FORM
6 - K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Report
of Foreign Private Issuer
Pursuant
to Rule 13a - 16 or 15d - 16 of
the
Securities Exchange Act of 1934
As
of 2/24/2010
Ternium
S.A.
(Translation
of Registrant's name into English)
Ternium
S.A.
46a,
Avenue John F. Kennedy – 2nd floor
L-1855
Luxembourg
(352)
4661-11-3815
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under
cover Form 20-F or 40-F.
Form
20-F ü Form
40-F__
Indicate
by check mark whether the registrant by furnishing the information contained in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12G3-2(b) under the Securities Exchange Act of 1934.
Yes
No ü
If “Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
Not
applicable
The
attached material is being furnished to the Securities and Exchange Commission
pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934,
as amended.
This
report contains Ternium S.A.’s press release announcing fourth quarter and full
year 2009 results.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
TERNIUM
S.A.
| By: /s/ Roberto Philipps | By: /s/ Daniel Novegil |
| Name: Roberto Philipps | Name: Daniel Novegil |
| Title: Chief Financial Officer | Title: Chief Executive Officer |
Dated:
February 24, 2010
 |
 |
Announces
Fourth Quarter and Full Year 2009 Results
LUXEMBOURG--(Marketwire
- February 24, 2010) - Ternium S.A. (NYSE: TX) today announced its results for
the full year and fourth quarter ended December 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 Fourth Quarter 2009 Results
|
4Q
2009
|
3Q
2009
|
4Q
2008
|
|||||
|
Shipments
(tons)
|
1,655,000
|
1,683,000
|
-2%
|
1,547,000
|
7%
|
||
|
Net
Sales (US$ million)
|
1,365.2
|
1,278.8
|
7%
|
1,721.1
|
-21%
|
||
|
Operating
Income (US$ million)
|
216.1
|
158.9
|
36%
|
186.3
|
16%
|
||
|
EBITDA
(US$ million)
|
315.9
|
254.3
|
24%
|
281.1
|
12%
|
||
|
EBITDA
Margin (% of net sales)
|
23%
|
20%
|
16%
|
||||
|
EBITDA
per Ton, Flat & Long Steel (US$)
|
177
|
147
|
20%
|
158
|
12%
|
||
|
Net
Foreign Exchange Result (US$ million)
|
72.2
|
(47.6)
|
(622.5)
|
||||
|
Discontinued
Operations Result (US$ million)
|
-
|
-
|
-
|
||||
|
Net
Income (US$ million)
|
194.8
|
104.7
|
86%
|
(348.5)
|
-156%
|
||
|
Equity
Holders' Net Income (US$ million)
|
159.3
|
88.5
|
80%
|
(334.0)
|
-148%
|
||
|
Earnings
per ADS (US$)
|
0.79
|
0.44
|
80%
|
(1.67)
|
-148%
|
-- EBITDA(1)
of US$315.9 million in the fourth quarter 2009, up 24% compared
to the third quarter 2009, mainly due to higher revenue per ton.
-- Earnings
per ADS(2) of US$0.79 in the fourth quarter 2009, which includes
a US$0.22 after-tax non-cash foreign exchange gain per ADS on Ternium's
Mexican subsidiary's US dollar denominated debt.
-- Positive
free cash flow(3) of US$9.7 million in the fourth quarter 2009,
including a working capital increase of US$212.3 million during the
fourth quarter 2009 as Ternium readjusted its inventories in
response
to higher demand for steel products.
-- Collection
of US$287.1 million on November 9, 2009 in connection with the
transfer of the Sidor shares to Venezuela.
-- Net
financial debt(4) of US$184.1 million at the end of 2009, a decrease
of US$301.6 million compared to the company's net financial debt
at the end of the third quarter 2009.
Ternium's
operating income in the fourth quarter 2009 was US$216.1 million, up 36%
compared to the third quarter 2009 mainly due to higher revenue per ton in all
of Ternium's regions partially offset by a slightly higher operating cost per
ton. Lower shipments in the North America Region in the fourth quarter 2009
compared to the third quarter 2009 were mostly offset by higher shipments in the
South & Central America Region. Operating income in the fourth quarter 2009
increased 16% when compared to the fourth quarter 2008 mainly as a result of
higher shipments of flat products and lower operating cost per ton, partially
offset by lower revenue per ton.
Net
income in the fourth quarter 2009 was US$194.8 million, an increase of US$90.1
million compared to the third quarter 2009 mainly due to the above mentioned net
foreign exchange results, which were offset by changes in Ternium's net equity
position, and a US$57.2 million increase in operating income, partially offset
by a US$86.5 million increase in income tax expense that includes the effect on
deferred taxes of changes in tax rate related to fiscal reform in
Mexico.
Net
income in the fourth quarter 2009 was US$543.3 million higher than in the fourth
quarter 2008 mainly as a result of a US$694.7 million increase in non-cash net
foreign exchange results, which was offset by changes in Ternium's net equity
position, and a US$29.8 million increase in operating income, partially offset
by a US$260.3 million increase in income tax expense.
Summary
of Full Year 2009 Results
|
12M
2009
|
12M
2008
|
|||
|
Shipments
(tons)
|
6,361,000
|
7,543,000
|
-16%
|
|
|
Net
Sales (US$ million)
|
4,959.0
|
8,464.9
|
-41%
|
|
|
Operating
Income (US$ million)
|
296.4
|
1,676.0
|
-82%
|
|
|
EBITDA
(US$ million)
|
708.5
|
2,089.6
|
-66%
|
|
|
EBITDA
Margin (% of net sales)
|
14%
|
25%
|
||
|
EBITDA
per Ton, Flat & Long Steel (US$)
|
103
|
263
|
-61%
|
|
|
Net
Foreign Exchange Result (US$ million)
|
83.1
|
(632.7)
|
||
|
Discontinued
Operations Result (US$ million)
|
428.0
|
157.1
|
||
|
Net
Income (US$ million)
|
767.1
|
875.2
|
-12%
|
|
|
Equity
Holders' Net Income (US$ million)
|
717.4
|
715.4
|
||
|
Earnings
per ADS (US$)
|
3.58
|
3.57
|
-- EBITDA(5)
of US$708.5 million in 2009, down 66% compared to 2008 mainly due
to lower revenue per ton and shipments, partially offset by lower
operating
cost per ton.
-- Earnings
per American Depositary Share (ADS) of US$3.58 in 2009, which includes
a US$2.67 gain per ADS as a result of the transfer of the Sidor
shares to Venezuela and a
US$0.26 non-cash foreign exchange gain per ADS
on Ternium's Mexican subsidiary's US dollar denominated debt.
-- Positive
free cash flow(6) of US$953.2 million in 2009.
-- Collection
of US$953.6 million during 2009 in connection with the transfer
of the Sidor shares to Venezuela.
-- Net
financial debt of US$184.1 million at the end of 2009, a decrease of
US$1.9 billion compared to the company's net financial debt at the end
of 2008.
Ternium's
operating income in 2009 was US$296.4 million, an 82% decrease compared to
operating income in 2008. A sharp decline in demand in the main steel consumer
sectors of Ternium's core markets during the second half of 2008 due to the
global economic downturn led to subdued shipments levels in 2009. Shipments
began to improve gradually only in the second half of the year. As a result,
Ternium's shipments in 2009 decreased by 1.2 million tons year-over-year and
revenue per ton decreased US$329, leading to a 41% drop in net sales that was
partially offset by a US$164 decrease in operating cost per ton.
Net
income during 2009 was US$767.1 million, compared to US$875.2 million in 2008.
Net income in 2009 decreased compared to 2008 mainly as a result of a US$1.4
billion decrease in operating income partially offset by a US$715.8 million
increase in non-cash net foreign exchange results, that was offset by changes in
Ternium's net equity position in the currency translation adjustments line, and
a US$564.0 million gain related to the transfer of the Sidor shares to
Venezuela.
Sidor
Compensation Payments
As of the
issue of this press release, Ternium has not yet received the Sidor compensation
payments required to be made by CVG on February 8, 2010. These payments consist
of a US$157.5 million principal installment, plus interest, due under the first
tranche, and a US$141.4 million mandatory prepayment, plus interest, due under
the second tranche.
Annual
Dividend Proposal
Ternium's
board of directors proposed the company's annual general shareholders' meeting,
to be held on June 2, 2010, the payment of an annual dividend of US$0.05 per
share (US$0.50 per ADS), or approximately US$100.2 million in the aggregate. If
the annual dividend is approved at the shareholders' meeting, it will be paid on
June 10, 2010.
New
Chief Financial Officer Named
Roberto
Philipps has decided to retire from his position as Ternium's Chief Financial
Officer as of February 28, 2010. He will continue to serve as an advisor to the
company's Chief Executive Officer. Pablo Brizzio, who has served as Ternium's
Financial Director since the company's initial public offering (IPO) in January
2006 and who has occupied several senior finance positions in the steel industry
for over 15 years, will become the company's new Chief Financial Officer. As
Ternium's Chief Financial Officer since the company's creation in 2005, Mr.
Philipps has played a key role in the growth of the company, overseeing the IPO
as well as Ternium's subsequent expansion throughout the Americas.
Outlook
Following
the downturn in 2009, Ternium expects the economies in South America to recover,
driven by strong worldwide demand for commodities. The company anticipates the
NAFTA region to grow at a more moderate pace, and a more dynamic industrial
sector in Mexico to support local demand for steel products.
Ternium
expects an increase in operating income in the first quarter 2010 compared to
the fourth quarter 2009 mainly as a result of higher shipments and a relatively
stable operating margin. In addition, the company foresees a gradual recovery in
production capacity utilization rates during the year.
Analysis
of Fourth Quarter 2009 Results
Net income attributable to the Company's equity
holders in the fourth quarter 2009 was US$159.3 million, compared with a
net loss of US$334.0 million in the fourth quarter 2008. Including minority
interest, net income for the fourth quarter 2009 was US$194.8 million, compared
with a net loss of US$348.5 million in the fourth quarter 2008. Earning per ADS
for the fourth quarter 2009 was US$0.79, compared with a loss per ADS of US$1.67
in the fourth quarter 2008.
Net sales in the fourth quarter 2009 were
US$1.4 billion, a decrease of 21% compared to the fourth quarter 2008 as a
result of lower revenue per ton partially offset by higher shipments. Shipments
of flat and long products were 1.7 million tons during the fourth quarter 2009,
an increase of 7% compared to shipments in the fourth quarter 2008, mainly due
to an increase in apparent demand in Ternium's main steel markets. Revenue per
ton shipped was US$795 in the fourth quarter 2009, a decrease of 25% compared to
the same quarter in 2008, mainly as a result of lower prices.
|
Net
Sales (million US$)
|
Shipments
(thousand tons)
|
Revenue
/ ton (US$/ton)
|
||||||||||
|
4Q
2009
|
4Q
2008
|
Dif.
|
4Q
2009
|
4Q
2008
|
Dif.
|
4Q
2009
|
4Q
2008
|
Dif.
|
||||
|
South
& Central America
|
546.9
|
642.4
|
-15%
|
602.0
|
559.9
|
8%
|
909
|
1,147
|
-21%
|
|||
|
North
America
|
616.4
|
735.7
|
-16%
|
772.3
|
642.2
|
20%
|
798
|
1,146
|
-30%
|
|||
|
Europe
& other
|
6.5
|
30.0
|
13.4
|
36.0
|
482
|
834
|
||||||
|
Total
flat products
|
1,169.8
|
1,408.1
|
-17%
|
1,387.6
|
1,238.1
|
12%
|
843
|
1,137
|
-26%
|
|||
|
South
& Central America
|
20.0
|
71.7
|
-72%
|
37.5
|
91.9
|
-59%
|
533
|
780
|
-32%
|
|||
|
North
America
|
124.6
|
159.7
|
-22%
|
226.5
|
213.2
|
6%
|
550
|
749
|
-27%
|
|||
|
Europe
& other
|
1.5
|
3.1
|
3.1
|
3.6
|
500
|
884
|
||||||
|
Total
long products
|
146.1
|
234.5
|
-38%
|
267.0
|
308.7
|
-14%
|
547
|
760
|
-28%
|
|||
|
Total
flat and long products
|
1,315.9
|
1,642.6
|
-20%
|
1,654.6
|
1,546.8
|
7%
|
795
|
1,062
|
-25%
|
|||
|
Other
products (1)
|
49.3
|
78.5
|
-37%
|
|||||||||
|
Total
Net Sales
|
1,365.2
|
1,721.1
|
-21%
|
|||||||||
(1)
Primarily includes iron ore, pig iron and pre-engineered metal buildings.
Sales of
flat products during the fourth quarter 2009 totaled US$1.2 billion, a decrease
of 17% compared with the same quarter in 2008. Net sales decreased as a result
of lower revenue per ton, partially offset by higher shipments. Shipments of
flat products totaled 1.4 million tons in the fourth quarter 2009, an increase
of 12% compared with the same period in 2008, mainly due to an increase in
apparent demand in Ternium's main steel markets. Revenue per ton shipped
decreased 26% to US$843 in the fourth quarter 2009 compared with the same period
in 2008, mainly due to lower prices.
Sales of
long products were US$146.1 million in the fourth quarter 2009, a decrease of
38% compared to the same period in 2008 mainly due to lower revenue per ton and
shipments. Shipments of long products totaled 267,000 tons in the fourth quarter
2009, a 14% decrease versus the same quarter in 2008, due to lower billet
shipments in the South & Central America Region partially offset by slightly
higher wire rod shipments in the North America Region. Revenue per ton shipped
was US$547 in the fourth quarter 2009, a decrease of 28% compared to the fourth
quarter 2008, mainly due to lower prices.
Sales of
other products totaled US$49.3 million during the fourth quarter 2009, compared
to US$78.5 million during the fourth quarter 2008. The decrease was mainly
driven by lower iron ore shipments and prices.
Sales of
flat and long products in the North America Region were US$741.0 million in the
fourth quarter 2009, a decrease of 17% versus the same period in 2008, due to
lower revenue per ton partially offset by higher shipments. Shipments in the
region totaled 999,000 tons during the fourth quarter 2009, or 17% higher than
in the same period in 2008 as a result of higher apparent demand in the region's
main markets. Revenue per ton shipped decreased 29% to US$742 in the fourth
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$566.9
million during the fourth quarter 2009, a decrease of 21% versus the same period
in 2008. This decrease was due to lower revenue per ton and relatively stable
shipments. Shipments in the region totaled 639,000 tons during the fourth
quarter 2009, or 2% lower than in the fourth quarter 2008, due to lower
shipments of billets, partially offset by higher shipments of flat steel.
Revenue per ton shipped was US$887 in the fourth quarter 2009, a decrease of 19%
compared to the same quarter in 2008, mainly due to lower prices.
Cost of sales totaled US$1.0 billion in the
fourth quarter 2009 compared to US$1.4 billion in the fourth quarter 2008. Cost
of sales decreased mainly as a result of lower cost per ton. Cost per ton
decreased year-over-over mainly as a result of lower costs for third party
steel, raw materials, energy, labor and services, as well as on account of the
impact on costs of the Argentine Peso's devaluation versus the US dollar and the
effect of write-down charges in the fourth quarter 2008.
SG&A expenses in the fourth quarter 2009
were US$137.8 million, or 10% of net sales, compared with US$159.6 million, or
9% of net sales, in the fourth quarter 2008. The decrease in SG&A was due
mainly to Ternium's efforts to reduce headcount and services costs in response
to the economic downturn, as well as on account of lower freight expenses as a
result of lower exports, lower tax charges and the impact on costs of the
Argentine Peso's devaluation versus the US dollar. Additionally, there was a
non-recurring pension plan loss of US$9.3 million in the fourth quarter 2009 in
Mexico.
Operating income in the fourth quarter 2009 was
US$216.1 million, or 16% of net sales, compared with US$186.3 million, or 11% of
net sales, in the fourth quarter 2008.
EBITDA in the fourth quarter 2009 was US$315.9
million, or 23% of net sales, compared with US$281.1 million, or 16% of net
sales, in the fourth quarter 2008.
Net financial income was US$93.0 million in the
fourth quarter 2009, compared with a net financial expense of US$681.7 million
in the fourth quarter 2008. During the fourth quarter 2009, Ternium's net
interest expenses were US$15.4 million, a decrease of US$11.4 million compared
to the fourth quarter 2008 due to lower indebtedness and lower interest
rates.
Net
foreign exchange result was a gain of US$72.2 million in the fourth quarter 2009
compared to a loss of $622.5 million in the same period in 2008. These results
were primarily due to the impact of the Mexican Peso's 3% revaluation in the
fourth quarter 2009 and 25% devaluation in the fourth quarter 2008,
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,
as the value of Ternium Mexico's US dollar denominated debt is not altered by
the Mexican Peso fluctuation when stated in US dollars in Ternium's consolidated
financial statements.
Interest
income on the Sidor financial asset was US$40.6 million in the fourth quarter
2009. This result is attributable to the Sidor financial asset in connection
with the transfer of the Sidor shares to Venezuela on May 7, 2009.
Income tax expense for the fourth quarter 2009
was US$114.5 million, or 37% of income before income tax, compared with an
income tax benefit of US$145.9 million, or 30% of loss before income tax,
discontinued operations and minority interest, in the same period in 2008. The
fourth quarter 2009 expense reflects a non-recurring loss of US$11.2 million
related to the fiscal reform in Mexico.
Analysis
of Full Year 2009 Results
Net income attributable to the Company's equity
holders for 2009 was US$717.4 million, compared with US$715.4 million for
2008. Including minority interest, net income for 2009 was US$767.1 million,
compared with US$875.2 million in 2008. Earnings per ADS were US$3.58 in 2009,
compared with US$3.57 in 2008.
Net sales for 2009 decreased 41% to US$5.0
billion compared to 2008. Net sales decreased due to lower shipments and lower
revenue per ton. Shipments of flat and long products were 6.4 million tons
during 2009, a decrease of 16% compared to 2008, due to lower shipments in
Ternium's core markets as a result of the effects of the global economic
downturn. Revenue per ton shipped was US$758 in 2009, a decrease of 30% when
compared to 2008, mainly as a result of lower prices in all of Ternium's
markets.
|
Net
Sales (million US$)
|
Shipments
(thousand tons)
|
Revenue
/ ton (US$/ton)
|
||||||||||
|
Year
2009
|
Year
2008
|
Dif.
|
Year
2009
|
Year
2008
|
Dif.
|
Year
2009
|
Year
2008
|
Dif.
|
||||
|
South
& Central America
|
1,717.1
|
2,782.5
|
-38%
|
1,903.6
|
2,604.2
|
-27%
|
902
|
1,068
|
-16%
|
|||
|
North
America
|
2,371.9
|
4,294.7
|
-45%
|
3,114.5
|
3,666.1
|
-15%
|
762
|
1,171
|
-35%
|
|||
|
Europe
& other
|
161.0
|
47.5
|
287.0
|
55.2
|
561
|
860
|
||||||
|
Total
flat products
|
4,250.0
|
7,124.7
|
-40%
|
5,305.2
|
6,325.5
|
-16%
|
801
|
1,126
|
-29%
|
|||
|
South
& Central America
|
57.3
|
274.4
|
-79%
|
118.4
|
302.5
|
-61%
|
484
|
907
|
-47%
|
|||
|
North
America
|
512.0
|
791.8
|
-35%
|
931.2
|
901.3
|
3%
|
550
|
878
|
-37%
|
|||
|
Europe
& other
|
3.5
|
8.9
|
6.1
|
13.3
|
583
|
669
|
||||||
|
Total
long products
|
572.9
|
1,075.1
|
-47%
|
1,055.6
|
1,217.2
|
-13%
|
543
|
883
|
-39%
|
|||
|
Total
flat and long products
|
4,822.9
|
8,199.8
|
-41%
|
6,360.8
|
7,542.7
|
-16%
|
758
|
1,087
|
-30%
|
|||
|
Other
products (1)
|
136.1
|
265.1
|
-49%
|
|||||||||
|
Total
Net Sales
|
4,959.0
|
8,464.9
|
-41%
|
|||||||||
(1)
Primarily includes iron ore, pig iron and pre-engineered metal buildings.
Sales of
flat products during 2009 were US$4.3 billion, a decrease of 40% compared to
2008. Net sales decreased as a result of lower shipments and revenue per ton.
Shipments of flat products were 5.3 million tons in 2009, a decrease of 16%
compared with 2008, mainly due to lower shipments in the South & Central
America and the North America regions, partially offset by higher shipments in
the "Europe and other" Region. Revenue per ton decreased 29% to US$801 in 2009
compared to 2008, as a result of lower steel prices.
Sales of
long products were US$572.9 million during 2009, a decrease of 47% compared to
2008 due to lower revenue per ton and shipments. Revenue per ton was US$543 in
2009, a decrease of 39% compared to 2008 as a result of lower prices. Shipments
of long products were 1.1 million tons in 2009, a 13% decrease versus 2008,
mainly due to lower billet shipments in the South & Central America Region
partially offset by higher bar shipments in the North America
Region.
Sales of
other products were US$136.1 million during 2009, compared to US$265.1 million
during 2008. The decrease was mainly driven by lower iron ore shipments and
prices and lower sales of pre-engineered metal buildings.
Sales of
flat and long products in the North America Region totaled US$2.9 billion in
2009, a decrease of 43% versus 2008, mainly due to the effect of lower shipments
and prices. Shipments in the region totaled 4.0 million tons during 2009, or 11%
lower than during 2008. Revenue per ton shipped was US$713 in 2009, a decrease
of 36% compared to 2008, as a result of lower prices.
Flat and
long product sales in the South & Central America Region were US$1.8 billion
during 2009, a decrease of 42% versus 2008. This decrease was due to lower
volumes and revenue per ton. Shipments in the region totaled 2.0 million tons
during 2009, or 30% lower than in 2008. Revenue per ton shipped in the South
& Central America Region was US$878 in 2009, a decrease of 17% compared to
2008, mainly due to lower prices.
Cost of sales was US$4.1 billion in 2009
compared to US$6.1 billion in 2008. Cost of sales decreased as a result of lower
shipments and lower cost per ton. Cost per ton decreased year-over-over mainly
as a result of lower costs for third party steel, raw materials, energy, labor
and services, as well as on account of the impact on costs of the Mexican Peso's
and Argentine Peso's devaluation versus the US dollar and the initiatives
Ternium launched to mitigate the global economic downturn.
Selling, general and administrative (SG&A)
expenses in 2009 were US$531.5 million, or 11% of net sales, compared
with US$669.5 million, or 8% of net sales, in 2008. The decrease in SG&A was
due mainly to Ternium's efforts to reduce headcount and services costs in
response to the economic downturn, as well as on account of lower freight
volumes, tax charges and the impact on costs of the Mexican Peso's and Argentine
Peso's devaluation versus the US dollar.
Operating income in 2009 was US$296.4 million,
or 6% of net sales, compared with US$1.7 billion, or 20% of net sales, in
2008.
EBITDA in 2009 was US$708.5 million, or 14.3%
of net sales, compared to US$2.1 billion, or 24.7% of net sales, in
2008.
Net financial income was US$132.9 million in
2009, compared with a net financial expense of US$797.1 million in 2008. During
2009, Ternium's net interest expense was US$84.7 million, a decrease of US$19.3
million compared to 2008 due to lower indebtedness as a result of amortizations
of debt and lower interest rates.
Net
foreign exchange result was a gain of US$83.1 million in 2009, compared to a
loss of US$632.7 million in 2008. These results were primarily due to the impact
of the Mexican Peso's 4% revaluation in 2009 and 25% devaluation in 2008,
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,
as the value of Ternium Mexico's US dollar denominated debt is not altered by
the Mexican Peso fluctuation when stated in US dollars in Ternium's consolidated
financial statements. In accordance with IFRS, Ternium Mexico prepares its
financial statements in Mexican Pesos and registers foreign exchange results on
its net non-Mexican Pesos positions when the Mexican Peso revaluates or
devaluates to other currencies.
Interest
income on the Sidor financial asset was US$136.0 million in 2009. This result is
attributable to the Sidor financial asset in connection with the transfer of the
Sidor shares to Venezuela on May 7, 2009.
Fair
value of derivatives was a gain of US$10.6 million in 2009, compared to a loss
of US$32.5 million in 2008. The result was related to certain derivative
instruments entered into primarily to mitigate the effect of interest rate and
currency fluctuations.
Income tax expense in 2009 was US$91.3 million
or 21% of income before income tax, discontinued operations and minority
interest, compared with US$162.7 million, or 18% of income before income tax,
discontinued operations and minority interest, in 2008. The income tax expense
in 2008 included a non-recurring gain of US$96.3 million on account of Hylsa's
reversal of deferred statutory profit sharing that reduced its effective tax
rate for the year.
Net result of discontinued operations in 2009
was a gain of US$428.0 million, related to the transfer of the Sidor shares to
Venezuela on May 7, 2009. In 2008, the net result of discontinued operations
comprised an after-tax gain of US$59.6 million related to Sidor and an after-tax
gain of US$97.5 million from the sale of non-core US assets during the first
quarter 2008.
Cash
Flow and Liquidity
Net cash
provided by continuing operations in the fourth quarter 2009 was US$72.6
million, lower than the US$576.2 million in net cash provided by continuing
operations in the fourth quarter 2008 mainly as a result of a working capital
increase of US$212.3 million in the fourth quarter 2009 compared to a working
capital decrease of US$380.4 million in the fourth quarter 2008. The increase in
working capital in the fourth quarter 2009 was mainly due to a US$231.4 million
increase in inventories. Inventories increased primarily as a result of a higher
volume of finished goods, goods in process and raw materials, as Ternium
readjusted its inventories in response to higher demand for steel products, as
well as higher prices.
Capital
expenditures in the fourth quarter 2009 were US$62.8 million, compared to
US$172.6 million in the fourth quarter 2008. In the fourth quarter 2009, Ternium
had positive free cash flow(7) of US$9.7 million, compared to positive free cash
flow(7) of US$403.6 million in the fourth quarter 2008. In addition, proceeds
from the transfer of shares of Sidor to Venezuela totaled US$287.1 million in
the fourth quarter 2009.
Net cash
provided by continuing operations in 2009 was US$1.2 billion, higher than the
US$517.5 million reported in 2008, mainly due to a working capital decrease of
US$635.2 million in 2009 compared to a working capital increase of US$1.1
billion in 2008, partially offset by a lower operating income in 2009. Working
capital decreased in 2009 mainly as a result of a US$429.1 million decrease in
inventories and a US$308.9 million decrease in trade and other receivables,
partially offset by an aggregate US$102.9 million increase in accounts payable
and other liabilities. Inventories decreased during 2009 as a result of lower
costs due to lower input prices as well as a lower volume of finished goods,
goods in process and raw materials.
Capital
expenditures in 2009 were US$208.6 million, compared to US$587.9 million in
2008. Capital expenditures during 2009 were carried out in Argentina mainly for
the relining of a blast furnace and the revamping of two coking batteries, and
in Mexico mainly for iron ore mining and processing activities and the revamping
of one hot strip mill.
In 2009,
Ternium had positive free cash flow(8) of US$953.2 million compared to negative
free cash flow(8) of US$70.4 million in 2008. In addition, proceeds from the
transfer of shares of Sidor to Venezuela totaled US$953.6 million in
2009.
Ternium's
net repayment of borrowings in 2009 was US$922.6 million, mostly related to the
amortizations of the Company's Mexican subsidiaries' outstanding
debt.
As of
December 31, 2009, Ternium's financial debt was US$2.3 billion, of which
US$539.5 million will mature during 2010, while the company's cash, cash
equivalents and other investments totaled US$2.1 billion. Ternium's net
financial debt(9) of US$184.1 million at the close of the fourth quarter 2009
decreased US$1.9 billion compared to the company's net financial debt at the end
of 2008. The Company maintains sufficient cash and marketable securities and
credit facilities to finance normal operations. Although Ternium believes it has
access to the credit markets, it has not negotiated additional credit
facilities.
Forward-Looking
Statements
Some of
the statements contained in this press release are "forward-looking statements."
Forward-looking statements are based on management's current views and
assumptions and involve known and unknown risks that could cause actual results,
performance or events to differ materially from those expressed or implied by
those statements. These risks include but are not limited to risks arising from
uncertainties as to gross domestic product, related market demand, global
production capacity, tariffs, cyclicality in the industries that purchase steel
products and other factors beyond Ternium's control.
About
Ternium
Ternium
is a leading steel company in Latin America, manufacturing and processing a wide
range of flat and long steel products for customers active in the construction,
home appliances, capital goods, container, food, energy and automotive
industries. With its principal operations in Mexico and Argentina, Ternium
serves markets in the Americas through its integrated manufacturing system and
extensive distribution network. The Company has an annual production capacity of
approximately nine million tons of finished steel products. More information
about Ternium is available at www.ternium.com.
Consolidated
income statement
|
US$
million
|
4Q 2009 | 4Q 2008 |
Dif.
|
Year
2009
|
Year
2008
|
Dif.
|
||||||||||||||||||
|
Net
sales
|
1,365.2 | 1,721.1 | (355.9 | ) | 4,959.0 | 8,464.9 | (3,505.9 | ) | ||||||||||||||||
|
Cost
of sales
|
(1,011.7 | ) | (1,376.7 | ) | 365.0 | (4,110.4 | ) | (6,128.0 | ) | 2,017.7 | ||||||||||||||
|
Gross
profit
|
353.5 | 344.4 | 9.1 | 848.6 | 2,336.9 | (1,488.2 | ) | |||||||||||||||||
|
Selling,
general and administrative expenses
|
(137.8 | ) | (159.6 | ) | 21.8 | (531.5 | ) | (669.5 | ) | 137.9 | ||||||||||||||
|
Other
operating (expenses) income, net
|
0.4 | 1.4 | (1.0 | ) | (20.7 | ) | 8.7 | (29.4 | ) | |||||||||||||||
|
Operating
income
|
216.1 | 186.3 | 29.8 | 296.4 | 1,676.0 | (1,379.7 | ) | |||||||||||||||||
|
Interest
expense
|
(20.4 | ) | (32.7 | ) | 12.3 | (105.8 | ) | (136.1 | ) | 30.3 | ||||||||||||||
|
Interest
income
|
5.0 | 5.9 | (0.8 | ) | 21.1 | 32.2 | (11.0 | ) | ||||||||||||||||
|
Interest
income - Sidor financial asset
|
40.6 | - | 40.6 | 136.0 | - | 136.0 | ||||||||||||||||||
|
Other
financial income (expenses), net
|
67.8 | (654.9 | ) | 722.7 | 81.6 | (693.2 | ) | 774.8 | ||||||||||||||||
|
Equity
in earnings of associated companies
|
0.2 | 1.1 | (0.9 | ) | 1.1 | 1.9 | (0.7 | ) | ||||||||||||||||
|
Income
before income tax expense
|
309.3 | (494.4 | ) | 803.6 | 430.4 | 880.8 | (450.4 | ) | ||||||||||||||||
|
Income
tax (expense) benefit
|
||||||||||||||||||||||||
|
Current
and deferred income tax (expense) benefit
|
(114.5 | ) | 145.9 | (260.3 | ) | (91.3 | ) | (259.0 | ) | 167.7 | ||||||||||||||
|
Reversal
of deferred statutory profit sharing
|
- | - | - | - | 96.3 | (96.3 | ) | |||||||||||||||||
|
Discontinued
operations
|
- | - | - | 428.0 | 157.1 | 270.9 | ||||||||||||||||||
|
Net
income for the period
|
194.8 | (348.5 | ) | 543.3 | 767.1 | 875.2 | (108.0 | ) | ||||||||||||||||
|
Attributable
to:
|
||||||||||||||||||||||||
|
Equity
holders of the Company
|
159.3 | (334.0 | ) | 493.3 | 717.4 | 715.4 | 2.0 | |||||||||||||||||
|
Minority
interest
|
35.5 | (14.5 | ) | 50.0 | 49.7 | 159.7 | (110.0 | ) | ||||||||||||||||
| 194.8 | (348.5 | ) | 543.3 | 767.1 | 875.2 | (108.0 | ) | |||||||||||||||||
Consolidated
balance sheet
|
US$
million
|
December
31, 2009
|
December
31, 2008
|
||||||
|
Property,
plant and equipment, net
|
4,040.4
|
4,212.3
|
||||||
|
Intangible
assets, net
|
1,085.4
|
1,136.4
|
||||||
|
Investment
in associated companies
|
6.6
|
5.6
|
||||||
|
Other
investments, net
|
16.4
|
16.9
|
||||||
|
Receivables,
net
|
101.3
|
120.2
|
||||||
|
Total
non-current assets
|
5,250.1
|
5,491.4
|
||||||
|
Receivables
|
136.3
|
249.0
|
||||||
|
Derivative
financial instruments
|
1.6
|
1.5
|
||||||
|
Inventories,
net
|
1,350.6
|
1,826.5
|
||||||
|
Trade
receivables, net
|
437.8
|
623.0
|
||||||
|
Sidor
financial asset
|
964.4
|
-
|
||||||
|
Available
for sale assets-discontinued operations
|
-
|
1,318.9
|
||||||
|
Other
investments
|
46.8
|
90.0
|
||||||
|
Cash
and cash equivalents
|
2,095.8
|
1,065.6
|
||||||
|
Total
current assets
|
5,033.3
|
5,174.5
|
||||||
|
Non-current
assets classified as held for sale
|
9.2
|
5.3
|
||||||
|
Total
assets
|
10,292.7
|
10,671.2
|
||||||
|
Shareholders'
equity
|
5,296.3
|
4,597.4
|
||||||
|
Minority
interest in subsidiaries
|
964.9
|
964.1
|
||||||
|
Minority
interest & shareholders' equity
|
6,261.2
|
5,561.5
|
||||||
|
Provisions
|
18.9
|
24.4
|
||||||
|
Deferred
income tax
|
857.3
|
810.2
|
||||||
|
Other
liabilities
|
176.6
|
148.7
|
||||||
|
Derivative
financial instruments
|
32.6
|
65.8
|
||||||
|
Borrowings
|
1,787.2
|
2,325.9
|
||||||
|
Total
non-current liabilities
|
2,872.7
|
3,375.0
|
||||||
|
Current
tax liabilities
|
103.2
|
194.1
|
||||||
|
Other
liabilities
|
57.0
|
103.4
|
||||||
|
Trade
payables
|
413.0
|
438.7
|
||||||
|
Derivative
financial instruments
|
46.1
|
57.2
|
||||||
|
Borrowings
|
539.5
|
941.5
|
||||||
|
Total
current liabilities
|
1,158.8
|
1,734.8
|
||||||
|
Total
liabilities
|
4,031.4
|
5,109.8
|
||||||
|
Total
liabilities, minority interest & shareholders' equity
|
10,292.7
|
10,671.2
|
||||||
Consolidated cash
flow statement
|
US$
million
|
4Q 2009 | 4Q 2008 |
Dif.
|
Year
2009
|
Year
2008
|
Dif.
|
||||||||||||||||||
|
Net
income from continuing operations
|
194.8 | (348.5 | ) | 543.3 | 339.1 | 718.1 | (379.0 | ) | ||||||||||||||||
|
Adjustments
for:
|
||||||||||||||||||||||||
|
Depreciation
and amortization
|
99.8 | 94.9 | 4.9 | 385.1 | 413.5 | (28.4 | ) | |||||||||||||||||
|
Equity
in earnings of associated companies
|
(0.2 | ) | (1.1 | ) | 0.9 | (1.1 | ) | (1.9 | ) | 0.7 | ||||||||||||||
|
Changes
in provisions
|
2.0 | (2.3 | ) | 4.3 | 4.6 | 2.4 | 2.3 | |||||||||||||||||
|
Net
foreign exchange results and others
|
(50.3 | ) | 649.8 | (700.1 | ) | (53.6 | ) | 629.5 | (683.1 | ) | ||||||||||||||
|
Interest
accruals less payments
|
8.1 | 1.6 | 6.6 | 10.7 | (84.2 | ) | 94.9 | |||||||||||||||||
|
Interest
income - Sidor financial asset
|
(40.6 | ) | - | (40.6 | ) | (136.0 | ) | - | (136.0 | ) | ||||||||||||||
|
Income
tax accruals less payments
|
71.2 | (198.5 | ) | 269.7 | (49.3 | ) | (88.5 | ) | 39.2 | |||||||||||||||
|
Impairment
charge
|
- | - | - | 27.0 | - | 27.0 | ||||||||||||||||||
|
Changes
in working capital
|
(212.3 | ) | 380.4 | (592.6 | ) | 635.2 | (1,071.5 | ) | 1,706.7 | |||||||||||||||
|
Net
cash provided by operating activities
|
72.6 | 576.2 | (503.6 | ) | 1,161.8 | 517.5 | 644.2 | |||||||||||||||||
|
Capital
expenditures
|
(62.8 | ) | (172.6 | ) | 109.8 | (208.6 | ) | (587.9 | ) | 379.3 | ||||||||||||||
|
Proceeds
from sale of property, plant & equipment
|
1.0 | 0.7 | 0.3 | 3.2 | 2.1 | 1.1 | ||||||||||||||||||
|
Acquisition
of business
|
- | - | - | (0.2 | ) | - | (0.2 | ) | ||||||||||||||||
|
Decrease
(Increase) in Other Investments
|
22.7 | (0.9 | ) | 23.6 | 43.2 | (24.7 | ) | 67.8 | ||||||||||||||||
|
Proceeds
from Sidor financial asset
|
287.1 | - | 287.1 | 953.6 | - | 953.6 | ||||||||||||||||||
|
Proceeds
from sale of discontinued operations
|
- | - | - | - | 718.6 | (718.6 | ) | |||||||||||||||||
|
Discontinued
operations
|
- | - | - | - | 242.4 | (242.4 | ) | |||||||||||||||||
|
Net
cash provided by (used in) investing activities
|
247.9 | (172.8 | ) | 420.7 | 791.2 | 350.5 | 440.7 | |||||||||||||||||
|
Dividends
paid in cash and other distributions
to
company's equity shareholders
|
- | - | - | - | (100.2 | ) | 100.2 | |||||||||||||||||
|
Dividends
paid in cash and other distributions
to
minority shareholders
|
- | - | - | - | (19.6 | ) | 19.6 | |||||||||||||||||
|
Proceeds
from borrowings
|
13.2 | 147.8 | (134.7 | ) | 219.0 | 519.8 | (300.8 | ) | ||||||||||||||||
|
Repayment
of borrowings
|
(124.2 | ) | (78.9 | ) | (45.3 | ) | (1,141.6 | ) | (1,152.9 | ) | 11.3 | |||||||||||||
|
Net
cash (used in) provided by financing activities
|
(111.0 | ) | 68.9 | (180.0 | ) | (922.6 | ) | (752.9 | ) | (169.7 | ) | |||||||||||||
|
Increase
in cash and cash equivalents
|
209.4 | 472.2 | (262.9 | ) | 1,030.4 | 115.1 | 915.3 | |||||||||||||||||
|
Shipments
|
|||||||
|
Thousand
tons
|
4Q
2009
|
4Q
2008
|
3Q
2009
|
Year
2009
|
Year
2008
|
||
|
South
& Central America
|
602.0
|
559.9
|
513.8
|
1,903.6
|
2,604.2
|
||
|
North
America
|
772.3
|
642.2
|
872.8
|
3,114.5
|
3,666.1
|
||
|
Europe
& other
|
13.4
|
36.0
|
25.3
|
287.0
|
55.2
|
||
|
Total
flat products
|
1,387.6
|
1,238.1
|
1,411.9
|
5,305.2
|
6,325.5
|
||
|
South
& Central America
|
37.5
|
91.9
|
26.3
|
118.4
|
302.5
|
||
|
North
America
|
226.5
|
213.2
|
244.6
|
931.2
|
901.3
|
||
|
Europe
& other
|
3.1
|
3.6
|
-
|
6.1
|
13.3
|
||
|
Total
long products
|
267.0
|
308.7
|
271.0
|
1,055.6
|
1,217.2
|
||
|
Total
flat and long products
|
1,654.6
|
1,546.8
|
1,682.8
|
6,360.8
|
7,542.7
|
||
|
Revenue
/ ton
|
|||||||
|
US$/ton
|
4Q
2009
|
4Q
2008
|
3Q
2009
|
Year
2009
|
Year
2008
|
||
|
South
& Central America
|
909
|
1,147
|
863
|
902
|
1,068
|
||
|
North
America
|
798
|
1,146
|
747
|
762
|
1,171
|
||
|
Europe
& other
|
482
|
834
|
616
|
561
|
860
|
||
|
Total
flat products
|
843
|
1,137
|
787
|
801
|
1,126
|
||
|
South
& Central America
|
533
|
780
|
478
|
484
|
907
|
||
|
North
America
|
550
|
749
|
548
|
550
|
878
|
||
|
Europe
& other
|
500
|
884
|
-
|
583
|
669
|
||
|
Total
long products
|
547
|
760
|
541
|
543
|
883
|
||
|
Total
flat and long products
|
795
|
1,062
|
747
|
758
|
1,087
|
||
|
Net
Sales
|
|||||||
|
US$
million
|
4Q
2009
|
4Q
2008
|
3Q
2009
|
Year
2009
|
Year
2008
|
||
|
South
& Central America
|
546.9
|
642.4
|
443.3
|
1,717.1
|
2,782.5
|
||
|
North
America
|
616.4
|
735.7
|
652.1
|
2,371.9
|
4,294.7
|
||
|
Europe
& other
|
6.5
|
30.0
|
15.6
|
161.0
|
47.5
|
||
|
Total
flat products
|
1,169.8
|
1,408.1
|
1,111.0
|
4,250.0
|
7,124.7
|
||
|
South
& Central America
|
20.0
|
71.7
|
12.6
|
57.3
|
274.4
|
||
|
North
America
|
124.6
|
159.7
|
134.0
|
512.0
|
791.8
|
||
|
Europe
& other
|
1.5
|
3.1
|
-
|
3.5
|
8.9
|
||
|
Total
long products
|
146.1
|
234.5
|
146.6
|
572.9
|
1,075.1
|
||
|
Total
flat and long products
|
1,315.9
|
1,642.6
|
1,257.6
|
4,822.9
|
8,199.8
|
||
|
Other
products
(1)
|
49.3
|
78.5
|
21.2
|
136.1
|
265.1
|
||
|
Total
net sales
|
1,365.2
|
1,721.1
|
1,278.8
|
4,959.0
|
8,464.9
|
||
(1)
Primarily includes iron ore, pig iron and pre-engineered metal buildings.
(1)
EBITDA in the fourth quarter 2009 equals operating income of US$216.1 million
plus depreciation and amortization of US$99.8 million.
(2) Each
American Depositary Share (ADS) represents 10 shares of Ternium's common stock.
Results are based on a weighted average number of shares of common stock
outstanding of 2,004,743,442.
(3) Free
cash flow in the fourth quarter 2009 equals net cash provided by operations of
US$72.6 million less capital expenditures of US$62.8 million.
(4) Net
financial debt for 2009 equals borrowings of US$2.3 billion less cash and cash
equivalents of US$2.1 billion and other investments of US$46.8
million.
(5)
EBITDA in 2009 equals operating income of US$296.4 million plus depreciation and
amortization of US$385.1 million and impairment charges related to intangible
assets of US$27.0 million.
(6) Free
cash flow for 2009 equals net cash provided by operations of US$1.2 billion less
capital expenditures of US$208.6 million.
(7) Free
cash flow for the fourth quarter 2009 equals net cash provided by continuing
operations of US$72.6 million less capital expenditures of US$62.8 million,
while free cash flow for the fourth quarter 2008 equals net cash provided
by
continuing operations of US$576.2 million less capital expenditures of US$172.6
million.
(8) Free
cash flow for 2009 equals net cash provided by continuing operations of US$1.2
billion less capital expenditures of US$208.6 million, while negative free cash
flow for 2008 equals net cash provided by continuing operations of US$517.5
million less capital expenditures of US$587.9 million.
(9) Net
financial debt in the fourth quarter 2009 equals borrowings of US$ 2.3 billion
less cash and cash equivalents of US$2.1 billion and other investments of
US$46.8 million.
Sebastián
Martí
Ternium -
Investor Relations
+1 (866)
890 0443
+54 (11)
4018 2389
www.ternium.com