LUXEMBOURG, Nov. 4, 2009 (Marketwire) --
LUXEMBOURG -- (Marketwire) -- 11/04/09 -- 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.
