Ternium S.A. 2024 Annual Financial Summary
Business Context and Reporting Period
This Form 6-K filing presents the consolidated financial statements of Ternium S.A. for the fiscal year ended December 31, 2024. Ternium is a global steel manufacturer with operations primarily in Mexico, Brazil, Argentina, and other Latin American markets. The company operates through two main segments: Steel (flat and long steel products) and Mining (iron ore and pellets). The financial statements are prepared in accordance with IFRS and presented in thousands of U.S. dollars.
Key Financial Metrics
| Metric ($ thousands) | 2024 | 2023 | Change |
|---|---|---|---|
| Net Sales | 17,649,060 | 17,610,092 | +0.2% |
| Gross Profit | 2,888,836 | 3,559,355 | -18.8% |
| Operating Income | 1,263,311 | 2,198,014 | -42.5% |
| Profit Before Tax | 728,005 | 1,320,782 | -45.0% |
| Net Profit (Total) | 173,781 | 986,374 | -82.4% |
| Net Profit (Parent Owners) | (53,672) | 676,043 | Loss vs. Profit |
| EPS (Basic & Diluted) | (0.03) | 0.34 | N/A |
| Operating Cash Flow | 1,906,157 | 2,501,124 | -23.8% |
| Total Debt (Borrowings) | 2,230,119 | 2,146,414 | +3.9% |
| Cash & Equivalents | 1,691,263 | 1,846,013 | -8.4% |
Material Changes vs. Prior Period
- Significant Litigation Provision: The primary driver of the decline in profitability was a non-cash provision of $410.2 million recorded in 2024 related to ongoing litigation regarding the acquisition of a participation in Usiminas. This followed a Superior Court of Justice (SCJ) decision in Brazil ordering indemnification payments to CSN.
- Margin Compression: Gross profit margin decreased from 20.2% in 2023 to 16.4% in 2024, driven by higher costs of sales ($14.76 billion vs. $14.05 billion) despite stable revenue.
- Segment Performance: The Steel segment generated operating income of $1.56 billion (Management view), while the Mining segment reported a loss of $165.9 million, largely due to impairment charges on mining assets in Mexico ($32.4 million).
- Dividends: The company paid cash dividends of $608.6 million to shareholders in 2024, compared to $569.3 million in 2023.
Outlook, Risks, and Contingencies
- US Tariff Risk: A subsequent event disclosed a U.S. government announcement of a 25% tariff on steel imports effective March 12, 2025. Ternium states it cannot currently quantify the impact on its business or financial condition.
- Argentina Economic Environment: Ternium Argentina continues to operate under foreign exchange restrictions. The company holds significant assets in Argentine sovereign bonds, the valuation of which is subject to local market volatility and exchange rate fluctuations.
- Usiminas Litigation: Ternium filed an extraordinary appeal against the SCJ decision regarding the Usiminas acquisition. The company maintains the claims are without merit but acknowledges the uncertainty of the ultimate resolution.
- Dividend Proposal: The Board intends to propose an annual dividend of $0.27 per share ($2.70 per ADS) for shareholder approval in May 2025.
Investor Verification Checklist
- Verify the status and potential financial impact of the CSN/Usiminas litigation and the likelihood of the extraordinary appeal succeeding.
- Assess the exposure to the newly announced 25% U.S. steel tariffs and potential supply chain disruptions.
- Review the valuation methodology for Argentine assets and the impact of ongoing currency restrictions on liquidity and repatriation of funds.
- Monitor the Mining segment impairment trends, specifically regarding the Las Encinas assets in Mexico.
- Confirm the company's ability to maintain dividend payouts given the net loss attributable to parent owners in 2024.