Ternium shares edge up on better-than-expected Q1 results

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Ternium shares edge up on better-than-expected Q1 results
Credit: © Reuters.

LUXEMBOURG - Ternium S.A. (NYSE:TX), a leading steel producer, announced its financial results for the first quarter of 2024, surpassing analyst expectations with an earnings per share (EPS) of $1.84, which was $0.17 higher than the consensus estimate of $1.67.

The company's revenue also exceeded forecasts, coming in at $4.78 billion against the anticipated $4.7 billion. The stock was up 0.4% in aftermarket trading following the results.

The first quarter saw Ternium achieving a robust operating performance, with a significant year-over-year (YoY) increase in revenue of 32%. The company's steel product shipments rose by 27% YoY, while mining product shipments did not have a comparable figure from the previous year. Ternium's operating income surged by 89% YoY to $675 million, and its adjusted EBITDA jumped by 68% YoY to $855 million, with an adjusted EBITDA margin of 18% of net sales.

Ternium attributed its strong quarterly performance to a rebound in margins and sustained high steel sales volumes. The company's net sales of steel products in Mexico saw a sequential increase, primarily due to industrial contract prices adjusting to higher levels. However, steel product sales volumes in Mexico faced a slight decline due to a destocking trend in the commercial market, which was largely offset by robust demand from industrial customers.

In contrast, the Southern Region experienced a significant decrease in net sales of steel products compared to the previous quarter, reflecting weaker demand in the Argentine market and a drop in revenue per ton. Argentina's market was impacted by lower activity levels and a destocking process in Ternium's value chain.

Looking ahead, Ternium anticipates a lower recurring adjusted EBITDA in the second quarter of 2024, mainly due to a margin reduction, which is expected to be partly offset by higher steel shipments. The steel segment's revenue per ton is predicted to decline in most of Ternium's markets, while cost per ton is projected to remain relatively stable.

Despite the challenges, Ternium's CEO expressed confidence in the company's ability to navigate the market conditions, citing the robust steel market in Mexico and moderate growth in various sectors in Brazil. However, the outlook for Argentina remains uncertain, with hopes for recovery in the second quarter as the economy adjusts to new policy measures.

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