FORM 6 - K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
As of 04/28/2006
Ternium S.A.
(Translation of Registrant's name into English)
Ternium S.A.
46a, Avenue John F. Kennedy - 2nd floor
L-1855 Luxembourg
(352) 4661-11-3815
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of
1934.
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
Not aplicable
The attached material is being furnished to the Securities and Exchange
Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange
Act of 1934, as amended.
This report contains Ternium S.A.'s press release announcing its results for the
first quarter of the year 2006.
Ternium Announces First Quarter 2006 Results
LUXEMBOURG--(BUSINESS WIRE)--April 28, 2006--Ternium S.A.
(NYSE:TX) announced today its results for the quarter ended March 31,
2006.
The financial and operational information contained in this press
release is based on consolidated financial statements prepared in
accordance with International Financial Reporting Standards (IFRS) and
presented in U.S. dollars.
Summary of 2006 First Quarter Results
-- Net sales of US$1.5 billion.
-- Operating income of US$392.5 million, or 26% of net sales.
-- EBITDA(a) of US$500.5 million, or 33% of net sales.
-- Net income of US$194.5 million.
-- Shipments of flat and long products of 2.2 million tons.
(a) EBITDA equals operating income plus depreciation, amortization
and other non cash transactions
Ternium's 2006 first quarter performance reflects continued
strength in our core steel markets. Revenue increased in the first
quarter of 2006 compared to the last quarter of 2005 as record
production levels in our Mexican subsidiary Hylsamex supported higher
shipments. EBITDA margin remained stable compared to the previous
quarter as higher cost of sales was offset by a reduction in SG&A
expenses.
Market Background and Outlook
Steel demand in the first quarter of 2006 was very strong in our
core markets. Prices remained at healthy levels with slight increases
across our product line. In the immediate future, we expect demand for
our products continuing to grow, reflecting the strong performance of
main economies in the Americas. In terms of costs, some of our
facilities could be subject to increases in iron ore and fluctuations
in energy items. Overall, we expect volumes and prices to offset
increases in cost.
Production
During the first quarter of 2006 Ternium's facilities produced 2.5
million tons of crude steel, compared to 2.4 million tons in the
previous quarter.
Acquisitions
On January 31, 2006, Ternium, through its Argentine subsidiary
Siderar, completed the purchase from Acindar S.A. of the manufacturing
plants and other assets located in the province of Santa Fe,
Argentina, and Acindar's controlled company Impeco S.A., which is
located in the province of San Luis, Argentina, for total
consideration of US$55.2 million. The plants, which are being
integrated into Siderar, primarily produce steel tubes for
agricultural, construction and machinery and equipment industries.
They have a combined annual production capacity of 140,000 tons.
On April 25, 2006, Ternium completed the purchase from Worthington
Industries of a 50 percent equity interest in Acerex S.A. de C.V. for
US$44.6 million. With this acquisition, which is still under
consideration of Mexico's antitrust authorities, Ternium's subsidiary
Hylsamex now owns 100 percent of Acerex. Acerex is a service center
that processes steel to produce short length and thin steel sheets in
various widths. It has a total annual production capacity of 544,000
tons, and operates as a cutting and processing plant for Ternium's
Mexican operations and as an independent processor for other
companies. Hylsamex, together with Worthington, had formed Acerex as a
50/50 joint venture in 1994.
These acquisitions are expected to further Ternium's strategy of
enhancing its direct relationships with customers in its core markets,
and in particular to those in the large and growing North American
markets, by delivering value-added products and services.
Analysis of 2006 First Quarter Results versus 2005 Fourth Quarter
Results
As a result of the consolidation of Amazonia's and Hylsamex's
results and other financial data since February 15, 2005, and August
22, 2005 respectively, Ternium's results and other financial data for
the year 2006 or any quarters in 2006 are likely to vary significantly
from the results and other financial data for the year 2005 or the
corresponding quarters in 2005. Accordingly, Ternium currently intends
to make quarterly comparisons on a sequential basis until the third
quarter of 2006. From the fourth quarter of 2006 onwards, comparisons
will be made on a quarterly year over year basis.
First quarter of 2006 and fourth quarter of 2005 figures
consolidate the results of Hylsamex, Siderar and Sidor together with
all other consolidating subsidiaries.
Net income for the period was US$194.5 million, compared to
US$168.7 million in the fourth quarter of 2005. Net income
attributable to equity holders of the company was US$165.0 million,
compared to US$137.5 million in the fourth quarter of 2005.
Net sales for the first quarter of 2006 increased 5% to US$1.5
billion compared to the previous quarter due to higher volume.
Shipments of flat and long products reached 2.2 million tons. Revenue
per ton shipped increased 1% to US$658.
Net Sales Shipments Revenue / ton
(million US$) (thousand tons) (US$/ton)
-------------------- -------------------- ---------------
1Q 4Q 1Q 4Q 1Q 4Q
2006 2005 Dif. 2006 2005 Dif. 2006 2005 Dif.
-------------------- -------------------- ---------------
South &
Central
America 691.2 606.7 14% 1,044.7 896.9 16% 662 676 -2%
North
America 491.8 489.6 0% 643.2 668.1 -4% 765 733 4%
Europe &
other 14.3 48.9 -71% 26.6 76.9 -65% 537 636 -16%
-------------------- -------------------- ---------------
Total flat
products 1,197.3 1,145.2 5% 1,714.5 1,641.8 4% 698 698 0%
South &
Central
America 121.5 110.1 10% 236.9 216.8 9% 513 508 1%
North
America 161.4 147.7 9% 296.5 282.7 5% 544 522 4%
Europe &
other -- 2.2 -- -- 4.9 -- -- 436 --
-------------------- -------------------- ---------------
Total long
products 282.9 259.9 9% 533.4 504.5 6% 530 515 3%
Total flat
and long
products 1,480.2 1,405.1 5% 2,247.9 2,146.3 5% 658 655 1%
Other
products(b) 48.7 62.7 -22%
--------------------
Total Net
Sales 1,528.9 1,467.8 4%
(b) Includes pig iron and pellets. Steel pipes and tubular products
were classified as "flat products." Accordingly, fourth quarter of
2005 figures were reclassified for comparative purposes.
Flat products sales were US$1.2 billion, an increase of 5%
compared to the previous quarter due to higher volume. Shipments
increased to 1.7 million tons as a result of improved demand in
Ternium's core markets and additional production of hot rolled
products in our Mexican subsidiary Hylsamex. Revenue per ton shipped
remained unchanged at US$698.
Long products sales were US$282.9 million, an increase of 9%
compared to the previous quarter mainly due to higher volume, as
shipments reached 533.4 thousand tons. Revenue per ton shipped
increased 3% to US$530 primarily as a result of a better mix due to
higher sales of wire rod and bars.
Other products sales were US$48.7 million, a decline of 22%
compared to the previous quarter on lower sales of pig iron and
pellets.
Sales of flat and long products in the South & Central America
Region were US$812.7 million, an increase of 13% compared to those of
the previous quarter mainly due to higher volume. The core markets of
Ternium in this geographical area continue to exhibit significant
growth. Shipments reached 1.3 million tons, an increase of 15%
compared to the previous quarter. Revenue per ton shipped was stable
at US$634.
Sales of flat and long products in the North America Region were
US$653.2 million on shipments of 939.7 thousand tons, remaining
relatively stable compared to the previous quarter. Revenue per ton
shipped increased 4% to US$695 mainly as a result of higher steel
prices.
Sales of flat and long products to Europe and other regions were
US$14.3 million on shipments of 26.6 thousand tons, a decrease of 71%
compared to those of the previous quarter as a result of strong demand
in our core markets in the Americas.
Cost of sales totaled US$987.2 million for the period, or 65% of
net sales compared to US$907.2 million in the previous quarter, or 62%
of net sales. Costs increased due to higher shipment volumes and
higher costs of key inputs in Venezuela primarily related to the price
increase for iron ore negotiated in November 2005 and the programmed
stoppage for revamping of our pellet production facilities.
Natural gas and electricity prices for the Central and South
America operations remained relatively stable compared to the previous
quarter, while our Mexican subsidiary experienced a decrease in both
gas and electricity costs due to a reduction in market prices. Labor
costs remained at similar levels to those of the previous quarter.
Selling, general and administrative expenses in the quarter were
US$151.0 million, or 10% of net sales, compared to US$174.8 million,
or 12% of net sales, in the previous quarter. The decrease was due to
lower personnel costs, primarily as a result of headcount reductions,
and to decreases in general and selling expenses, as well as to the
absence of non-recurring reorganization charges that were recorded in
the previous quarter.
Other operating income totaled US$1.8 million in the quarter,
compared to expenses that totaled US$18.8 million in the previous
quarter mainly related to non-recurring losses recorded in the latter
quarter.
Operating income was US$392.5 million, or 26% of net sales,
compared to US$367 million, or 25% of net sales, in the previous
quarter. EBITDA(c) was US$500.5 million, or 33% of net sales, compared
to US$489.7 million, or 33% of net sales, in the previous quarter.
(c) EBITDA equals operating income of US$392.5 million plus
depreciation and amortization of US$106.3 million and other
non-cash items of US$1.6 million.
Net Financial expenses were US$123.5 million compared to US$130.7
million in the previous quarter. The reduction in net financial
expenses was attributable to lower interest expenses and to a decrease
in Sidor's excess cash distribution related to the participation
account. This was partially offset by an increase in cost of debt
issuance of US$6.8 million related to a prepaid commission that was
fully recognized as a consequence of the prepayment of some of the
loans taken for the acquisition of Hylsamex.
Sidor's excess cash distribution related to the participation
account resulted in expenses of US$83.3 million, compared to expenses
of US$91.9 million in the previous quarter.
Equity in losses of associated companies for the quarter was
US$1.8 million, compared to earnings of US$0.2 million in the previous
quarter, mainly related to our investment in Matesi, a hot briquette
iron producer in Venezuela.
Income tax expense for the quarter was US$72.7 million or 27% of
income before income tax and minority interest.
Income attributable to minority interest for the quarter was
US$29.5 million, compared to income of US$31.1 million in the previous
quarter.
Cash Flow and Liquidity
Net cash provided by operating activities in the period was
US$293.6 million. Net cash used in investing activities was US$141.2
million and was mainly related to capital expenditures of US$90.0
million and the acquisition of steel tube production facilities for
US$55.2 million as previously explained.
Net cash used in financing activities was US$14.0 million. Net
financial debt decreased US$1.3 billion mainly as a result of the
repayment of borrowings with the net proceeds from the initial public
offering and the capitalization of the subordinated convertible loans.
Cash at the end of the quarter was US$892.6 million. In addition,
Ternium has restricted cash of US$10.3 million.
Forward-Looking Statements
Some of the statements contained in this press release are
"forward-looking statements." Forward-looking statements are based on
management's current views and assumptions and involve known and
unknown risks that could cause actual results, performance or events
to differ materially from those expressed or implied by those
statements. These risks include but are not limited to risks arising
from uncertainties as to gross domestic product, related market
demand, global production capacity, tariffs, cyclicality in the
industries that purchase steel products and other factors beyond
Ternium's control.
About Ternium
Ternium is one of the leading steel companies in the Americas,
offering a wide range of flat and long steel products. Ternium has
operating locations in Mexico, Argentina and Venezuela that provide it
with a strong position from which to serve its core markets. In
addition, Ternium reaches the global markets through its own
distribution network.
Consolidated income statement
US$ million 1Q 2006 4Q 2005 1Q 2005(d)
-------------------------------------- ---------- --------- ----------
Net sales 1,528.9 1,467.8 767.6
Cost of sales (987.2) (907.2) (418.2)
---------- --------- ----------
Gross profit 541.7 560.6 349.4
Selling, general and administrative
expenses (151.0) (174.8) (65.0)
Other operating expense, net 1.8 (18.8) (1.0)
---------- --------- ----------
Operating income 392.5 367.0 283.4
Financial income (expense), net (123.5) (130.7) (38.9)
Excess of fair value of net assets
acquired over cost -- -- 188.4
Equity in (losses) earnings
of associated companies (1.8) 0.2 19.3
---------- --------- ----------
Income before income tax expense 267.2 236.5 452.2
Income tax expense (72.7) (67.8) (48.6)
Net income for the period 194.5 168.7 403.6
Attributable to:
Equity holders of the Company 165.0 137.5 337.6
Minority interest 29.5 31.1 66.0
---------- --------- ----------
194.5 168.7 403.6
(d) Combined consolidated financial information on the basis of common
control.
Consolidated balance sheet
March 31, December 31,
US$ million 2006 2005
-------------------------------------------- ------------ ------------
Property, plant and equipment, net
& other assets 5,418.4 5,463.9
Intangible assets, net 547.8 552.9
Investment in associated companies, net 7.3 9.1
Other investments, net 12.3 12.6
Deferred tax assets 40.6 29.1
Other assets 1.0 1.0
Trade & other receivables, net 53.3 47.9
------------ ------------
Total non-current assets 6,080.8 6,116.4
Receivables 293.5 291.3
Other assets -- 3.2
Derivatives & financial instruments 8.4 5.4
Inventories, net 1,061.6 1,000.1
Trade receivables, net 495.9 472.8
Other investments 5.3 5.2
Cash and cash equivalents 902.9 765.6
------------ ------------
Total current assets 2,767.6 2,543.6
Non-current assets classified
as held for sale 9.8 --
------------ ------------
Total assets 8,858.1 8,660.0
Shareholders' equity 3,146.4 1,842.5
Minority interest in subsidiaries 1,700.9 1,733.5
Minority interest & shareholders' equity 4,847.3 3,576.0
Provisions 54.7 53.5
Deferred tax liabilities 1,040.9 1,048.2
Non current tax liabilities 36.9 --
Other liabilities 197.9 187.9
Trade payables 1.2 1.2
Borrowings 1,209.4 2,399.9
------------ ------------
Total non-current liabilities 2,541.1 3,690.6
Provisions 0.7 0.7
Current tax liabilities 103.1 127.0
Other liabilities 186.2 194.1
Trade payables 637.3 555.3
Borrowings 542.4 516.4
------------ ------------
Total current liabilities 1,469.7 1,393.4
------------ ------------
Total liabilities 4,010.8 5,084.1
Liabilities, minority interest &
shareholders' equity 8,858.1 8,660.0
Consolidated cash flow statement
US$ million 1Q 2006 4Q 2005 1Q 2005(e)
----------------------------------------- -------- -------- ----------
Net income 194.5 168.7 403.6
Adjustments for:
Depreciation and amortization 106.3 113.9 48.9
Income tax accruals less payments 10.9 (18.9) 30.0
Excess of fair value of net assets
acquired over cost -- -- (188.4)
Equity in earnings of associated
companies 1.8 (0.2) (19.3)
Derecognition of property, plant &
equipment -- 11.8 --
Interest accruals less payments (15.9) 10.2 3.2
Changes in provisions 11.4 22.5 2.9
Changes in working capital (12.6) 36.4 106.2
Currency translation adjustment and
others (3.0) (0.8) 4.4
-------- -------- ----------
Net cash provided by operating activities 293.6 343.6 391.5
Capital expenditures (90.0) (120.2) (36.9)
Change in trust funds - (5.2) 83.6
Acquisition of business(f) (55.2) (9.8) --
Proceeds from sale of property,
plant & equipment 4.0 3.7 1.9
-------- -------- ----------
Net cash used in investing activities (141.2) (131.5) 48.6
Dividends paid in cash and other
distributions to company's
shareholders -- -- (99.7)
Dividends paid in cash and other
distributions to minority shareholders -- (4.6) (24.2)
Net proceeds from Initial Public
Offering 525.0 -- --
Contributions from shareholders 3.1 -- --
Proceeds from borrowings 11.4 84.3 26.9
Repayment of borrowings (553.5) (63.8) (133.4)
-------- -------- ----------
Net cash used in financing activities (14.0) 15.9 (230.4)
Increase (decrease) in cash
and cash equivalents 138.4 228.0 209.7
(e) Combined consolidated financial information on the basis of common
control.
(f) Corresponds to Impeco and other assets purchased from Acindar in
1Q 2006 and to Hylsamex in 4Q 2005.
Shipments
----------------------------
Thousand tons 1Q 2006 4Q 2005 1Q 2005(g)
----------------------------------------- -------- -------- ----------
South & Central America 1,044.7 896.9 593.5
North America 643.2 668.1 245.6
Europe & other 26.6 76.9 171.5
-------- -------- ----------
Total flat products 1,714.5 1,641.8 1,010.6
South & Central America 236.9 216.8 89.0
North America 296.5 282.7 37.8
Europe & other -- 4.9 --
-------- -------- ----------
Total long products 533.4 504.5 126.8
Total flat and long products 2,247.9 2,146.3 1,137.3
(g) Combined consolidated financial information on the basis of common
control.
Revenue / ton
----------------------------
US$/ton 1Q 2006 4Q 2005 1Q 2005(g)
----------------------------------------- -------- -------- ----------
South & Central America 662 676 704
North America 765 733 577
Europe & other 537 636 712
-------- -------- ----------
Total flat products 698 698 674
South & Central America 513 508 550
North America 544 522 556
Europe & other -- 436 --
-------- -------- ----------
Total long products 530 515 552
Total flat and long products 658 655 661
(g) Combined consolidated financial information on the basis of common
control.
Net Sales
----------------------------
US$ million 1Q 2006 4Q 2005 1Q 2005(h)
----------------------------------------- -------- -------- ----------
South & Central America 691.2 606.7 417.9
North America 491.8 489.6 141.6
Europe & other 14.3 48.9 122.1
-------- -------- ----------
Total flat products 1,197.3 1,145.2 681.6
South & Central America 121.5 110.1 48.9
North America 161.4 147.7 21.0
Europe & other -- 2.2 --
-------- -------- ----------
Total long products 282.9 259.9 69.9
-------- -------- ----------
Total flat and long products 1,480.2 1,405.1 751.5
Other products(i) 48.7 62.7 16.1
-------- -------- ----------
Total net sales 1,528.9 1,467.8 767.6
(h) Combined consolidated financial information on the basis of common
control.
(i) Includes pig iron and pellets. Steel pipes and tubular products
were classified as "flat products." Accordingly, fourth quarter of
2005 figures were reclassified for comparative purposes.
CONTACT: Ternium S.A.
Investor Relations:
Sebastian Marti, 866-890-0443 (USA)
Mexico: +52-81-8865-1240
Argentina: +54-11-4018-2389
www.ternium.com
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TERNIUM S.A.
By: /s/ Roberto Philipps By: /s/ Daniel Novegil
-------------------- ------------------
Name: Roberto Philipps Name: Daniel Novegil
Title: Chief Financial Officer Title: Chief Executive Officer
Dated: April 28, 2006