TERNIUM S.A. TERNIUM ARGENTINA S.A.
Guillermo Etchepareborda
Investor Relations / Responsable de Relaciones con el Mercado
+54 (11) 4018 8252 ar.ternium.com
Ternium Argentina Files First Quarter of 2024 Financial Reports with BYMA and CNV
Buenos Aires, April 24, 2024 - Ternium Argentina S.A. (BYMA: TXAR) filed today its financial reports for the first quarter ended March 31, 2024, with Bolsas y Mercados Argentinos (BYMA) and Comisión Nacional de Valores (CNV).
The financial and operational information contained in this press release is based on Ternium Argentina's operational data and consolidated condensed interim financial statements prepared in accordance with the Accounting Standards of the International Financial Reporting Standards (IFRS) and presented in Argentine Pesos (ARP) and metric tons.
Summary
Ternium Argentina's steel shipments were 346,400 tons in the first quarter of 2024, decreasing 28% compared to shipment levels in the fourth quarter and 38% compared to shipment levels in the prior-year first quarter. During the period, steel demand from industrial and commercial sectors in the local market decreased significantly. Furthermore, restrictions to the importation of production inputs in 2023, exacerbated since last October, continued affecting the company's production levels during the first quarter of the year, preventing a relevant increase in exports despite the decrease in local demand.
Ternium Argentina's consolidated net income was ARP216.6 billion in the first quarter of 2024. Operating income was ARP74.6 billion on operating margin of 17%, decreasing 900 basis points compared to operating margin in the prior-year same period. On the other hand, the company recorded a ARP61.1 billion deferred tax gain in the first quarter of 2024. This result stems from the use of the US dollar as the company's functional currency, as inflation adjustment of financial statements in the period, for fiscal purposes, was significantly higher than the appreciation of the US dollar versus the Argentine Peso in the quarter.
Ternium Argentina's capital outlays in property, plant and equipment, and intangible assets were ARP46.5 billion in the first quarter of 2024. Among other initiatives, of note during the period were the progress made in the integral modification of its particulate matter emission capturing system, with the completion of works at basic oxygen furnaces #1 and #3, and significant progress at basic oxygen furnace #2. Furthermore, the company continued advancing the construction of its new pipe distribution center in Rosario and its new wind farm in Olavarría.
Outlook
Ternium Argentina forecasts a sequential increase in production rates in the second quarter of 2024, reflecting a gradual recovery in raw material inventories. Although local economic prospects are relatively uncertain, the company expects certain recovery in sales to industrial customers and the commercial market. In addition, the company expects a sequential increase in export volumes in the second quarter of the year, mainly of semi-finished steel products, supported by the increase in production rates.
During the second quarter, Ternium Argentina expects to inaugurate the new pipe distribution center in Rosario, which will enable it to offer new services to customers as well as to increase operational efficiencies. In addition, the company expects to complete the integral modification of its particulate matter emission capturing system, with the completion of works at basic oxygen furnace #2, advance the construction of its new wind farm in Olavarría, and advance diverse projects focused on maintenance, technology applied to operations and the environment.
Analysis of First Quarter of 2024 Results
ARP Million | 1Q 2024 | 4Q 2023 | 1Q 2023 |
Shipments (tons) | 346,400 | 481,500 | 560,700 |
Domestic shipments | 323,300 | 469,000 | 545,700 |
Export shipments | 23,100 | 12,500 | 15,000 |
Net sales | 436,394 | 338,853 | 165,532 |
Operating result | 74,631 | 87,777 | 43,447 |
Financial result | (2,312) | 81,370 | 5,838 |
Equity result | 84,612 | 20,897 | 15,865 |
Net result | 216,608 | (71,080) | 50,349 |
Per share net result1 (ARP) | 47.95 | (15.74) | 11.15 |
Net result in the first quarter of 2024 was a gain of ARP216.6 billion, equivalent to a per share net gain1 of ARP47.95.
Net sales in the first quarter of 2024 were ARP436.4 billion, compared to net sales of ARP165.5 billion in the first quarter of 2023. Shipments were 346,400 tons in the first quarter of 2024, a 214,300-ton decrease compared to shipment levels in the prior-year first quarter.
Ternium Argentina's shipments in the domestic Argentine market were 323,300 tons in the first quarter of 2024, a 222,400-ton decrease compared to shipment levels during the prior-year first quarter. Exports totaled 23,100 tons in the first quarter of 2024, a 8,100-ton increase compared to shipment levels during the first quarter of 2023. Of the exports in the first quarter of 2024, 54% were shipped to South and Central America, with 44% shipped to North America and 2% shipped to Europe and other destinations.
1 Per share net result was calculated based on 4.517.094.023 shares issued and outstanding during the period.
Cost of sales in the first quarter of 2024 totaled ARP318.1 billion, a ARP210.0 billion increase compared to the ARP108.1 billion recorded in the first quarter of 2023, due mainly to higher cost per ton, partially offset by lower shipments. Of note in the cost per ton change were higher costs of raw materials and other inputs, an increase in labor, maintenance and services costs, and higher depreciation and amortization.
Selling, General and Administrative (SG&A) expenses in the first quarter of 2024 totaled ARP43.5 billion, with a 10.0% SG&A expense to net sales ratio, compared to ARP14.3 billion expense recorded in the first quarter of 2023, with a ratio of 8.6%.
Financial net results in the first quarter of 2024 were a loss of ARP2.3 billion, compared to a gain of ARP5.8 billion in the first quarter of 2023.
Net interest results during the first quarter of 2024 were a gain of ARP17.1 billion compared to a gain of ARP2.3 billion in the prior-year first quarter.
Changes in the fair value of financial instruments resulted in a net loss of ARP23.3 billion in the first quarter of 2024, due mainly to the divestment of BOPREAL holdings (Bono para la Reconstrucción de una Argentina Libre) partially offset by an increase in the value of investments, compared to a net gain of ARP3.6 billion in the first quarter of 2023.
Net foreign exchange results were a gain of ARP4.3 billion in the first quarter of 2024, compared to a gain of ARP248 million in the prior-year same period.
The equity in the result of associated companies in the first quarter of 2024 was a gain of ARP84.6 billion on a gain in the investment in Ternium México of ARP82.8 billion and a gain in the investment in Usiminas of ARP1.9 billion. In the first quarter of 2023, the equity in the result of associated companies had been a gain of ARP15.0 billion.
Income tax result in the first quarter of 2024 was a gain of ARP59.7 billion, including a deferred tax gain of ARP61.1 billion. In the first quarter of 2023, income tax expense was ARP14.8 billion, including a deferred tax charge of ARP511,000.
Cash Flow and Liquidity
Net cash provided by operating activities in the first quarter of 2024 was ARP5.2 billion. Working capital increased by ARP64.1 billion in the first quarter of 2024 as a result of a ARP65.2 billion increase in inventories, an aggregate ARP9.3 billion net increase in accounts payable and other liabilities, partially offset by an aggregate ARP10.4 billion net increase in trade and other receivables. The sequential increase in the inventory value was mainly the result of a higher volume of raw materials, as well as higher volume and cost of steel products.
Cash flow related to capital expenditures in the first quarter of 2024 totaled ARP46.5 billion. Net borrowings were ARP55.9 billion and payments in connection with leasing liabilities amounted to ARP1.3 billion. In the first quarter of 2024, Ternium Argentina invested ARP11.3 billion in securities.
Consolidated condensed income statement
ARP million | 1Q 2024 | 1Q 2023 |
Net sales | 436,394 | 165,532 |
Cost of sales | (318,072) | (108,058) |
Gross profit | 118,322 | 57,474 |
Selling, general and administrative expenses | (43,495) | (14,297) |
Other operating (expense) income, net | (196) | 270 |
Operating income | 74,631 | 43,447 |
Financial expense | (3,674) | (362) |
Financial income | 20,772 | 2,647 |
Other financial (expense) income, net | (19,410) | 3,553 |
Result of the equity in associated companies | 84,612 | 15,865 |
Income before income tax expense | 156,931 | 65,150 |
Income tax expense | 59,677 | (14,801) |
Profit for the period | 216,608 | 50,349 |
Attributable to: | ||
Equity holders of the Company | 216,608 | 50,349 |
Non-controlling interest | - | - |
216,608 | 50,349 |
Consolidated condensed statement of financial position
ARP million | March 31, 2024 | December 31, 2023 |
Property, plant and equipment, net | 768,083 | 662,428 |
Intangible assets, net | 38,631 | 39,983 |
Investments in associated companies | 2,121,931 | 1,923,622 |
Deferred tax assets | 33,209 | 31 |
Other receivables | 25,124 | 21,903 |
Other investments | 273 | 4,233 |
Total non-current assets | 2,987,251 | 2,652,200 |
Other receivables | 96,494 | 59,037 |
Inventories, net | 532,578 | 435,403 |
Trade receivables | 75,433 | 83,160 |
Other investments | 1,031,387 | 830,822 |
Cash and cash equivalents | 50,139 | 49,020 |
Total current assets | 1,786,031 | 1,457,442 |
Total assets | 4,773,282 | 4,109,642 |
Capital and reserves attributable to the company's equity holders | 4,158,634 | 3,496,017 |
Non-controlling interest | 8 | 8 |
Total equity | 4,158,642 | 3,496,025 |
Provisions | 2,438 | 1,843 |
Deferred income tax | - | 119,723 |
Other liabilities | 12,157 | 10,485 |
Leasing liabilities | 44,784 | 43,444 |
Total non-current liabilities | 59,379 | 175,495 |
Current income tax liabilities | 86,344 | 92,656 |
Other liabilities | 54,954 | 45,725 |
Trade payables | 338,555 | 284,337 |
Leasing liabilities | 5,358 | 5,185 |
Borrowings | 70,050 | 10,219 |
Total current liabilities | 555,261 | 438,122 |
Total liabilities | 614,640 | 613,617 |
Total equity and liabilities | 4,773,282 | 4,109,642 |
Consolidated condensed statement of cash flows
ARP million | 1Q 2024 | 1Q 2023 | |
Profit for the period | 216,608 | 50,349 | |
Adjustments for: | |||
Depreciation and amortization | 21,337 | 5,359 | |
Income tax accruals less payments | (79,959) | 4,962 | |
Interest accruals less payments | 1,020 | 18 | |
Changes in provisions for contingencies | 651 | 88 | |
Result of the equity in associated companies | (84,612) | (15,865) | |
Changes in working capital | (64,137) | 5,595 | |
Net foreign exchange results and others | (5,712) | (263) | |
Net cash provided by operating activities | 5,196 | 50,243 | |
Capital expenditures | (46,452) | (4,783) | |
Disposals of property, plant and equipment | 98 | 4 | |
Increase in other investments | (11,264) | (47,047) | |
Net cash used in investing activities | (57,618) | (51,826) | |
Proceeds from borrowings | 55,919 | 240 | |
Payments for leasing | (1,341) | (468) | |
Net cash provided by (used in) financing activities | 54,578 | (228) | |
Increase (decrease) in cash and cash equivalents | 2,156 | (1,811) |
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Disclaimer
Ternium SA published this content on 24 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 April 2024 21:08:09 UTC.
