Ternium S.A. · NYSE:TX
Ternium — Q3 2007 Earnings Presentation
18 slides from Ternium's earnings presentation, Dec 6, 2007
Slide 1: 3Q Results Teleconference
November 7, 3Q Results Teleconference
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements and information relating to 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 to Terni
Slide 3: Industry Outlook: World apparent steel use
341 352 375 398 419 220 246 255 260 37 44 49 55 62 66 70 74 78 983 955 929 902 225 Industry Outlook World apparent steel use Source: IISI (2007-2008 SRO Autumn 07 – 2009-2012 MTF Oct06) 1.079 1.138 1.242 1.414 1.588 1.524 1.323 1.655 1.468 1.000 1.200 1.400 1.600 1.800 (p) (p) (p) (p) (p) (p) OTROS
Slide 4: Industry Outlook: GDPs
Annual GDP growth rate 2003 2004 2005 2006 2007 [e] 2008 [p] China USA Latam Argentina Brasil Colombia Mexico Venezuela Europa World 2,7 4,0 3,5 3,9 3,6 3,5 Industry Outlook GDPs Source: IISI / World Research Centre / IMF 10,0 10,1 10,4 11,1 11,5 10,9 2,5 3,6 3,1 2,9 2,0 2,0 2,1 6,0 4,5 5,4 4,9 4,7
Slide 5: Industry Outlook: Prices
Industry Outlook Prices Avg. Gap HRC-Slab gap HRC USA Midwest Slab USA Import Source: CRU
Slide 6: Industry Outlook: USA crude steel production vs inventories
Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Source: AISI / MSCI Industry Outlook USA: Crude steel production vs SC Inventories
Slide 7: Industry Outlook: Raw Materials
69 7,1 Industry Outlook Raw Materials Source: Clarkson Source: CVRD Source: CRU US$/t Actual Tubarao a China IRON ORE NATURAL GAS (HENRY HUB) FREIGHTS (PANAMAX DAILY RENTAL) COKE EXPORTS (FOB CHINA) 4,0 3,4 5,5 6,2 9,0 7,0 0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0 10,0 + 103%
Slide 8: Grupo Imsa – Hylsamex Integration
Grupo Imsa – Hylsamex Integration • April 29th: Contract signing for the acquisition of Imsa • From May to July: Development of a 100 days plan • July 26th: IMSA consolidated into Ternium’s Financials • August 7th: Mexican operations under one new functional structure • March 31st 2008: Estimated da
Slide 9: Grupo Imsa's expected integration synergies
• Mills specialization • Procurement & logistics • Management reorganization • Marketing consolidation • Working Capital reduction Larger runs, dedicated mills, rationalization of attributes, higher efficiencies Improved purchasing through Exiros, efficiencies arising from the supply chain managemen
Slide 10: Slide 10
Slide 11: Total investments (US$ million)
2007E 2008E 2009E 2010E Total investments (US$ million) Ongoing investment plan for 2007-2010 worth US$2.0 billion Ternium Mexico Hot rolling mills (+730,000 metric tons/year; US$180 million) 2007 & 2008 Cold rolling mills (+530,000 metric tons/year; US$65 million) Service centers (+280,000 metric t
Slide 12: Mining
6 5 1 2 3 4 7 TECOMAN C.DE ORTEGA EL RANCHITO AQUILA MINA AQUILA COAHUAYANA NUEVO A LAZARO CARDENAS COLOMERA MAQUILI LA PLACITA DE MORELOS MANZANILLO COLIMA PUEBLO COQUIMATLAN IXTLAHUACAN MIRAFLORES CAMOTLAN DE MINATITLAN COMALA V. DE ALVAREZ QUESERIA CUAUHTEMOC ARMERIA A GUADALAJARA A GUADALAJARA A
Slide 13: Mining Expansion
Probable Proven Total Mining Expansion Current Reserves (*) [MMt] (*) Does not include recent acquisition Development subject to certification of iron ore reserves, currently in progress Total iron ore production target of 8.0 million tons per year of concentrates, up from current 4.5 million tons p
Slide 14: Ternium's performance in 3Q 2007
3Q 2007 2Q 2007 3Q 2006 Ternium’s performance in 3Q 2007 3Q 2007 EBITDA of US$588 million, or 25% of net sales • Sales up mainly due to consolidation of Grupo Imsa • Lower Ebitda on account of higher costs • Lower Ebitda margin due to higher costs and Grupo Imsa consolidation Shipments (million tons
Slide 15: Strong free cash flow generation
Strong free cash flow ¹ generation • Free cash flow of US$735 million in 9M 2007, US$840 million for the year 2006 • Free cash flow in the third quarter 2007 of US$35 million was impacted by a one-time US$296 million income tax payment related to the acquisition of Grupo Imsa (tax credit) Ternium’s
Slide 16: Third quarter 2007 EBITDA of US$588 million
Third quarter 2007 EBITDA of US$588 million (84) (15) (22) EBITDA 3Q06 Shipments Revenue per Ton Cost per Ton SG&A Other EBITDA 3Q07 excl. IMSA EBITDA IMSA EBITDA 3Q07
Slide 17: Net debt increased to US$2.9 billion
3,693 1,606 2,916 1,586 1,057 4,134 Dic-05 Jun-06 Dic-06 Jun-07 Sep-07 Holding's debt Mexican subsidiaries' debt Amazonia / Sidor's debt Siderar's debt Cash & equivalents Net debt increased to US$2.9 billion as a result of the acquisition of Grupo Imsa Cash & equivalents 1,194 Borrowings 2,916 1,586
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