Ternium closing in on Brazilian purchase

In an early August 2017 conference call with investors, Pablo Brizzio, chief financial officer of Argentina-based steelmaker Ternium, said Brazil’s antitrust authority (the CADE) had approved, “without any restrictions,” Ternium’s acquisition of the CSA, steel plant in Rio de Janeiro, currently operated by Germany’s ThyssenKrupp.

“We continue working on 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, he added. “We expect it to close as anticipated, during the third quarter of 2017.”

Brizzio said prospects in the Brazilian economy are improving and cited what he called positive results from Usiminas, in which Ternium has a stake. “The company is working well in order to get these results, and we are confident it will continue to do so.”

Overall in the second quarter of 2017, Brizzio characterized Ternium as experiencing “strong” activity in Mexico and as achieving “much better” results in Argentina.

“We continued having a strong performance in the second quarter of the year, probably somewhat stronger than our [previous estimates],” said Brizzio, who was joined on the conference call by Sebastián Martí, Ternium’s investor relations director.

The quarter yielded record steel shipments for the company of 2.6 million tons, 7 percent more than the previous quarter. Sales increased by 11 percent with what the Ternium executives called good performances in all regions. As of the end of June 2017, the company’s EBITDA (earnings before interest, taxes, depreciation and amortization) grew by 38 percent to $962.6 million. Compared with that benchmark, “we expect EBITDA to be lower than the third quarter,” Brizzio remarked.

He described steel market fundamentals in North America as “healthy” and said governments in the region have supported the concern around possible unfair competition. “We are confident this will continue into the future, through anti-dumping, countervailing and other regulatory means to ensure a level playing field for competitors in the market,” he commented.

In Argentina, signs of recovery in many sectors of the economy are hinting at a strong second half of the year, and a 10 percent increase in steel consumption for 2017 overall, said Brizzio. He also said overall economic and steel sector prospects are favorable in Central America, Colombia and the United States in the remainder of 2017.