Ternium reports profits in late 2023

Luxembourg-based steel producer Ternium S.A., which operates steel mills in Mexico and Argentina, has reported net income of $554 million in the fourth quarter of 2023 and $986 million for the entire year. The firm’s net income dropped by 53 percent compared with more than $2 billion in income in 2022.

The company says it closed the year with a good set of operating results in the fourth quarter and expresses optimism about the Mexican steel market this year.

Ternium says its steel shipments in Mexico at the end of last year remained strong in a seasonally weaker period, aided by continued growth of commercial customer demand.

The company’s shipments in its South American region, including its operations in Argentina, were "relatively weak" in the fourth quarter as government-imposed restrictions on the importation of inputs further affected its steel production rates in Argentina.

Ternium says the new presidential administration in Argentina has resulted in a devalued currency and a decrease of $537 million in the fair value of the company’s holdings of Argentine securities.

The company is more bullish on Mexico, reporting its shipments there grew a remarkable 22 percent year over year, achieving a record 8.4 million tons in the fourth quarter of 2023.

“Steel demand strengthened in the country supported by nearshoring activities, manufacturing and infrastructure investment," Ternium says. In addition, the company continued gaining share in Mexico’s flat steel market as it ramped up its new hot rolling mill in Pesquería in northern Mexico.

In all of last year, Ternium produced 18.1 million tons of steel in Mexico, representing year-on-year growth of 18 percent.

The company expects to begin deploying its downstream project in Pesquería during the second half of 2024, which it says should support an increase in volumes in this market during the second half of this year.

Ternium also predicts healthy industrial activity in Mexico, together with the nearshoring of manufacturing capacity as contributing to steel demand growth in the region. “Construction activity in Mexico remains at good levels, with nonresidential construction such as industrial warehouses, natural gas pipelines and other infrastructure projects doing well [but] residential construction being negatively affected by increased input prices," the company says.

In Argentina, the company says much needed macroeconomic reforms are expected to have a recessionary effect on the Argentine economy in the first half of 2024 and, consequently, are likely to negatively affect Ternium shipments in the local market.

In the first quarter of this year, Ternium expects its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to increase compared with the fourth quarter of 2023.

The company anticipates adjusted EBITDA margin to sequentially improve as a result of lower steel cost per ton and slightly higher revenue per ton, which it expects will be driven by higher realized steel prices in Mexico and the United States, with the company adding it anticipates slightly higher shipments in North America to be offset by lower shipments in Argentina.