2,088,000 -28%
Net Sales (US$ million) 1,174.7 1,721.1 -32% 1,942.6 -40%
Operating Income (Loss) (US$
million) (26.5) 186.3 -114% 359.4
EBITDA (US$ million) 95.0 281.1 -66% 464.4 -80%
EBITDA Margin (% of net
sales) 8% 16% 24%
EBITDA per Ton, Flat & Long
Steel (US$/ton) 55 158 -65% 212 -74%
Net Foreign Exchange Result
(US$ million) (160.5) (622.5) 40.2
Discontinued Operations
Result (US$ million) - - 159.9
Net Income (Loss) (US$
million) (117.0) (348.5) 480.7
Equity Holders' Net Income
(Loss) (US$ million) (93.2) (334.0) 422.1
Earnings (Loss) per ADS
(US$) (0.46) (1.67) 2.11
-- EBITDA(2) of US$95.0 million in the first quarter 2009, down 66%
quarter-over-quarter, as revenue per ton decreased US$301 compared to the
fourth quarter 2008, while operating cost per ton decreased US$197.
-- Loss per American Depositary Share (ADS)(3) of US$0.46 in the first
quarter 2009, which includes a US$0.86 non-cash foreign exchange loss per
ADS on Ternium's Mexican subsidiary's US dollar denominated debt.
-- Positive free cash flow(4) of US$341.0 million in the first quarter
2009, as Ternium reduced its steel inventories by 366,000 tons and its
capital expenditures by 60% compared to the fourth quarter 2008.
-- Net financial debt(5) of US$1.8 billion at the close of the first
quarter 2009, a decrease of US$345.4 million compared to the close of the
fourth quarter 2008.
Ternium's operating result in the first quarter 2009 was a loss of US$26.5
million, compared to a gain of US$186.3 million in the fourth quarter 2008,
mainly due to lower gross margin. Additionally, the operating loss in the
first quarter 2009 included a US$123.1 million loss related to the
write-down of Ternium's inventory compared to a US$68.3 million inventory
related write-down in the fourth quarter 2008. Revenue per ton decreased
US$301 in the first quarter 2009 when compared to the fourth quarter 2008,
while operating cost per ton decreased US$197.
The operating result in the first quarter 2009 was US$385.9 million lower
than that of the first quarter 2008, mainly due to a 28% decrease in
shipments and a 16% decrease in revenue per ton. There was no write-down
of inventories recorded in the first quarter 2008.
Ternium had a net loss of US$117.0 million in the first quarter 2009,
compared to a net loss of US$348.5 million in the fourth quarter 2008. The
quarter-over-quarter improvement was mainly due to a US$462.0 million
reduction in net foreign exchange loss, partially offset by a US$212.8
million reduction in operating income and a US$49.3 million reduction in
income tax benefit.
The first quarter 2009 net loss compared to a net gain of US$480.7 million
in the first quarter 2008. This year-over-year decrease was mainly due to
a US$385.9 million lower operating result, a US$200.8 million lower net
foreign exchange result and the absence in the first quarter 2009 of a
US$159.9 million discontinued operations gain present in the first quarter
2008, partially offset by a US$106.4 million reduction in income tax
expense.
Net foreign exchange result during the first quarter 2009 was a loss of
US$160.5 million, compared to a loss of US$622.5 million in the fourth
quarter 2008 and a gain of US$40.2 million in the first quarter 2008. The
net foreign exchange losses in the first quarter 2009 and fourth quarter
2008 were primarily due to the Mexican Peso's 6% and 25% devaluation,
respectively, 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.
Ternium's financial debt at the end of the first quarter 2009 was US$2.9
billion, while the company's cash, cash equivalents and other liquid
investments totaled US$1.2 billion as of March 31, 2009. The company's net
financial debt of US$1.8 billion at the close of the first quarter 2009
decreased by US$345.4 million from its net financial debt position as of
December 31, 2008.
Outlook
Ternium expects apparent demand in its main markets to remain weak in the
second quarter 2009 as a result of the continued reduction of steel
inventories. In the second half of 2009, the company anticipates shipments
to gradually increase, prices to remain weak due to the steel industry's
low capacity utilization in Ternium's regions and costs to be reduced by
lower price of steel making inputs and the initiatives that Ternium is
carrying out to adjust to the current environment.
The company anticipates a lower net debt position at the close of the
second quarter 2009, mainly as a result of a continuing decline in working
capital needs and a low level of capital expenditures. Ternium plans to
achieve a balance between inventory levels and expected demand in the third
quarter 2009.
Analysis of First quarter 2009 Results
Net loss attributable to Ternium's equity holders in the first quarter 2009
was US$93.2 million, compared with net income attributable to the company's
equity holders of US$422.1 million in the first quarter 2008. Including
minority interest, net loss for the first quarter 2009 was US$117.0
million, compared with net income of US$480.7 million in the first quarter
2008. Loss per ADS for the first quarter 2009 was US$0.46, compared with
earnings per ADS of US$2.11 in the first quarter 2008.
Net sales in the first quarter 2009 were US$1.2 billion, 40% lower than net
sales in the first quarter 2008. Shipments of flat and long products were
1.5 million tons during the first quarter 2009, a decrease of 28% compared
to shipment levels in the first quarter 2008, mainly due to a decrease in
demand in Ternium's main steel markets. Revenue per ton shipped was US$761
in the first quarter 2009, a decrease of 16% compared to the same quarter
in 2008, mainly as a result of lower prices and a less favorable market
mix.
Net Sales (million Shipments (thousand Revenue / ton
US$) tons) (US$/ton)
1Q 1Q
1Q 2009 1Q 2008 Dif. 1Q 2009 1Q 2008 Dif. 2009 2008 Dif.
South &
Central
America 358.0 635.8 -44% 363.7 673.0 -46% 984 945 4%
North
America 545.6 1,021.0 -47% 704.0 1,080.0 -35% 775 945 -18%
Europe &
other 93.3 4.8 170.9 4.8 546 1,008 -46%
------- ------- --- ------- ------- --- ---- ----- ------
Total flat
products 996.8 1,661.6 -40% 1,238.5 1,757.7 -30% 805 945 -15%
South &
Central
America 11.4 36.4 -69% 23.1 56.7 -59% 493 643 -23%
North
America 134.8 186.4 -28% 239.4 265.3 -10% 563 703 -20%
Europe &
other 2.0 5.2 -61% 3.0 8.8 -66% 666 587 14%
------- ------- --- ------- ------- --- ---- ----- ------
Total long
products 148.2 228.0 -35% 265.5 330.7 -20% 558 689 -19%
Total flat and
long products 1,145.0 1,889.6 -39% 1,504.1 2,088.5 -28% 761 905 -16%
Other
products(1) 29.7 53.0 -44%
------- ------- ---
Total Net
Sales 1,174.7 1,942.6 -40%
(1) Primarily includes iron ore, pig iron and pre-engineered metal
buildings.
Sales of flat products during the first quarter 2009 totaled US$1.0
billion, a decrease of 40% 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 1.2 million tons in the first quarter
2009, a decrease of 30% compared with the same period in 2008, mainly due
to a decrease in demand in Ternium's main steel markets. Revenue per ton
shipped decreased 15% to US$805 in the first quarter 2009 compared with the
same period in 2008, mainly due to lower steel prices and a less favorable
market mix.
Sales of long products were US$148.2 million in the first quarter 2009, a
decrease of 35% compared to the same period in 2008 mainly due to lower
volumes and prices. Shipments of long products totaled 266,000 tons in the
first quarter 2009, a 20% decrease versus the same quarter in 2008, due to
lower demand in Ternium's billet markets in the South & Central America
Region. Revenue per ton shipped was US$558 in the first quarter 2009, a
decrease of 19% compared to the first quarter 2008, mainly due to lower
steel prices.
Sales of other products totaled US$29.7 million during the first quarter
2009, compared to US$53.0 million during the first quarter 2008. The
decrease was mainly driven by lower iron ore shipments and reduced revenue
from other items including pig iron and metal building components.
Sales of flat and long products in the North America Region were US$680.4
million in the first quarter 2009, a decrease of 44% versus the same period
in 2008, due to lower shipments and prices. Shipments in the region
totaled 943,000 tons during the first quarter 2009, or 30% lower than in
the same period in 2008 as a result of lower demand in the region's main
markets.
