管理層發言
Good morning, ladies and gentlemen. Welcome to Ternium's Conference Call to Discuss the Results for the Second Quarter 2026. We would like to inform you that this event is being recorded. We would like to remind you that this conference call is intended exclusively for investors and market analysts. We request that questions from journalists be directed to media relations through our website in the press section. With this, I would now like to turn the floor over to Mr. Sebastián Martí. You may proceed.
Okay. It seems we had some technical issues. I hope you can hear us now. Let's go again. Good morning, and thank you for joining us today. My name is Sebastián Martí, and I am Ternium's Global IR and Compliance Senior Director. Yesterday, we announced our financial results for the second quarter and first half of 2026. Today's call is intended to provide additional context to that presentation. I'm joined by Maximo Vedoya, Ternium's Chief Executive Officer; and Pablo Brizzio, the company's Chief Financial Officer, who will discuss Ternium's operating environment and performance. Following our prepared remarks, we will open up the call to your questions. Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on Page 2 in today's webcast presentation. You will also find any reference to non-IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday. With that, I'll turn the call over to Mr. Vedoya.
Good morning, everyone, and thank you for joining us. Yesterday, we reported a significant increase in Ternium's results in the second quarter. Adjusted EBITDA was 50% higher sequentially, and our EBITDA margin reached 16.5%. Our balance sheet remains strong with a net debt position of $112 million. With the peak of our investment program in Mexico behind us, we expect capital expenditures to keep declining further down the road. Before turning to our markets, let me say a few words on safety. Two weeks ago, we held Ternium's Safety Week, which we run every year across all of our operations. We stopped our production lines and more than 21,000 people took part in safety awareness routines. Stopping production across the company sends a clear message of our priority. Moving to Mexico. Shipments increased and margin expanded. The business environment is slowly getting better. Government measures against unfair trade are already helping steel volumes recover, and the country continues to strengthen its trade defenses. The commercial market improved during the quarter, supported by restocking along the value chain, which is bringing inventories back to a more balanced level. We are also gaining market share in this segment, helped by lower imports and by our stronger performance versus peers as customers continue to value Ternium's reliability, service and ability to respond quickly. Steel demand in the industrial market did not grow at the same pace. The auto sector remains healthy and HVAC is improving on demand from data centers, but Section 232 tariffs are affecting our customers in this and other manufacturing sectors. We expect volumes to continue recovering gradually in the third quarter. We are supplying steel for new gas pipeline projects and replacing Asia-imported steel from several automotive OEMs. Public infrastructure projects under the agreement to promote the Mexican steel industry should add further demand ahead. Moving to trade. The U.S. and Mexico have held three meetings in the last month to work towards a new framework. These talks have advanced, although they have not yet produced concrete results. For the Mexican government, Section 232 remains a top priority. These tariffs are hard to justify in the case of steel as the U.S. runs a large trade surplus with Mexico, and Mexico is by far its larger external supplier. At the same time, there is still excess steel capacity in the world, and this makes it necessary to keep working on the trade front. Our fourth round of talks will take place in Washington in early September. Turning to Pesqueria. Our new downstream lines continue to ramp up and the slab facility is progressing well with start-up expected in early 2027. This new capacity positions Ternium well for a more integrated and better defended North American market, where local supplies become a competitive advantage. Ternium is prepared to serve that demand with local capacity, short lead times and the technical support that industrial customers require. On top of that, the steel from our new slab mill will reach the automotive industry with a carbon footprint well below that of the blast furnace-based steel that still supplies most of the region's automotive market. Before moving on to other markets, let me mention two recognitions we received in Mexico since our last call. Caterpillar distinguished Ternium through its Supplier Excellence Recognition program for the fourth year in a row. And we also received Trinity's Premier Supplier Award in the steel category. Awards repeated over time and across industries show that our customers value the quality of our products and the service of our team. Turning to Brazil. Trade defense is advancing. In June, the steel quota system was renewed until June 2027, and the antidumping case on hot-rolled coil from China should reach a final decision during the remainder of this year. More is still needed but the direction is positive. Demand across consuming sectors remain uneven. Automotive is solid with production expected to grow by 6% this year. Road and infrastructure equipment remains dynamic. Other sectors are weaker, affected either by slow demand or unfair competition from imported finished goods. Against this backdrop, Usiminas has improved its profitability over the last few quarters. This came from better industrial performance, strict cost control and higher productivity. A key milestone for this competitiveness was the completion of the pulverized coal injection project, a structural step forward that brings greater efficiency and lower cost while also reducing emissions intensity. We also received important customer recognitions. General Motors named us Supplier of the Year in the industrialization and trust category, and Honda Motors granted us a Gold Best Supplier Award. In Argentina, shipments increased sequentially in the second quarter, mostly for seasonal reasons. Our view on this market has not changed. We continue to expect energy, mining and agriculture to be the most dynamic sectors with construction recovering gradually from still low levels. Manufacturing remained weak, held back by soft demand and strong competition from imports. In July, we published Ternium's 2025 Sustainability Report. One of the main updates in this revision is the revision of our 2030 decarbonization target, which now includes Usiminas and uses 2024 as a new base year. We are committed to reducing emissions intensity per ton of hot-rolled steel by 50% covering Scope 1, 2 and 3 under GHG protocol methodology. The report also covers our progress in energy efficiency, environmental management, safety and community engagement. I encourage you to read it. It gives a complete view of the work Ternium is doing in all these fronts. This was a quarter with a solid recovery in profitability and a balance sheet that remains very strong. Looking ahead, we expect performance to continue showing good results in the third quarter, supported by the recovery in Mexico, a more balanced trade environment in Brazil and steady progress on our strategic projects. All of this rests on the daily work and commitment of all our people, and I want to thank them all. With this, I'd like to move to a review of our quarterly performance. Pablo, please go ahead.
Thanks, Maximo, and thanks, everybody, for participating in this call. Let me turn to our operational and financial performance for the second quarter of this year. Adjusted EBITDA rose in the second quarter, driven by higher volumes and better margin with adjusted EBITDA margin expanding to 16.5% from 12.2% in the first quarter. Performance benefited from the strengthened market fundamentals in Mexico and a more constructive steel market environment in Brazil. The key drivers behind this result were improvements in realized steel prices, mainly in Mexico and Brazil. Looking ahead, we expect adjusted EBITDA to increase sequentially in the third quarter, driven by higher shipments and an improved adjusted EBITDA margin. This margin expansion should reflect higher revenue per ton, partially offset by an increase in cost per ton across our markets. Net income reached $465 million in the second quarter, primarily driven by strong operating performance. Compared to the first quarter, the improvement in operating income was partially offset by lower net financial results, mainly from foreign exchange losses and lower deferred tax gains. Let's review the Steel segment shipments now. Consolidated shipments increased by 4% sequentially in the second quarter. In Mexico, volumes continue to rise, supported by strengthening in the commercial market, lower imports from more effective trade defense against unfair trade practices and efforts to improve market share, as already was explained by Maximo. In Brazil, sales volumes were broadly steady versus the first quarter with Usiminas maintaining its focus on margin rather than volume. In the Southern region, volume picked up in a typical seasonal recovery even as the underlying demand continues to hold steady. Looking ahead, we expect shipments to keep recovering mainly in Mexico, supported by sustained commercial market momentum and also in Brazil as trade measures take hold and inventories normalize. Moving to the Steel segment performance. Steel cash operating income rose by $204 million sequentially with higher volume and realized steel prices. Revenue per ton increased slightly, which should drive revenue per ton and margins to continue improving in the third quarter. Turning now to the Mining segment. Shipments normalized in the second quarter, reflecting the seasonal recovery of iron ore shipments in the Brazilian operations. Cash operating income declined slightly sequentially as lower realized iron ore prices were partially offset by higher sales volume. Let's review now the cash flow and balance sheet. Although we had a significant increase in operating results, this was partially offset by a $418 million buildup in working capital consistent with higher sales and increased raw material prices and steel costs. Capital expenditure reflects our progress in the expansion of the industrial center in Pesqueria, now mostly focused on the construction of the new slab facility. During the quarter, we also paid a dividend to shareholders of $255 million, corresponding to the balance of the total dividend declared for the fiscal year 2025. With this, we end June 2026 with a net debt position of $112 million compared to a net cash position of $327 million at the end of March. Finally, let me close with a quick look at our first half performance. In the first six months, adjusted EBITDA was $1.2 billion, rising 65% year-over-year, with EBITDA margins expanding to 14% from 9% in the same period of last year. Net income for the first half amounted to $837 million, resulting in shareholders' earnings of $2.84 per ADS, almost double the prior year level, supported by stronger operational results on higher steel margins. Cash from operations totaled $473 million with a year-over-year decline mainly driven by higher working capital needs with higher inventory values and higher receivables associated with an increase in steel prices as well as higher raw material costs. Capital expenditure reached $837 million in the first half, reflecting continued investment in the Pesqueria expansion. With this, we are leaving behind the peak of our investment cycle and expect CapEx of $1.6 billion for the full year 2026, moderating to around $1.2 billion next year. With this, we conclude our prepared remarks. We would like now to welcome your questions. Please, operator, go ahead.
分析師問答
Our first question comes from Mr. Rafael Barcellos from Bradesco BBI.
Congratulations for the results. Looking at your price realization in the second quarter, it was very strong. But looking at how Mexican steel prices have performed over the past few months and given the contract lags, it seems that your second quarter price realization could have been even better than what you published in the second quarter. Does that mean that you have an even stronger price realization in the third quarter, growing quarter-over-quarter even more than what you published in the second quarter? And can you comment a bit on the overall market environment in Mexico? How do you see prices evolving from now on? As a second question regarding the USMCA discussion, we understand that the likelihood of seeing deals made sector by sector is more likely than a broader USMCA revision. Do you believe this statement is correct? And what is the likelihood of seeing any sort of agreement with the U.S. happening before year-end?
Thank you, Rafael. On prices in Mexico: one of the things that's happening is that we are having more shipments in the commercial market than in the industrial market. The mix that we are selling is a bit different than before. The Section 232 tariffs are affecting production of some industrial customers in Mexico, so they are a little cautious, which changes the mix. Prices in the commercial market are more spot-oriented, which helps explain why realization may be a bit lower than you would expect. We expect some changes in the third quarter, but do not expect huge movements because this dynamic is still ongoing in Mexico. Regarding the market environment in Mexico, it is improving but not growing dramatically. World Steel recently estimated annual consumption growth for Mexico at around 4%, and I agree with that view. Our steel shipments are increasing a bit more because we are gaining market share against imports, which is positive, but market growth is moderate. On USMCA and the talks between the U.S. and Mexico, there is a lot of speculation. What I think is happening is that both sides have priorities that are broadly aligned with our interests. Mexico prioritizes addressing Section 232; the U.S. wants Mexico to step up trade defenses against unfair trade in steel and other products. Both objectives are reasonable, and progress in either direction would be positive for us and for the Mexican market. I hope that answers your questions a bit.
Just as a quick follow-up to clarify: on the price side, you mentioned that we should not expect many changes in mix in the third quarter. But price realization should increase quarter-over-quarter, similar to what we saw happening in the second quarter, correct?
Yes, that's correct. The mix will not change much, but prices should see a continued increase quarter-over-quarter, similar to the second quarter.
Our next question comes from Emerson Vieira from Goldman Sachs.
I have two questions. One on volumes in Mexico. One of the most difficult parts is trying to estimate the incremental volumes that the company is perceiving right now due to the infrastructure projects. Can you share any sensitivity in terms of what could be the incremental steel demand for Ternium because of those projects that are being delivered or actually starting by Pemex, CFE, etc.? What could be the upside to volumes in your view? Is it correct to understand that this impact is coming earlier than anticipated? In the last quarter you mentioned that you could expect those higher volumes only toward the end of the year, and now this appears to be anticipated. That is the first question; then I will move to the second later.
Thank you, Emerson. Infrastructure is starting to pick up. If you look at Mexican infrastructure consumption, it decreased in 2025 and did not move much in early 2026. Now there are some projects gaining momentum. Infrastructure projects take time; they do not produce big changes quarter-to-quarter. With the agreement we have with the Mexican administration to promote the steel industry, we are discussing projects of around 600,000 to 700,000 tons. However, this is not coming in one quarter; these are projects that will develop over at least 1.5 to 2 years. How much of that will realize in the following quarters is limited; they take time. I hope that clarifies the timing.
So 600,000 to 700,000 tons is considering all projects that you guys have entered into partnerships, correct?
Yes. But you have to take at least one to two years to develop all that.
My second question is on capital allocation. In May, the company revised down the proposed dividends when the geopolitical scenario was more uncertain. Uncertainties still exist, but earnings are improving at a faster pace. Would it make sense to believe that dividends could be raised and maybe return to prior levels or even above? What is the company's view on dividend payments going forward in light of these changes?
Good question. On capital allocation, first look at CapEx. We are coming out of a period of significant CapEx for Pesqueria and investments in Usiminas. In 2027, CapEx should decrease; Pablo mentioned a figure around $1.2 billion to $1.3 billion versus about $1.6 billion this year. The priority next year will be to consolidate and run the new facilities we have built, focus on operations and start-up activities. The environment remains uncertain globally, so we will monitor risks closely. Nevertheless, returning capital to shareholders remains a key part of our capital allocation framework. Pablo can add more detail on the numbers.
Emerson, it is clear that results are improving and CapEx is coming down from the peak. We will spend the next one to two years digesting and ramping up those investments, including certification and commissioning work. If we confirm sustained better results and reduced CapEx, an increase in dividends is possible and has precedent in the company's history. We also aim to maintain a strong financial position to support future alternatives, including potential share acquisitions to simplify corporate structure, although there are conditions and complications, especially regarding share liquidity. In summary, we have room to increase dividends if sustained results support it, while keeping a conservative balance sheet to remain flexible.
Our next question comes from Caio Ribeiro from Bank of America.
Two questions on the trend of North American steel markets. First, looking at HRC prices in Mexico and the U.S., there's quite a large gap of around $300 per ton, which has expanded over the past year. Can you talk about how lead times and inventory levels look in Mexico to understand how they compare to the U.S., where lead times are well above average at nine weeks and inventories are quite low? On this note, is the trigger to narrow that spread simply a reduction in tariffs for Mexico or are there other triggers? Second, U.S. HRC prices have had a strong run over the past year. Looking ahead, how do you view the restart of the large blast furnace at Gary Works that was idled and the start-up of Nucor's new capacity later this year? Do you see these as risks that could create a price inflection point, and are current price levels already encouraging a pickup in imports?
Caio, I don't think the price gap between Mexico and the U.S. is due to different lead times or inventory differences. Mexico's prices are following the same trend as the U.S.; they are increasing. Lead times and inventories are quite similar. The difference is the impact of Section 232 in the U.S. and that trade measures in Mexico are not as effective as the U.S. tariffs. The price gap should start closing once discussions between the U.S. and Mexico produce concrete conclusions. Mexico is asking to get relief from the 232 effects on its trade with the U.S., and the U.S. is asking for tougher trade defenses from Mexico; progress on these fronts would narrow the gap. Regarding increased U.S. capacity, I do not see a large immediate risk. The U.S. is reducing imports, and demand is not materially higher year-on-year; consumption is similar. New capacity should be absorbed by demand increases and import reductions. There could be temporary price fluctuations, but I do not see a major impact from the restarts you mentioned.
Our next question comes from Alfonso Salazar from Scotiabank.
Two questions regarding the Mexican market. First, can you share what conversations with clients in Mexico reveal about their moves and thinking? For example, Toyota is moving part of Tacoma production to the U.S. What challenges are clients facing and what are they planning if Section 232 goes away—would they face higher steel prices? Second, what is your view on Mexico's future in the global auto market? The U.S. leads pickup and SUV demand, China leads EVs and low-cost markets, and OEMs are losing share except in the U.S. With Pesqueria's new slab facility coming online, how do you see Mexico's position evolving?
Alfonso, for industrial customers, especially U.S.-origin OEMs, they expect a resolution on Section 232 and the USMCA talks. Most believe an agreement or solution will be reached because they have extensive supply chain operations across Mexico and the U.S., and they generally prefer a stronger regional market. The main challenge remains Section 232. Customers do not necessarily think that removing 232 will automatically raise costs; rather, they expect a more integrated regional market, which would create opportunities to produce across Mexico and the U.S. The OEMs are waiting for that resolution. Regarding Mexico's position in the global auto market: Mexican auto production is stable—around 4 million units per year—and production has not materially declined from 2025 to 2026. The opportunity is for stronger integration between Mexico and the U.S., given the large U.S. market and significant cross-border supply chains. Pesqueria's slab facility positions us well to serve regional automotive demand as that integration progresses, once trade discussions advance and certification and ramp-up are completed.
Just a follow-up: for commercial customers, if 232 goes away, they may face higher steel prices. Is that the implication?
I don't think commercial customers will necessarily face higher prices. They will face market prices that reflect the degree of fair competition. The main issue for commercial customers is demand—how and when growth in construction and infrastructure will pick up. Mexico's steel consumption fell significantly in 2025 and is expected to grow about 4% this year, still well below the 2023 peak. Commercial customers are most focused on demand recovery and infrastructure programs.
Our next question comes from Daniel Sasson from Itaú BBA.
Congrats on the results. My first question is on capital allocation. With Pesqueria nearing conclusion, you should enter a period of stronger free cash flow generation. Could we see dividend payments increase over the next few years? Or will the company remain conservative on the balance sheet given geopolitical turbulence? Could buybacks or acquisition of remaining Usiminas shares be considered, possibly to simplify the corporate structure? Second, on Pesqueria: can you give more color on how to model reduced needs for slab purchases from third parties after the project starts up versus additional costs like energy and iron ore needs? What would be the delta in EBITDA coming exclusively from Pesqueria in 2027 versus 2026, all else equal?
Daniel, on Pesqueria: the slab facility will start early in the year, but it is a complex project and ramp-up will take several quarters. You should not expect a large immediate EBITDA impact in 2027 because certification, commissioning and ramp-up across multiple products and customers takes time. The facility will enable us to supply automotive customers regionally with a lower carbon footprint product, but the full benefits will be phased in over time as certifications and customer qualifications are completed. On capital allocation, Pablo will add more detail, but the main message is that we are moving out of a peak CapEx period, which gives us flexibility. The priority is to consolidate and operate these investments effectively before launching new large projects.
Let me summarize capital allocation. Results are improving while CapEx is coming down from the peak. We still need one to two years to digest and ramp up the investments, which makes launching new big CapEx projects in the near term more difficult. We will continue with maintenance CapEx and certain strategic decisions, including future mining activity in Brazil. If sustained better results are confirmed and CapEx moderates, increasing the dividend is a possibility. We tend to be conservative and keep a strong financial position to support future alternatives. Regarding acquiring remaining shares, the long-term objective to simplify corporate structure is clear, but practical conditions and liquidity issues make such moves difficult in the short run. In general, we want to keep a strong balance sheet, return capital when appropriate, and remain prepared to take advantage of opportunities.
Thank you. That concludes the question-and-answer session. I would like to turn it back over to Mr. Maximo Vedoya for closing remarks.
Okay. Thank you all of you for joining us today. We welcome any feedback you have or any additional questions. Have a great day. See you in a couple of months.
Ternium's conference call has now concluded. Thank you for attending today's presentation. You may now disconnect and have a good day.