Ternium S.A. · NYSE:TX
Ternium — Investor Day (April 2009)
23 slides from Ternium's investor day presentation, Apr 2, 2009
Slide 1: Investor Day
Investor Day Solomon R. Guggenheim Museum, New York April 2, 2009
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements and information relating to Ternium S.A. and its subsidiaries (collectively, “Ternium”) that are based on the current beliefs of its management as well as assumptions made by and information currently available
Slide 3: Event Schedule
Event Schedule 08:00am Breakfast and registration 08:45am Presentation by Daniel Novegil, CEO 09:45am Coffee break 10:00am Q&A with Ternium’s management 11:00am Closing remarks TERNIUM l Investor Day - April 2, 2009 3
Slide 4: Market Overview: New Competitive Landscape
Market Overview: New Competitive Landscape Ternium’s Strategic Positioning Management Initiatives Conclusion TERNIUM l Investor Day - April 2, 2009 4
Slide 5: Market Overview: New Competitive Landscape
Market Overview: New Competitive Landscape Ternium’s Strategic Positioning Management Initiatives Conclusion TERNIUM l Investor Day - April 2, 2009 5
Slide 6: Impact of crisis on world steel consumption
Market overview Impact of crisis on world steel consumption World Steel Consumption Steel capacity utilization (million tonnes) (%) 1400 2009f (WSD) Region Jan'09 vs Average '07 Utilization Rate World -24% China -5% 1200 World 67% 94% Developed -37% China 89% 99% Other -30% 1000 Asia ex China 68% 92
Slide 7: International HRC price
Market overview International HRC price HRC price and cost (in constant US$/ton, base March´09) 1,086 1100 •Supply driven market •Demand driven market •Downward trend in costs •Surge in costs New1000 •Privatization •Consolidation competitive 900 •Cost pushed •Price pulled landscape 800 677 700 644 6
Slide 8: New competitive landscape
Market overview New competitive landscape • From globalization to regionalization, trade barriers; regional focus, value added • Uneven reduction in raw material prices and currency devaluation; production flexibility and cost competitiveness • Overcapacity in net exporting regions; slab availabilit
Slide 9: Ternium's Strategic Positioning
Market Overview: New Competitive Landscape Ternium’s Strategic Positioning Management Initiatives Conclusion TERNIUM l Investor Day - April 2, 2009 9
Slide 10: Ternium's strategic positioning
Ternium’s strategic positioning • Regional leadership, strong market share, downstream integration, diversified product mix • Cost advantages relative to competitors • Flexibility (integrated, minimill, slab re-rolling) • Experienced management team with successful track record Product mix – Top Pla
Slide 11: Cost advantages relative to competitors
Ternium’s strategic positioning Cost advantages relative to competitors Cost reductions Post Crisis (US$/ton) 800 Ternium’s Iron Ore supply 2009e 800 (mtpy) 8 700 700 Pre-crisis cost Sales 0.9 396 251 600 600 Brazil HRC 2.5 303 268 Cash 500 247 500 Cost 250 220 218 166 400 400 Propietary 5.8 Consump
Slide 12: Production flexibility
Ternium’s strategic positioning Production flexibility 3rd Parties Coking Coal Mexico Argentina Iron Ore Mines Iron Ore Cap. 4.2 mtpy Nat. Gas Util. 100 % Market Blast Furnace #2 Blast Furnace #1 Cap. 2.5 mtpy Cap. 1.2 mtpy Direct Reduction Util. 72 % Util. Idled Cap. 1.7 mtpy Util. 100 % 3rd Partie
Slide 13: Ternium's strategic positioning: cost competitiveness
Ternium’s strategic positioning High CIS Latin America Cost Competitiveness China US Europe Japan Low Market to Capacity High Competitive edge in new environment: • High market share, downstream integration and high value added • Low cost, production flexibility TERNIUM l Investor Day - April 2, 200
Slide 14: Management Initiatives
Market Overview: New Competitive Landscape Ternium’s Strategic Positioning Management Initiatives Conclusion TERNIUM l Investor Day - April 2, 2009 14
Slide 15: Management initiatives
Management initiatives • Rapid reduction of working capital • Production cuts and transfers between Production Units • Halting all steel and raw material procurement • CAPEX reductions, re-assessment of expansion plans • Improvement of financial position • Cost reductions, contract renegotiations, h
Slide 16: Production and steel purchase reduction
Management initiatives Production and steel purchase reduction • Production cuts in line with demand levels and working capital reduction plans • Priorization of lower cost inputs and facilities • Steel purchasing minimized, in part replaced by intercompany transfers Crude steel production Slab purc
Slide 17: Inventory reduction
Management initiatives Inventory reduction • De-stocking of raw materials, semis and finished steel Steel inventories Raw material inventories (thousand tonnes) (thousand tonnes) 2,269 Rolled Coal and Metallics -566 -477 2,360 Iron Ore Slabs 1,703 -366 1,883 -463 835 1,302 -333 -126 1,337 709 1,420
Slide 18: Capex reduction
Management initiatives Capex reduction • Complete re-assessment of capex program • Re-negotiating contracts with suppliers • Expansion plans being re-evaluated: expansion in Argentina suspended, project in Mexico currently in design stage 900 Capex 800 (million US$) 700 600 500 -452 ID 2008 400 Actu
Slide 19: Cost reduction
Management initiatives Cost reduction • Comprehensive cost reduction program • Contract renegotiations with suppliers • Re-assignments, headcount reduction, temporary layoffs Headcount reduction Aug'05 Jun'07 Feb'09 White Collar 4,643 3,940 3,370 Blue Collar 13,546 12,718 12,147 Contractors 3,877 2,
Slide 20: Net debt reduction
Management initiatives Net debt reduction • Cash position of US$1.2 billion as of March 31, 2009 • Net Debt of US$1.8 billion as of March 31, 2009 Net debt position (billion US$) 2.5 2.1 1.8 Sep'08 Dec'08 Mar'09 Source: Ternium TERNIUM l Investor Day - April 2, 2009 20
Slide 21: Conclusion
Market Overview: New Competitive Landscape Ternium’s Strategic Positioning Management Initiatives Conclusion TERNIUM l Investor Day - April 2, 2009 21
Slide 22: Conclusion: Ternium will weather the storm and succeed
Conclusion: Ternium will weather the storm and will succeed in new competitive landscape • Local focus, strong market share in domestic markets, downstream integration • Flexible producer, cost advantages relative to competitors • Rapid response to downturn, productive re-configuration, cost reducti
Slide 23: TERNIUM l Investor Day - April 2, 2009
TERNIUM l Investor Day - April 2, 2009 23