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Business Context and Reporting Period

Company: Ternium S.A.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Year ended December 31, 2025 (with comparative data for 2024 and 2023)
Business Overview: Ternium is a global steel and mining company operating primarily in Mexico, Brazil, Argentina, and other Latin American markets. The company is organized into two operating segments: Steel and Mining. A significant portion of its operations involves the Usiminas control group in Brazil, where Ternium increased its participation to 51.5% in 2023 and subsequently acquired the remaining Nippon Steel/Mitsubishi participation in early 2026.

Key Financial Metrics (Year Ended Dec 31, 2025)

Material Changes vs. Prior Period

• Revenue Decline: Net sales decreased by approximately 11.6% to $15.6 billion, driven by lower volumes and pricing in the steel segment compared to 2024.
• Profitability Improvement: Despite lower revenue, Profit for the Year increased by 74% to $303 million, and Profit Attributable to Owners turned positive ($425 million) from a loss of $54 million in 2024. This was largely due to a significant reduction in the provision for ongoing litigation related to the Usiminas acquisition ($117 million in 2025 vs. $410 million in 2024).
• Deferred Tax Write-down: The company recognized a $428 million write-down of deferred tax assets (DTA) in 2025, primarily related to Usiminas, impacting the effective tax rate.
• Capital Expenditures: Capex increased by 34% to $2.5 billion, primarily driven by the investment in the Pesquería Industrial Center in Mexico (DRI-EAF plant).
• Debt Reduction: Total borrowings increased slightly to $2.4 billion, but the company maintained a low debt-to-equity ratio of 0.13.

Guidance, Outlook, Risks, and Unusual Items

• Usiminas Acquisition (Subsequent Event): On February 10, 2026, Ternium completed the acquisition of the remaining Nippon Steel/Mitsubishi participation in Usiminas for approximately $315 million, increasing its control group stake to 83.1%.
• Functional Currency Change: Usiminas changed its functional currency from the Brazilian Real to the U.S. Dollar effective January 1, 2026, to better reflect its economic environment and reduce FX volatility.
• Dividend Proposal: The Board intends to propose an annual dividend of $0.27 per share ($2.70 per ADS), totaling approximately $530 million, subject to shareholder approval in May 2026.
• Legal Contingencies: A significant lawsuit by CSN regarding the 2012 Usiminas acquisition remains pending. While the Superior Court of Justice (SCJ) ruled against Ternium in 2024, Ternium filed an extraordinary appeal. The potential exposure is estimated at approximately $390 million if CSN prevails, though Ternium maintains the claims are without merit.
• Argentina Risks: Ternium Argentina operates under foreign exchange restrictions. The company holds significant assets in Argentine sovereign bonds and faces volatility in the local currency. A dividend in kind of up to $300 million was approved in December 2025.
• U.S. Tariffs: The company faces uncertainty regarding U.S. tariffs on steel imports (Section 232) and reciprocal tariffs, which could impact its U.S. sales and global trade dynamics.

Investor Verification Checklist

• Usiminas Litigation Status: Verify the current status of the CSN lawsuit and the likelihood of the $390 million exposure materializing.
• Deferred Tax Asset Recoverability: Assess the assumptions used for the $428 million DTA write-down and the future profitability projections for Usiminas.
• Argentina FX Exposure: Review the valuation of Ternium Argentina's assets held in local currency and sovereign bonds, and the impact of potential devaluation.
• Capex Execution: Monitor the progress and cost overruns of the Pesquería Industrial Center project in Mexico, which drove the increase in capital expenditures.
• Dividend Sustainability: Confirm the distributable retained earnings under Luxembourg law to ensure the proposed $530 million dividend is fully payable.