Ternium presented good results in all its operations during the second quarter of the year. CSA integration process moves forward according to schedule.
With a “strong” activity in Mexico and a “much better” one in Argentina, Ternium presented positive economic results in the second quarter of the year, and provided an outlook of the coming months before analysts.
“We continued having a strong performance in the second quarter of the year, probably somewhat stronger than our estimations back then.,” said Pablo Brizzio, Chief Financial Officer (CFO), in a conference with analysts conducted by him together with Sebastián Martí, Investor Relations Director.
The quarter showed a record of shipments for the company: 2.6 million tons, 7% more than the previous quarter. Sales increased by 11% with good performances in all regions. At the closing of the first semester of the year, the company’s EBITDA (Earnings before interest, taxes, depreciation, and amortization) grew by 38% to USD962.6 million. Compared to that benchmark, “we expect quarterly EBITDA to be lower in the third quarter,” said Brizzio.
He also explained that the negative free cash flow of the first semester (USD 76 million) was due to a rise of working capital, as a result of the increased level of activity, settlement of 2016 income tax expense balance, and inventory growth; factors which should not repeat during the second half of the year.
Brizzio explained that steel market fundamentals in North America remain “healthy” and that the governments in the region have supported the concern around possible unfair competition. “We are confident this will continue into the future, through antidumping, countervailing and other regulatory means to ensure a level playing field for competitors in the market,” he said.
Meanwhile in Argentina, signs of recovery in many sectors of the economy hint at a strong second half of the year, and a 10% increase of steel consumption in 2017. Brizzio also said that economic and sector’s prospects are favorable in Central America, Colombia and the United States.
CSA, one more step
On Tuesday, August 1st the antitrust authority in Brazil (CADE) approved, without any restrictions, Ternium’s acquisition of CSA, the steel plant in Rio de Janeiro. “We continue working in the necessary steps for the closing,” said Brizzio. After CADE’s decision, there is now a period of 15 days in which any other stakeholder can make any comments. “We expect it to close as anticipated, during the third quarter of the year.”
Besides, prospects in the Brazilian economy are also improving. In answer to a question by the analysts, Brizzio recognized the positive results from Usiminas, where Ternium has a stake. “The company is working well in order to get these results, and we are confident that it will continue to do so.”