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 11/6/2007
Ternium S.A.
(Translation of Registrant's name into English)
Ternium S.A.
46a, Avenue John F. Kennedy - 2nd floor
L-1855 Luxembourg
(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 applicable
Ternium Announces Results for the Third Quarter
and First Nine Months of 2007
LUXEMBOURG--(BUSINESS WIRE)--Nov. 6, 2007--Ternium S.A. (NYSE:TX)
today announced its results for the third quarter and nine months
ended September 30, 2007.
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 and metric tons.
Summary of Third Quarter 2007 Results
3Q 2007 3Q 2006 2Q 2007
Shipments (million tons) 2.7 2.2 23% 2.6 6%
Net Sales (US$ million) 2,343.4 1,740.4 35% 1,961.1 19%
Operating Income (US$ million) 432.6 508.2 -15% 450.6 -4%
EBITDA(a) (US$ million) 587.9 614.9 -4% 580.8 1%
EBITDA Margin (% of net sales) 25% 35% 30%
Net Income (US$ million) 214.0 354.0 -40% 315.0 -32%
Equity Holders' Net Income (US$
million) 159.8 257.4 -38% 236.9 -33%
Earnings per ADS (US$) 0.80 1.28 -38% 1.18 -33%
(a)Third quarter 2007 EBITDA equals operating income of US$432.6
million plus depreciation and amortization of US$155.4 million.
During the third quarter 2007, operating income was US$432.6
million, which represented a decline of 15% from operating income of
$508.2 million in the third quarter 2006. Excluding the effect of the
Grupo Imsa consolidation, which began on July 26, 2007, operating
income in the third quarter 2007 decreased mainly as a result of
higher raw material, freight and labor costs. Shipments increased
during the third quarter 2007 mainly as a result of the Grupo Imsa
consolidation. Ternium's higher revenue per ton mainly reflected Grupo
Imsa's higher value added product mix. The current cost of slabs
contributed to Ternium's lower gross margin in the third quarter 2007.
Net income during the third quarter 2007 was US$214.0 million, a
decrease of 40% compared to net income of US$354.0 million in the
third quarter 2006. In addition to the decrease in operating income
during the period, Ternium's net income in the third quarter 2007 was
affected mainly by a higher foreign exchange loss on and higher
interest expenses related to the debt incurred by the company for its
acquisition of Grupo Imsa. This foreign exchange loss impacted
Ternium's third quarter 2007 net income by US$37.8 million, or by
US$0.18 per American Depositary Share (ADS), and was offset by a
positive change to Ternium's net equity position. The foreign exchange
loss resulted from the impact of the Mexican Peso depreciation on the
company's Mexican subsidiaries' US dollar denominated debt (Ternium's
subsidiaries prepare their financial statements in currencies other
than the US dollar in accordance with IFRS).
Ternium's net sales were US$2.3 billion during the third quarter
2007, an increase of 35% and 19% when compared with the third quarter
2006 and the second quarter 2007, respectively. Shipments increased in
the third quarter 2007 as a result of the consolidation of Grupo Imsa.
Excluding this effect, shipments were relatively stable when compared
with the third quarter 2006, and were lower when compared with the
second quarter 2007, mainly as a result of lower production levels
resulting from maintenance and revamping stoppages in some of
Ternium's facilities. Apparent steel demand in the North America
Region reflected the lower level of activity in the region's
construction, household appliances and auto industries. Steel demand
remained strong in the South & Central America Region.
Ternium Mexico Update
On July 26, 2007, Ternium obtained full ownership of Grupo Imsa
S.A.B. de C.V., a leading flat steel manufacturer with operations in
Mexico, the United States and Guatemala. Ternium began consolidating
Grupo Imsa's balance sheet and results of operations in its
consolidated financial statements on July 26, 2007. All of Grupo
Imsa's businesses have been included in Ternium's Flat Products
segment, with the exception of the insulated panels business (Metl
Span) and the pre-engineered metal buildings businesses (Varco Pruden)
in the United States and Mexico which have been included in Ternium's
Other Products segment.
On October 26, 2007, Ternium secured a new iron ore mining
concession in Mexico's Michoacan state. The concession adds
approximately 56,000 acres to the company's existing concessions in
the region and is located in an area that will facilitate integration
with Ternium's current mining operations. The company expects that
this development will play a relevant role in its iron ore production
expansion plans.
Outlook
Ternium expects apparent steel demand in its markets to remain at
current levels, excluding the effect of the seasonal weakening that
usually takes place at the end of the year. The integration of Grupo
Imsa into Ternium's operations in Mexico is proceeding well, and the
company expects to achieve positive synergies beginning in 2008.
Ternium anticipates that sales volume will increase following the
full consolidation of Grupo Imsa in the fourth quarter 2007 after a
partial consolidation during the third quarter 2007. Excluding this
effect, sales volume should remain relatively stable. The full
consolidation of Grupo Imsa's higher value added product sales mix
should contribute to higher revenue per ton in the North America
Region.
Cost per ton is also expected to increase due to the full
consolidation of Grupo Imsa's higher value added product sales mix and
higher production cost structure. Labor costs at Sidor also could
increase as a result of negotiations currently underway for a new
two-year collective bargaining agreement.
Analysis of Third Quarter 2007 Results
Net income attributable to the Company's equity holders for the
third quarter 2007 was US$159.8 million, compared with US$257.4
million in the third quarter 2006. Including minority interest, net
income for the third quarter 2007 was US$214.0 million, compared with
US$354.0 million in the third quarter 2006. Earnings per ADS for the
third quarter 2007 were US$0.80, compared with US$1.28 in the third
quarter 2006.
Net sales for the third quarter 2007 increased 35% to US$2.3
billion compared with the same period in 2006. Net sales increased
mainly due to the Grupo Imsa consolidation. Excluding this effect,
higher shipments and prices in the South & Central America Region were
partially offset by lower shipments and prices in the North America
Region. Shipments of flat and long products reached 2.7 million tons
during the third quarter 2007, an increase of 23% compared to shipment
levels in the third quarter 2006 mainly as a result of the Grupo Imsa
consolidation. Revenue per ton shipped increased 8% to US$801 in the
third quarter 2007 versus the same quarter in 2006, mainly as a result
of the consolidation of Grupo Imsa's higher value added product mix.
Net Sales (million Shipments (thousand
US$) tons)
3Q 2007 3Q 2006 Dif. 3Q 2007 3Q 2006 Dif.
South & Central America 996.8 824.2 21% 1,243.2 1,123.5 11%
North America 821.1 484.2 70% 906.3 554.9 63%
Europe & other 14.2 9.4 51% 23.3 17.2 35%
------- ------- ---- ------- ------- ----
Total flat products 1,832.0 1,317.9 39% 2,172.8 1,695.6 28%
South & Central America 200.3 146.1 37% 315.4 244.8 29%
North America 156.0 193.1 -19% 244.8 288.0 -15%
------- ------- ---- ------- ------- ----
Total long products 356.3 339.2 5% 560.2 532.8 5%
Total flat and long products 2,188.4 1,657.1 32% 2,733.0 2,228.4 23%
Other products (1) 155.0 83.3 86%
------- ------- ----
Total Net Sales 2,343.4 1,740.4 35%
Revenue / ton (US$/ton)
3Q 2007 3Q 2006 Dif.
South & Central America 802 734 9%
North America 906 873 4%
Europe & other 609 548 11%
--------- -------- -----------
Total flat products 843 777 8%
South & Central America 635 597 6%
North America 637 670 -5%
--------- -------- -----------
Total long products 636 637 0%
Total flat and long
products 801 744 8%
Other products (1)
Total Net Sales
(1) Primarily includes metal building systems and components,
insulated panels, iron ore and pig iron.
Sales of flat products during the third quarter 2007 totaled
US$1.8 billion, an increase of 39% compared with the same quarter in
2006. Excluding the effect of the Grupo Imsa consolidation, net sales
increased as a result of higher shipments and prices in the South &
Central America Region, partially offset by lower shipments and prices
in the North America Region. Shipments of flat products totaled 2.2
million tons in the third quarter 2007, an increase of 28% compared
with the same period in 2006. Revenue per ton shipped increased 8% to
US$843 in the third quarter 2007 compared with the same period in
2006. This increase resulted primarily from higher prices in the South
& Central America Region and lower prices in the North America Region,
partially offset by a richer mix of sales following the consolidation
of Grupo Imsa.
Sales of long products were US$356.3 million during the third
quarter 2007, an increase of 5% compared with the same period in 2006,
due to higher shipments and prices in the South & Central America
Region, partially offset by lower shipments and prices in the North
America Region. Shipments totaled 560,000 tons in the third quarter
2007, representing a 5% increase versus the same quarter in 2006.
Revenue per ton shipped remained stable at US$636 in the third quarter
2007 over the third quarter 2006.
Sales of other products totaled US$155.0 million during the third
quarter 2007, compared to US$83.3 million in the same period in 2006.
This increase resulted mainly from the inclusion of the insulated
panels business (Metl Span) and the pre-engineered metal buildings
businesses (Varco Pruden) in the United States and Mexico in the Other
Products segment, partially offset by lower sales of iron ore and pig
iron.
Flat and long product sales in the South & Central America Region
were US$1.2 billion during the third quarter 2007, an increase of 23%
versus the same period in 2006. This increase was due to higher
volumes and revenue per ton. Shipments in the region totaled 1.6
million tons during the third quarter 2007, or 14% higher than in the
third quarter 2006, due to an increase in demand. Revenue per ton
shipped in the region increased 8% to US$768 in the third quarter 2007
over the same quarter in 2006, mainly due to higher prices.
Sales of flat and long products in the North America Region were
US$1.0 billion in the third quarter 2007, an increase of 44% versus
the same period in 2006, mainly due to the Grupo Imsa consolidation,
partially offset by lower shipments and prices. Shipments in the
region totaled 1.2 million tons during the third quarter 2007, or 37%
higher than the same period in 2006. Revenue per ton shipped in the
region increased 6% to US$849 in the third quarter 2007 over the same
quarter in 2006, due mainly to lower prices offset by the
consolidation of Grupo Imsa's higher value added product mix.
Cost of sales totaled US$1.7 billion in the third quarter 2007, or
73% of net sales, compared to US$1.1 billion, or 62% of net sales, in
the third quarter 2006. Cost of sales increased as a result, in part,
of the Grupo Imsa consolidation, which increased Ternium's cost per
ton due to Grupo Imsa's higher production cost structure and higher
value added product sales mix. Excluding this effect, the higher
year-over-year cost of sales was related to higher raw material,
service and labor costs and higher amortizations resulting mainly from
new acquisitions and assessments of useful life.
Prices for iron ore supplies to the Argentine and Venezuelan
operations were higher during the third quarter 2007 than they were in
the same period in 2006. Labor costs in Mexico, Argentina and
Venezuela increased year-over-year during the third quarter 2007.
Selling, general and administrative (SG&A) expenses in the third
quarter 2007 were US$225.3 million, or 10% of net sales, compared with
US$152.5 million, or 9% of net sales, in the third quarter 2006. The
increase in SG&A, excluding the effect of the Grupo Imsa
consolidation, was due mainly to higher freight expenses related to
higher shipping costs and a year-over-year increase in labor costs in
Mexico, Argentina and Venezuela.
Operating income in the third quarter 2007 was US$432.6 million,
or 19% of net sales, compared with US$508.2 million, or 29% of net
sales, in the third quarter 2006.
EBITDA(1) in the third quarter 2007 was US$587.9 million, or 25%
of net sales, compared with US$614.9 million, or 35% of net sales, in
the third quarter 2006. The lower EBITDA margin is due in part to the
consolidation of Grupo Imsa, which, as a steel processor, is not
integrated in terms of steel production and therefore has a lower
EBITDA margin than integrated producers. Equity holders' EBITDA in the
third quarter 2007 was 68.7% of EBITDA.
Net financial expenses totaled US$163.0 million in the third
quarter 2007, compared with US$87.2 million in the same period in
2006. This increase was due mainly to a US$12.8 million increase in
the excess cash distribution related to Sidor's participation
accounts; a US$19.7 million increase in net interest expense that is
primarily associated with an increase in net debt; and a US$49.7
million increase in net foreign exchange losses (an effect that is
offset to a large extent by changes in Ternium's net equity position)
that resulted primarily from the impact of the Mexican Peso
depreciation on the company's Mexican subsidiaries' US dollar
denominated debt (Ternium's subsidiaries prepare their financial
statements in currencies other than the US dollar in accordance with
IFRS).
Sidor's excess cash distribution related to the participation
account was US$176.2 million in the third quarter 2007 compared with
US$144.4 million in the third quarter 2006. The recognition of
payments to minority shareholders of Sidor resulted in expenses for
Ternium of US$71.0 million in the third quarter 2007, compared with
expenses of US$58.2 million in the same period in 2006.
Income tax expense for the third quarter 2007 was US$53.5 million,
or 20% of income before income tax and minority interest, compared
with US$71.7 million, or 17% of income before income tax and minority
interest, in the third quarter 2006.
Income attributable to minority interest for the third quarter
2007 was US$54.2 million, compared with US$96.7 million in the third
quarter 2006. The year-over-year decrease was due mainly to lower
income attributable to minority interest in Sidor and Siderar,
including the reduction in minority interest in Siderar on account of
Ternium's acquisition of an additional 4.85% stake in Siderar in
December 2006.
Cash Flow and Liquidity
Net cash provided by operating activities in the third quarter
2007 was US$143.5 million. This total includes a one-time US$296.2
million income tax payment related to the acquisition of Grupo Imsa
that Ternium can use as tax credits in the future. Capital
expenditures in the third quarter 2007 were US$109.0 million, compared
to US$93.9 million in the third quarter 2006. Investments during the
third quarter 2007 were made mainly for the upgrading of one of the
hot strip mills in Mexico, the construction of new coking facilities
and a new bag house for the steel shop in Argentina, and the revamping
of DRI production facilities and steel shops in Venezuela. Free cash
flow(2) in the third quarter 2007, adjusted for income tax payments
related to the Grupo Imsa transaction, was US$330.7 million, compared
to US$191.9 million in the third quarter 2006.
Proceeds from borrowings in the third quarter 2007 were US$3.9
billion, of which US$3.6 billion was related to the Grupo Imsa
acquisition. A majority of this new debt is held by Ternium's Mexican
subsidiaries. Repayment of borrowings in the third quarter 2007 of
US$1.9 billion was primarily related to the refinancing of most of
Ternium's Mexican subsidiaries' outstanding debt. Ternium's equity
investment in Grupo Imsa was US$1.7 billion.
Ternium's net debt position (borrowings less cash and cash
equivalents and other current investments) increased by US$3.1 billion
during the third quarter 2007 to US$2.9 billion as of September 30,
2007, compared to net debt of US$413.7 million as of December 31,
2006. Total financial debt was US$4.1 billion as of September 30,
2007, compared to US$1.1 billion as of December 31, 2006.
Analysis of Results for First Nine Months of 2007
Net income attributable to the Company's equity holders for the
nine months ended September 30, 2007 was US$618.9 million, compared
with US$655.0 million for the nine months ended September 30, 2006.
Including minority interest, net income for the first nine months of
2007 was US$780.6 million, compared with US$837.7 million for the
first nine months of 2006. Earnings per ADS were US$3.09 in the first
nine months of 2007.
Net sales for the first nine months of 2007 increased 23% to
US$6.1 billion, compared with the same period in 2006. Excluding the
effect of the Grupo Imsa consolidation, net sales increased due to
higher shipments and prices in the South & Central America Region,
partially offset by lower shipments in the North America Region.
Shipments of flat and long products reached 7.8 million tons during
the first nine months of 2007, an increase of 13% compared to shipment
levels in the first nine months of 2006. Revenue per ton shipped
increased 8% to US$749 in the first nine months of 2007 versus the
same period in 2006, mainly as a result of higher prices and the
consolidation of Grupo Imsa's higher value added product mix.
Net Sales (million Shipments (thousand
US$) tons)
9M 2007 9M 2006 Dif. 9M 2007 9M 2006 Dif.
South & Central America 2,779.2 2,292.2 21% 3,606.5 3,330.2 8%
North America 1,830.3 1,495.5 22% 2,202.6 1,854.3 19%
Europe & other 137.3 31.9 330% 217.0 59.7 263%
------- ------- ---- ------- ------- ----
Total flat products 4,746.8 3,819.7 24% 6,026.1 5,244.2 15%
South & Central America 563.8 398.3 42% 928.3 719.0 29%
North America 531.6 566.4 -6% 844.5 926.0 -9%
------- ------- ---- ------- ------- ----
Total long products 1,095.3 964.7 14% 1,772.9 1,645.0 8%
Total flat and long products 5,842.2 4,784.4 22% 7,798.9 6,889.2 13%
Other products (1) 260.5 194.6 34%
------- ------- ----
Total Net Sales 6,102.7 4,979.0 23%
Revenue / ton
(US$/ton)
9M 2007 9M 2006 Dif.
South & Central America 771 688 12%
North America 831 807 3%
Europe & other 633 535 18%
------- ------- ------
Total flat products 788 728 8%
South & Central America 607 554 10%
North America 629 612 3%
------- ------- ------
Total long products 618 586 5%
Total flat and long
products 749 694 8%
Other products (1)
Total Net Sales
(1) Primarily includes metal building systems and components,
insulated panels, iron ore and pig iron.
Sales of flat products during the first nine months of 2007
totaled US$4.7 billion, an increase of 24% compared with the same
period in 2006. Excluding the effect of the Grupo Imsa consolidation,
net sales increased mainly as a result of higher shipments and prices
in the South & Central America Region, partially offset by lower
shipments in the North America Region. Shipments totaled 6.0 million
tons in the first nine months of 2007, an increase of 15% compared
with the same period in 2006. Revenue per ton shipped increased 8% to
US$788 in the first nine months of 2007 compared with the same period
in 2006, mainly as a result of higher prices and the consolidation of
Grupo Imsa's higher value added product mix.
Sales of long products were US$1.1 billion during the first nine
months of 2007, an increase of 14% compared to the same period in
2006. This was due to higher prices across most of Ternium's markets
and higher shipments in the South & Central America Region, partially
offset by lower shipments in the North America Region. Shipments
totaled 1.8 million tons in the first nine months of 2007,
representing an 8% increase versus the same period in 2006. Revenue
per ton shipped increased 5% to US$618 in the first nine months of
2007 over the first nine months of 2006.
Sales of other products totaled US$260.5 million during the first
nine months of 2007 compared to US$194.6 million during the same
period in 2006. This increase resulted mainly from the inclusion of
the insulated panels business (Metl Span) and the pre-engineered metal
buildings businesses (Varco Pruden) in the United States and Mexico in
Ternium's Other Products segment, partially offset by lower sales of
iron ore and pig iron.
Flat and long product sales in the South & Central America Region
were US$3.3 billion during the first nine months of 2007, an increase
of 24% versus the same period in 2006. This increase was due to higher
volumes and revenue per ton. Shipments in the region totaled 4.5
million tons during the first nine months of 2007, or 12% higher than
in the first nine months of 2006, due to an increase in demand.
Revenue per ton shipped in the region increased 11% to US$737 in the
first nine months of 2007 over the same period in 2006, mainly due to
higher prices and a higher value added mix of sales.
Sales of flat and long products in the North America Region
totaled US$2.4 billion in the first nine months of 2007, an increase
of 15% versus the same period in 2006, mainly due to the effect of the
Grupo Imsa consolidation, partially offset by lower shipments.
Shipments in the region totaled 3.0 million tons during the first nine
months of 2007, or 10% higher than during the same period in 2006.
Revenue per ton shipped in the region increased 5% to US$775 in the
first nine months of 2007 over the same period in 2006, mainly as a
result of the consolidation of Grupo Imsa's higher value added product
mix.
Cost of sales totaled US$4.2 billion in the first nine months of
2007, or 69% of net sales, compared to US$3.1 billion, or 63% of net
sales, in the first nine months of 2006. Cost of sales increased in
part as a result of the Grupo Imsa consolidation, which increased
Ternium's cost per ton due to Grupo Imsa's higher production cost
structure and higher value added product sales mix. Excluding this
effect, the higher year-over-year cost of sales was due mainly to an
increase in shipments volume and higher value added mix of sales,
higher raw material, service and labor costs and higher amortizations
resulting mainly from new acquisitions and assessments of useful life.
Prices for iron ore supplies to the Argentine and Venezuelan
operations were higher during the first nine months of 2007 than they
were in the same period in 2006. Scrap and zinc prices also increased
year-over-year. Additionally, labor costs in Mexico, Argentina and
Venezuela increased during the first nine months of 2007 versus the
comparable period the prior year.
SG&A expenses in the first nine months of 2007 were US$588.2
million, or 10% of net sales, compared with US$458.6 million, or 9% of
net sales, in the first nine months of 2006. The increase in SG&A
expenses during the period, excluding the effect of the Grupo Imsa,
consolidation, resulted mainly from higher freight expenses related to
a higher level of shipments and shipping costs and the year-over-year
increase in labor costs in Mexico, Argentina and Venezuela.
Operating income in the first nine months of 2007 was US$1.3
billion, or 21% of net sales, compared with US$1.4 billion, or 28% of
net sales, in the first nine months of 2006.
EBITDA(3) in the first nine months of 2007 was US$1.7 billion, or
28% of net sales, compared to US$1.7 billion, or 34% of net sales, in
the first nine months of 2006. The lower EBITDA margin is due in part
to the consolidation of Grupo Imsa, which, as a steel processor, is
not integrated in terms of steel production and therefore has a lower
EBITDA margin than integrated producers. Equity holders' EBITDA in the
first nine months of 2007 was 67.0% of EBITDA.
Net financial expenses totaled US$332.2 million in the first nine
months of 2007, compared with US$318.9 million in the same period in
2006. This increase was due mainly to a US$15.6 million increase in
the excess cash distribution related to Sidor's participation
accounts; a US$39.4 million increase in net foreign exchange losses
(an effect that is offset to a large extent by changes in Ternium's
net equity position) that resulted primarily from the impact of the
Mexican Peso depreciation on Ternium's Mexican subsidiaries' US dollar
denominated debt (Ternium's subsidiaries prepare their financial
statements in currencies other than the US dollar in accordance with
IFRS); a US$20.0 million decrease in net interest and other debt
related expenses primarily associated with Ternium's lower average net
debt; and a US$26.2 million increase in the fair value of some
derivative instruments entered into by Ternium related to energy
prices and interest rates fluctuations.
Sidor's excess cash distribution related to the participation
account was US$574.4 million in the first nine months of 2007,
compared with US$535.7 million in the first nine months of 2006. The
recognition of payments to minority shareholders of Sidor resulted in
expenses for Ternium of US$231.3 million in the first nine months of
2007, compared with expenses of US$215.7 million in the same period in
2006.
Income tax expense for the first nine months of 2007 was US$182.4
million, or 19% of income before income tax and minority interest,
compared with US$224.6 million, or 21% of income before income tax and
minority interest, in the first nine months of 2006.
Income attributable to minority interest for the first nine months
of 2007 was US$161.7 million, compared with US$182.7 million in the
first nine months of 2006. The year-over-year decrease was due mainly
to lower income attributable to minority interest in Siderar,
including the reduction in minority interest on account of Ternium's
acquisition of an additional 4.85% stake in Siderar in December 2006,
partially offset by higher income attributable to minority interest in
Sidor.
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. With its main
operations in Mexico, Venezuela, Argentina and the United States and
25,000 employees, Ternium has annual sales of approximately US$10
billion and annual shipments of approximately 12 million tons of
finished steel products. More information about Ternium is available
at www.ternium.com.
(1) EBITDA equals operating income of US$432.6 million plus
depreciation and amortization of US$155.4 million.
(2) Free cash flow equals net cash provided by operating
activities of US$143.5 million less capital expenditures of US$109.0
million.
(3) EBITDA equals operating income of US$1.3 billion plus
depreciation and amortization of US$400.8 million.
Consolidated income statement
US$ million 3Q 2007 3Q 2006 Dif.
Net sales 2,343.4 1,740.4 603.0
Cost of sales (1,701.0) (1,078.5)(622.5)
--------- ----------------
Gross profit 642.4 661.9 (19.5)
Selling, general and administrative
expenses (225.3) (152.5) (72.9)
Other operating income/(expenses), net 15.5 (1.2) 16.7
--------- ----------------
Operating income 432.6 508.2 (75.6)
Interest expense (46.8) (27.7) (19.2)
Interest income 14.9 15.4 (0.5)
Other financial expenses, net (131.1) (75.0) (56.1)
Equity in (losses)/earnings of
associated companies (2.0) 4.8 (6.8)
--------- ----------------
Income before income tax expense 267.5 425.8 (158.2)
Income tax expense (53.5) (71.7) 18.2
Net income for the period 214.0 354.0 (140.0)
Attributable to:
Equity holders of the Company 159.8 257.4 (97.5)
Minority interest 54.2 96.7 (42.5)
--------- ----------------
214.0 354.0 (140.0)
US$ million 9M 2007 9M 2006 Dif.
Net sales 6,102.7 4,979.0 1,123.7
Cost of sales (4,233.6) (3,143.8) (1,089.7)
--------- --------- ---------
Gross profit 1,869.1 1,835.2 33.9
Selling, general and administrative
expenses (588.2) (458.6) (129.6)
Other operating income/(expenses), net 17.7 0.8 16.9
--------- --------- ---------
Operating income 1,298.6 1,377.4 (78.8)
Interest expense (76.7) (91.7) 15.0
Interest income 39.7 40.6 (0.8)
Other financial expenses, net (295.3) (267.8) (27.4)
Equity in (losses)/earnings of
associated companies (3.4) 3.8 (7.3)
--------- --------- ---------
Income before income tax expense 963.0 1,062.3 (99.3)
Income tax expense (182.4) (224.6) 42.2
Net income for the period 780.6 837.7 (57.1)
Attributable to:
Equity holders of the Company 618.9 655.0 (36.1)
Minority interest 161.7 182.7 (21.0)
--------- --------- ---------
780.6 837.7 (57.1)
Consolidated balance sheet
US$ million September 30, 2007 December 31, 2006
Property, plant and equipment,
net 7,180.2 5,420.7
Intangible assets, net 1,571.3 551.6
Investment in associated
companies 47.7 16.3
Other investments, net 14.7 13.4
Deferred tax assets 298.2 36.4
Receivables, net 93.4 78.9
------------------ -----------------
Total non-current assets 9,205.6 6,117.3
Receivables 277.9 175.8
Derivative financial
instruments 1.1 7.9
Inventories, net 1,982.5 1,241.3
Trade receivables, net 1,047.0 577.9
Other investments 115.2 0.0
Cash and cash equivalents 1,078.8 643.4
------------------ -----------------
Total current assets 4,502.4 2,646.2
Non-current assets classified as
held for sale 17.0 7.0
------------------ -----------------
Total assets 13,725.0 8,770.5
Shareholders' equity 4,281.9 3,757.6
Minority interest in subsidiaries 1,857.3 1,729.6
Minority interest & shareholders'
equity 6,139.2 5,487.1
Provisions 57.4 60.5
Deferred income tax 1,508.5 985.2
Other liabilities 351.3 274.6
Trade payables 6.8 7.2
Borrowings 3,763.6 548.4
------------------ -----------------
Total non-current liabilities 5,687.6 1,875.9
Current tax liabilities 221.3 103.2
Other liabilities 248.1 158.4
Trade payables 1,052.1 621.8
Derivative financial
instruments 6.4 15.5
Borrowings 370.2 508.7
------------------ -----------------
Total current liabilities 1,898.2 1,407.5
------------------ -----------------
Total liabilities 7,585.8 3,283.4
Total liabilities, minority
interest & shareholders' equity 13,725.0 8,770.5
Consolidated cash flow statement
US$ million 3Q 2007 3Q 2006 Dif.
Net income for the period 214.0 354.0 (140.0)
Adjustments for:
Depreciation and amortization 155.4 106.7 48.7
Income tax accruals less payments (324.0) 0.8 (324.8)
Equity in losses of associated
companies 2.0 (4.8) 6.8
Interest accruals less payments 35.9 (12.6) 48.5
Changes in provisions (9.6) 6.7 (16.2)
Changes in working capital 13.0 (190.1) 203.1
Others 56.8 25.1 31.6
--------- ------- ---------
Net cash provided by operating
activities 143.5 285.8 (142.3)
Capital expenditures (109.0) (93.9) (15.1)
Change in trust funds - - -
Acquisition of business (1) (1,727.0) - (1,727.0)
Increase in Other Investments (115.2) - (115.2)
Proceeds from sale of property, plant
& equipment 0.6 0.4 0.2
--------- ------- ---------
Net cash used in investing activities (1,950.6) (93.5) (1,857.1)
Dividends paid in cash and other
distributions to company's equity
shareholders - - -
Dividends paid in cash and other
distributions to minority
shareholders (0.1) - (0.1)
Net proceeds from Initial Public
Offering - - -
Contributions from shareholders - - -
Contributions from minority
shareholders in consolidated
subsidiaries 1.1 - 1.1
Proceeds from borrowings 3,869.7 86.7 3,783.0
Repayment of borrowings (1,905.6) (369.9) (1,535.6)
--------- ------- ---------
Net cash provided by/(used in) financing
activities 1,965.1 (283.3) 2,248.4
Increase/(decrease) in cash and cash
equivalents 158.0 (90.9) 248.9
US$ million 9M 2007 9M 2006 Dif.
Net income for the period 780.6 837.7 (57.1)
Adjustments for:
Depreciation and amortization 400.8 318.5 82.4
Income tax accruals less payments (357.6) 4.3 (361.9)
Equity in losses of associated
companies 3.4 (3.8) 7.3
Interest accruals less payments 34.1 (10.7) 44.8
Changes in provisions (15.7) 31.7 (47.4)
Changes in working capital 120.0 (274.1) 394.1
Others 75.1 35.1 39.9
--------- --------- ---------
Net cash provided by operating
activities 1,040.6 938.6 102.0
Capital expenditures (306.0) (280.1) (25.8)
Change in trust funds - 5.2 (5.2)
Acquisition of business (1) 1,727.2) (103.1) (1,624.1)
Increase in Other Investments (115.2) - (115.2)
Proceeds from sale of property, plant
& equipment 7.1 1.0 6.1
--------- --------- ---------
Net cash used in investing activities (2,141.3) (377.0) (1,764.3)
Dividends paid in cash and other
distributions to company's equity
shareholders (100.2) - (100.2)
Dividends paid in cash and other
distributions to minority
shareholders (20.0) (27.2) 7.2
Net proceeds from Initial Public
Offering - 525.0 (525.0)
Contributions from shareholders - 3.1 (3.1)
Contributions from minority
shareholders in consolidated
subsidiaries 1.1 - 1.1
Proceeds from borrowings 4,062.0 123.2 3,938.8
Repayment of borrowings (2,586.3) (1,124.8) (1,461.5)
--------- --------- ---------
Net cash provided by/(used in) financing
activities 1,356.5 (500.7) 1,857.2
Increase/(decrease) in cash and cash
equivalents 255.8 60.9 194.9
(1) Corresponds to the purchase of Impeco and other assets from
Acindar in 1Q 2006, the purchase of Worthington Industries' 50% equity
interest in Acerex in 2Q 2006 and the purchase of Grupo Imsa in 3Q
2007.
Shipments
Thousand tons 3Q 2007 3Q 2006 2Q 2007 9M 2007 9M 2006
South & Central America 1,243.2 1,123.5 1,251.5 3,606.5 3,330.2
North America 906.3 554.9 598.0 2,202.6 1,854.3
Europe & other 23.3 17.2 111.0 217.0 59.7
------- ------- ------- ------- -------
Total flat products 2,172.8 1,695.6 1,960.4 6,026.1 5,244.2
South & Central America 315.4 244.8 320.1 928.3 719.0
North America 244.8 288.0 286.4 844.5 926.0
------- ------- ------- ------- -------
Total long products 560.2 532.8 606.5 1,772.9 1,645.0
Total flat and long products 2,733.0 2,228.4 2,567.0 7,798.9 6,889.2
Revenue / ton
US$/ton 3Q 2007 3Q 2006 2Q 2007 9M 2007 9M 2006
South & Central America 802 734 768 771 688
North America 906 873 814 831 807
Europe & other 609 548 671 633 535
------- ------- ------- ------- -------
Total flat products 843 777 776 788 728
South & Central America 635 597 621 607 554
North America 637 670 638 629 612
------- ------- ------- ------- -------
Total long products 636 637 629 618 586
Total flat and long products 801 744 741 749 694
Net Sales
US$ million 3Q 2007 3Q 2006 2Q 2007 9M 2007 9M 2006
South & Central America 996.8 824.2 960.6 2,779.2 2,292.2
North America 821.1 484.2 486.7 1,830.3 1,495.5
Europe & other 14.2 9.4 74.5 137.3 31.9
------- ------- ------- ------- -------
Total flat products 1,832.0 1,317.9 1,521.8 4,746.8 3,819.7
South & Central America 200.3 146.1 198.6 563.8 398.3
North America 156.0 193.1 182.6 531.6 566.4
------- ------- ------- ------- -------
Total long products 356.3 339.2 381.3 1,095.3 964.7
------- ------- ------- ------- -------
Total flat and long products 2,188.4 1,657.1 1,903.1 5,842.2 4,784.4
Other products (1) 155.0 83.3 57.9 260.5 194.6
------- ------- ------- ------- -------
Total net sales 2,343.4 1,740.4 1,961.1 6,102.7 4,979.0
(1) Primarily includes metal building systems and components,
insulated panels, iron ore and pig iron.
CONTACT: Ternium
Investor Relations
Sebastian Marti, +1 (866) 890 0443 or
+52 (81) 8865 2111 or +54 (11) 4018 2389
www.ternium.com
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 results for the
third quarter and first nine months of 2007.
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: November 6, 2007