Ternium SA 2024 Earnings: Resilience Amid Global Challenges- Intellectia AI™

2025-02-194mins

Content

# Ternium’s Mixed Performance Amid Global Uncertainties - Ternium SA Earnings Report

## Ternium SA Earnings Overview
Ternium S.A. (NYSE: TX), a leading steel producer in the Americas, released its financial results for the fourth quarter and full year ending on December 31, 2024. The year was marked by a volatile steel market, influenced by geopolitical uncertainties and persistent economic challenges. Despite these hurdles, Ternium managed to maintain its financial health by implementing strategic operational adjustments. The company concluded the year with a net income totaling $174 million, a figure notably impacted by a $404 million provision reversal for litigation expenses.

## Ternium SA Financial Results
Below is a summary of Ternium SA’s critical financial metrics for the fourth quarter and full year 2024:

| Financial Metric                 | Q4 2024   | FY 2024   |
|----------------------------------|-----------|-----------|
| Net Income                       | $333M     | $174M     |
| Adjusted Net Income (ex-litigation reversal) | $71M (loss) | $584M     |
| Earnings per ADS (Equity Holders) | -$0.42    | $1.61     |

Though Ternium’s financial performance was impacted by market conditions, the results remained robust, showcasing the company’s resilience amid adverse circumstances.

## Revenue Breakdown
The steel segment witnessed variations influenced by geographical and market-specific factors. Below is the revenue performance across major segments:

| Segment          | Q4 2024 YoY Change | FY 2024 YoY Change |
|------------------|--------------------|--------------------|
| Steel Segment    | -7%                | Slight Decline     |
| Mining Segment   | Stable             | +21%               |

### Segment Analysis
The steel segment experienced a 7% decrease in shipments during Q4 2024 compared to the previous year, primarily influenced by seasonal slowdowns in Mexico, Brazil, and regional southern markets. In Mexico, a weakened commercial market due to political transitions further compounded these declines. However, Brazil showed resilience with a slight year-over-year increase in shipments aided by local demand and improved operational performance from Usiminas.

The mining segment fared better, gaining a 21% increase in shipments throughout 2024, driven by the comprehensive integration of Usiminas’ operations, despite lower production in Mexican and Brazilian mines.

## Key Developments
Ternium made significant strides in operational efficiencies and strategic expansions. A highlight was the capital expenditure of $1.9 billion, which underscores the company’s commitment to future growth through the expansion of its industrial center in Pesquería, Mexico. Additionally, the construction of a new wind farm in Argentina aligns with Ternium’s sustainability goals, achieving significant steps towards decarbonization by offsetting third-party electricity reliance with an annual production of approximately 480 GWh.

## Comments from Company Officers
Ternium’s management emphasized their focus on strategic initiatives. They noted the ongoing ramp-up of downstream expansion projects in Mexico and highlighted the start-up of key facilities slated for the year-end. The executive team has expressed cautious optimism, expecting improved margins and shipment volumes in Q1 2025, although uncertainties remain regarding trade measures impacting Mexico’s steel demand.

## Dividends and Share Repurchases
In 2024, Ternium distributed $609 million in dividends to shareholders, manifesting a strong commitment to returning capital. For 2025, the board proposed an annual dividend of $2.70 per ADS, equating to a dividend yield of 9%, assuming shareholder approval at the upcoming annual general meeting. This proposal includes an already paid interim dividend, demonstrating the board’s proactive approach in rewarding investment returns to shareholders.

## Ternium SA Stock Forecast
Analyzing Ternium’s current financial health, operational developments, and strategic initiatives, the stock forecast remains focused on long-term growth potential, albeit with cautious optimism given market conditions. The stock price, trading at approximately $3.46, is anticipated to have a conservative near-term high projection of $4.00, while a low projection could reach $3.00. These projections account for the anticipated EBITDA improvements and operational advancements balanced against external market uncertainties.

In conclusion, Ternium S.A. navigates through economic turbulence with strategic resilience, a strong operational focus, and prudent risk management. Its balanced approach has poised Ternium to capitalize on future opportunities, albeit with a keen eye on external market conditions that may influence demand and pricing in the year ahead. As Ternium continues to invest in growth and sustainability, stakeholders can expect the company to maintain its prominent position in the Americas' steel industry.