Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Ternium plans to improve its profitability in Q1 2021 compared to the previous quarter while focusing on expanding the use of renewable energy in its quest to reduce carbon emissions by 2030.


The South American steelmaker said in its earnings report on Feb 22 that it also plans to increase its use of scrap alternatives, improving emissions at its Mexican DRI plant, reducing the use of met coal in its Brazil and Argentina operations, and invest in green steelmaking capacity.


The firm’s steel shipments decreased by 9pc to 11.4mn mt in 2020 from 12.5mn mt in the previous year while iron ore shipments climbed by 6pc to 3.8mn mt against 3.6mn mt during the same period. 


Shipments in Mexico declined by 6pc to 5.9mn mt in 2020 compared to a year ago but made up more than half of the company’s total shipments. Shipments in South America, including Argentina and Colombia, fell by 1pc to 1.9mn mt in 2020 against the previous year. Last year, Ternium’s Brazil slab facility returned to full capacity in H2 2020 from minimum utilization in April. Shipments in other markets including the US decreased by 17pc to 3.5mn mt in 2020 against 4.3mn mt the prior year. 


The company’s net sales fell by 14pc to $8.7bn in 2020 from $10.2bn in 2019 though operating income rose by 25pc to $1.1bn against $864mn in this timeframe. Ternium benefited from a steady recovery in H2 as steel centers rebuilt inventories and end consumers increased interest in durables and housing. 


EBITDA trended flat at $1.5bn in 2020 from the previous year, though the EBITDA margin as a percentage of sales increased to 17pc in 2020 from 15pc in 2019. Net income post taxes rose by 37.8pc to $867.9mn in 2020 from $630mn in the year-ago period. 


In 2020, capital expenditures fell by 47pc to $560mn reflecting the ending of some expansion projects as well as delayed expenditure schedules on ongoing projects due to the COVID-19 pandemic.


Q4 2020

In the fourth quarter, shipments increased by 5pc to 3.1mn mt from 2.9mn mt in the same quarter a year ago. Iron ore shipments rose by 3pc to 943,000mt in Q4 2020 against the year-ago quarter. Net sales in Q4 2020 climbed by 15pc to $2.6bn as operating income surged by 634pc to $677.2mn in the same quarter, both against Q4 2019. 


Steel shipments in Q4 2020 to Mexico rose by 14pc as shipments to South America climbed by 20pc compared to the same year-ago quarter. 


Ternium increased EBITDA Q4 by 145pc to 645.2mn against 2631.1mn in the same year-ago quarter.

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