Q4 2023 Ternium SA Earnings Call
Okay.
Good day and welcome to <unk> fourth quarter 2023 results call participants will be able to listen only until the question and answer portion of this call. Please note that today's call is being recorded if you'd like to ask a question during Q&A.
Operator: Good day, and welcome to Ternium's fourth quarter 2023 results call. Participants will be able to listen only to the question and answer portion of this call. Please note that today's call is being recorded. If you'd like to ask a question during Q&A, simply press the star followed by the number one on your telephone keypad.
The star followed by the number one on your telephone keypad, if you'd like you withdraw your question. Please press star and number one again I'd like to introduce the Calder Sebastian Marti you May now proceed. Thank you.
Operator: If you'd like to withdraw your question, please press star and number one again. I'd like to introduce the call to Sebastian Marti. You may now proceed. Good morning, and thank you for joining us today.
Well morning, Thank you for joining yesterday, Mike I missed the Boston Lager L. I.
Sebastin Mart: My name is Sebastian Mart, and I am Ternium's Global IR and Compliance Engineer. Today, we list yesterday's financial results for the fourth quarter of the full year 2020. Joining me today are Ternium's Chief Executive Officer, Maximo Vedoya, and the company's Chief Financial Officer, Pablo Brizzio. We discussed Ternium's business environment and performance. At the conclusion of our prepared remarks, there will be a Q&A. Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may differ from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on page two of today's webcast presentation. [inaudible] With that, I turn the call over to Mr. Vedoya.
In comparison.
And with yesterday's financial results for the fourth quarter and full year 'twenty, Turkey.
Call is complementary to that dislocation.
Joining me today are chairman and Chief Executive Officer, Mark Seymour was up and the company's Chief Financial Officer, Pablo with you.
We just got done with environment and performance.
At the conclusion of our prepared remarks, there will be a Q&A session.
Before we begin I would like to remind you that this conference call contains forward looking information and that actual results may vary from both express or imply.
Factors that could affect results are contained in our filings with the securities and Exchange Commission.
Page two in today's webcast presentation.
You will also find any referenced along I've always financial measures are reconciled to the most directly comparable.
Maximo Vedoya: Thank you, Sebastian. Good morning to everyone, and thank you very much for participating today in our conference. 2023 was a key year for Ternium. We made... good progress on several fronts following the transformation path we envisioned a couple of years ago. The new projects in Mexico are firmly under development.
Sure.
The press release issued yesterday.
With that I'll turn the call over to Mr. Eduardo.
Thank you Oscar and good morning to everyone and thank you very much for participating today in our conference calls.
Once again Q3 was a key year for Changyou, we make.
Well it was in February from Halloween the transformation path, we envisioned a couple of years ago.
Projects in Mexico are firmly under development, then you downstream life in the past you guys Goodyear will enable us to offer a new high value added products global customers in the region. This capacity will be integrated within upstream project, a new speed of slabs.
Maximo Vedoya: The new downstream lines in Pesqueria will enable us to offer new, high-value-added products to our customers in the region. This capacity will be integrated with an upstream project, a new steel slab mill currently under construction. This will be the greenest and most technologically advanced automotive Steel Products and Steel Mills in the Americas. It will be able to supply the full range of auto products, from exposed grade to advanced high strength. This lab mill will be based on electric arc furnace technology that could be supplied with renewable energy.
Mean currently under construction.
This will be the greenest and most technologically advanced automotive steel products.
In the Americas.
You'll be able to supply the full range of auto products from expose great to advanced high strength steels.
This meeting will be based on electric arc furnace technology that could be supply with any more energy. In addition, the project engage a direct reduction iron facility with capability to capture C O two.
Maximo Vedoya: In addition, the project includes a direct reduction iron facility with the capability to capture CO2. On the other hand, Ternium's new role in Uciminas is already showing good results for the company. The new management team there is taking decisions that are having a significantly positive impact on its performance. In addition to these strategic developments, in 2023, Ternium had a solid year from a financial performance point of view; adjusted EBDA and net income were strong, as was cash generated. As a result of these good results and its strong financial position, Ternium's Board of Directors proposed an annual dividend of $3.30 per ADS, a significant year-over-year increase.
The other half that is new rolling as you mean that is already showing good results for the company and your management team there he's taking the T shirts that are having a significantly positive impact on its performance.
In addition to these strategic developments intend to 23, seven you had a solid year from a financial performance point of view adjusted EBITDA and net income was strong as well as cash generation.
As a result of these great results and strong financial position.
And its board of directors proposed an annualized dividend of $3 33.
Yes.
Significant year over year increase D CS.
Maximo Vedoya: This is the highest annual dividend on record, as we continue to develop a consistent growth path for our return to shore homes. Let me now review the latest developments in our main market. Growth in Mexico's steel market has been strong. Consumption of flux-free steel in 2023 reached an all-time high of more than 18 million tons, equivalent to an annual increase of 18 percent. Our shipments in the country...grew by 22% with a significant market share gain, supported by the ramp-up of our new hot rolling mill in Pescadilla. The market environment in Mexico continues to be healthy.
Well leave it in our records.
We continue to develop a consistent growth path for our return to shareholders.
Let me now review the latest development in our main markets.
Growth in Mexico steel market has been strong, but some sort of flat steel in 2023.
And all time high of more than 18 million tonnes. If we go into an increase of 18 four cents.
Our shipments in the country.
<unk> by 22% with a significant market share gains supported by the ramp up of our new Hot Rolling mill in <unk>.
The market environment in Mexico continues to be healthy industrial activity strong the auto industry is working at high levels of capacity.
Maximo Vedoya: Industrial Activity Strong. The auto industry is working at high levels of capacity, rebuilding stocks in the value chains. In 2023, automotive production increased by 14%, reaching 3.8 million units. Construction activity in the country also remains at good levels, with non-residential construction, like industrial warehouses, natural gas pipelines, and other infrastructure projects, doing well. On the other hand, residential construction has been negatively affected by the increasing prices of construction in Brazil.
They still seem to value change in 2023 automotive production increased by 14%.
Reaching three 8 million units.
Construction activity in the country also remains at good levels with known with your days like industrial warehouse natural gas pipelines and other infrastructure projects doing well on.
The other time residential construction is being negatively affected by the increasing prices of course, such a construction inputs.
Maximo Vedoya: The lack of manufacturing capacity is clearly one of the factors contributing to economic activity in the region. Mexico offers a compelling combination of geographic proximity, skilled labor, and a supportive business environment, contributing to increased supply chain resilience. Looking ahead to the first quarter, we expect shipments in Mexico to maintain the strong level reported in the fourth quarter of 2023. However, there is a downside risk to this short-term volume view, as steel prices in the region have recently begun a downward trend, and there is some opportunistic demand retraction, which is typical in such a scenario. In addition, we anticipate lower cost per ton and slightly higher revenue per ton to push margins back up. Regarding our growth projects, we expect to inaugurate the first line of our downstream project in Pescaria during the second half of this year, with a startup of 550,000 tons per year peak in line, and the first lines of our services.
The EMEA shoring of manufacturing capacity is clearly one of the factors contributing to economic activity in the region.
Mexico offers a compelling.
Nation of geographic proximity skilled labor and our support to the business environment contributing to increased supply chain resilience.
Looking ahead to the first quarter, we expect shipments in Mexico to maintaining the strong level, we reported in the fourth quarter of 2023. However.
There is a downside risk to this short term volume view.
Oil prices in the region have recently begun a downward trend there is some opportunistic the month.
Traction would you typically typical in such a scenario.
Yeah.
In addition, we anticipate lower cost per ton and slightly higher revenue per ton to push margins back up.
Regarding our growth projects, we expect to integrate the first line is our junk of our downstream project Inpex Korea. During the second half of this year. We just started up off a 550000 tons per year picking nine.
First lines of our service center.
Maximo Vedoya: By the end of next year, we plan to start up the new galvanizing line, followed shortly by the core rolling mill. The ramp-up of all these new lines should enable us to gradually increase the value-added of our shipments in Mexico. The construction of both our slab mill and the downstream lines is progressing as expected, with suppliers already assigned to all the main equipment and different levels of advance in the work of each of them.
At the end of next year, we plan to start up the new Gulf I know, you're seeing line followed shortly by the cold Rolling Mill.
The ramp up of all these new lives should enable us to gradually increase the value added of our shipments in Mexico.
The construction of both our slapped me the Dallas Draglines.
It doesn't seem I suspected.
<unk> already assigned for all the main equipment and different level of advanced in the work of each of them.
Maximo Vedoya: We have updated our budget for this project, and we are now estimating a total investment of $3.5 billion, up 9% from the $3.2 billion in our initial estimation disclosed one year ago. The main source of this increase was inflation in the pricing of equipment and fluctuations in the FX rate. Let's turn now to Brazil, after an increase in our participation. In July of 2023, we began fully consolidating Ushimina's results. This happened during a transformational year for Ushimina, as it successfully restructured its main glass firm with the appointment of a new management team, which means we have two. Strong decisions, such as, for example, putting out of operation one of the smallest blast furnaces and one of the skulking facilities.
We have updated our budget for these projects.
And we are now estimating a total investment of $3 5 billion up 9% from the $3 2 billion in our initially estimation disclosed one year ago. The main source of this increase were our inflation on the pricing of agreement I'm 50.
Sure.
FX right.
Yeah.
That's done turning now to Brazil.
After an increase in our participation in July of 'twenty to 'twenty. Three we began fully consolidating with you meet US result, this happened during a transformational E fleets you mean, that's us it successfully relied its main blast furnace.
The appointment of a new management team, what do you mean a stoop.
Strong decisions Us for example, putting out.
Operation one of our smallest blast furnace.
And one of our spoke in facilities. In addition, the new money men.
Maximo Vedoya: In addition, the new management team took decisions that led to higher efficiency of the metallic charge in the axon process and lower fuel rate of the blast furnace. This is part of a significant management initiative that focuses on Ximena's industrial system, with the aim of increasing its productivity, and it will continue to be UCMina's focus throughout this year. Ucimina's mining operation had a very good year, with iron ore shipments reaching an all-time high of 9.1 million tons in 2023. On the other hand, Ucimina suspects a deterioration in its mining business during the first half of 2024, due to the temporary stoppage of one or two ore processing plants and seasonal rains at the beginning of the year. A key issue in the steel market in Brazil is that adequate trade measures are taken to defend it from unfair trade, as has already been done in many other important markets like the U.S., Mexico, and Europe.
He took the seizures leap to higher efficiency of the metallic charge in the upstream process, a lower fuel rate of the blast furnace.
This is part of a significant management initiative, which furbish honestly, you mean us industrial system, we can with the aim at increasing its productivity.
And it will continue to be you'll see me less focus throughout this year well.
What do you mean as mining operation had a very good year, we got no shipments, reaching an all time high of $9 1 million tons in 'twenty three.
The other hand, when she me is expect at the duration and its mining business. During the first half of 2024 due to the temporary stoppage of one or two of our processing plants and teach them a range at the beginning of the year.
A key issue in the steel market in Brazil is there.
Other great wake measures are taking to defend it from unfair trade US has already been made in many other important markets like the U S Mexico and Europe.
Maximo Vedoya: The import of steel so below the cost of production is having a toll on the Brazilian steel market. The Brazilian Steel Association, together with all steel companies, are actively trying to find a solution to this issue. For the first quarter of 2024, we'll see Minas anticipate a sequential improvement in the profitability of the steel business, mainly as a result of lower cost per ton, as the productivity of the steel business is gradually improved. In Argentina, a new government administration took office in December and is determined to introduce significant macro reform. The first measures taken by the new administration were a steep devaluation of the Argentinian peso.
Imports of steel so below cost of production is having a toll in the Brazilian market, the Brazilian steel association to better with all steel companies.
Are actively trying to find a solution to this issue.
For the first quarter of 'twenty 'twenty four will see me does anticipate some sequential improvement in the profitability of the steel business, mainly as a result of lower cost per ton at the productivity of the steel business is gradually improving.
In Argentina, our new government administration took office in December and.
Returning to introduce significant macro reforms.
The first measures taken by the new administration, whereas steep devaluation of the Argentinian peso significant government spending that's with the aim of controlling inflation and the proposal of cigarette market friendly reforms.
Maximo Vedoya: Significant government spending cuts with the aim of controlling inflation and the proposal of several market-friendly reforms. These much-needed reforms, although positive for the medium to long term, are expected to initially have a recessionary effect on Argentina's economy and, consequently, a negative effect on Ternium's shipment in the local market. If the government is able to successfully stabilize the macroeconomic situation in the country and introduce this market-friendly reform, Argentina is a country that offers many opportunities for all kinds of investment in different fields, which would bring a long-awaited path to economic recovery, something that would be very positive for our operations in the country. We are advancing in Argentina with the construction of our first self-owned wind farm, which will begin operation by the end of the year. We are also analyzing ways of replicating this experience in other countries.
This much needed reforms.
Positive for the medium to long term I expect it will initially have a recessionary effect in Argentina economy, Consequently, and they've got really affect affect Chinese shipment in the local market.
If the government is able to successfully stabilize the macroeconomic situation of the country and introduce these market friendly reform.
That is a country, which offer many opportunities for all kind of investment in different fields, which would bring our long awaited path to economic recovery.
Something that would be very positive for our operations in the country.
Yeah.
We are advising advancing in Argentina with the construction of our first self all win fund, which will begin operation by the end of the year.
We are also analyzing ways of replay fleet, we'd be taking these experience in other countries.
Let me now make a few final comments before closing my prepared remarks.
Maximo Vedoya: Let me now make a few final comments before closing my prepared remarks. 2024 will keep us busy as we continue implementing our strategic plan, which represents the largest growth initiative in Ternium's history. The development of the downstream project in Pesqueria will enable us to begin shipping higher value-added products to our customers during the current year. We have a strong competitive position in Mexico and a market that is being significantly benefited by the Near Sharing of Manufacturing Capacity. Argentina, we have had a bumpy year, but I'm confident we have the expertise to navigate through a rough period.
'twenty 'twenty four will keep us busy as we continue implementing our strategic plan, which represent the largest growth initiative in tonnage keeps tree.
The development of the downstream project at best Goodyear will enable us to begin shipping higher value added products to our costs to our customers. During the current tier we have a strong competitive position in Mexico.
Market that is being significantly benefiting by the near shoring of manufacturing capacity.
Argentina, we have a bumpy year, but I'm confident we have the expertise to navigate through a rough period, we do have some opportunities to substitute any still demand decrease in the local money market with cheap in two other Italian facility to complement their productions.
Maximo Vedoya: We do have some opportunities to substitute any steel demand decrease in the local market with shipments to other Ternium facilities to complement their production. And finally... This is an important year for Ximena. It has many opportunities for productivity improvement. I trust the new management team in place will successfully guide it to its full potential. With this, Pablo.
Finally.
This is an important year for me. This has many opportunities for productivity improvement I Trust, the new management team in.
In place will successfully guided.
To its full potential.
With these Pablo.
Forehead and review performance in the fourth quarter piece.
Pablo Daniel Brizzio: Go ahead and review Ternium's performance in the fourth quarter. Thanks, Maximo, and good morning to everyone. Let's review our company operating and financial results in the webcast presentation for a more detailed picture of our performance. If you want, we can start on page three.
Thanks, Maximo and good morning to everyone, Let's review, our company's operating and financial results on the webcast presentation for more detailed picture of our performance.
Did you want to start by page three piece.
Pablo Daniel Brizzio: Ternium delivered strong results in the fourth quarter of this year, 2023. Margins in the period were slightly above our last quarter expectations, mainly due to lower... Guests at the VDA for the fourth quarter were... $651 million, a 7% decline from the third quarter of 2023. The decrease was primarily driven by lower steel prices, partially upset by lower.
Don't you believe are stronger something before corporate off D C or what you can do pretty marshes, the BDO to work lately about our last quarter expectations, mainly due to lower costs.
Adjusted EBITDA for the fourth quarter.
Yes.
Tragedy on $51 million, a 7% decline from the third quarter.
Great.
This was primarily driven by lower steel prices, partially upset by lower costs.
Pablo Daniel Brizzio: In addition, the profitability of Uximina's mining operation increased sequentially during the year, adjusted the VDA margin state constant at 13 percent, during the prior quarter of the fall. This relatively low-level war was, again, affected by the consolidation of the Sibina Steel operation, which continues to record low profitability as it ramps up its main blast furnaces at the Ipatinga facility. Looking forward, we anticipate an increase in adjusted EVDA for the first quarter of 2024, primarily driven by an improvement in our margins resulting from lower estate costs per ton and slightly higher revenue per ton. Now, I'm going to the chat.
In addition, the perfect I really do you have you seen enough mining operation increased sequentially during the period.
I'll definitely be you're Muslim stayed constant at 13%.
[noise] mirrored the prior quarter performance.
We thought it'd be really married were once again affected by the consolidation of who should be nice. Its deliberation. We've continued to work with a low profitability as you ramp up maybe less pregnancy you bet you.
We have a few.
Looking forward, we anticipate an increase maybe you.
The adjusted EBITDA for the first quarter of 'twenty 'twenty, four primarily driven by an improvement in our magazines consulting from lowers the cost per tonne in Colombia.
Paul.
What we know to what extent.
Pablo Daniel Brizzio: Both net income and adjusted earnings per ADS showed notably strength during the fourth quarter. The results include non-caste positive effects from UC Minna's post-retirement liabilities and contingencies reversed, along with a net foreign exchange gain related to a substantial devaluation of the Argentine peso against the U.S. We will go deeper into this on the upcoming, Let's turn now to our Achievements, Performance In Mexico, Ternium steel shipments remain strong in a seasonally weaker period, aided by continued growth of commercial customer demand. Equally remarkable, as Maximo mentioned, shipments of Ternium in the country for the full year 2023 surged by 22% over the prior year, indicating a substantial gain in market share driven by the ramp-up of our new hot rolling mill industry.
Both net income and adjusted the aseptic beverage behavior drove notable strength during the fourth quarter.
The results include noncash closer to either fix from UC, Minas both regarding the liabilities and contingencies will be with us along with a net foreign exchange gain related to a substantial devaluation of the Argentine peso against the U S dollar.
We will have deeper into this.
On the upcoming slides.
Let's turn now to our students perform on a beach for Mexico.
These shipments remained strong in a seasonally weaker period for you.
By computer growth of commercial customer demand.
Equally remarkable if Mexican American government shipments in the country for the full year 2023 surged by 22% over the prior year.
As our friendship getting market share driven by the ramp up of our new Hot Rolling Mill.
Looking ahead, we have the supergene meant to increase slightly and be a sincere version in the first quarter of 'twenty 'twenty four.
Pablo Daniel Brizzio: Looking ahead, we anticipate GMEX to increase slightly in the USMCA region in the first quarter of 2020. In Brazil, the increasing volumes reported in the second half of 2023 primarily reflected the consolidation of using. You can expect stable achievements in the first quarter of 2020. Steel shipments in the southern region decreased by 7% in the fourth quarter as the government imposed restrictions on the import of inputs affecting terminal steel production rates. In the coming quarter, we expect demand in Argentina to decrease compared to the fourth quarter due to the usual seasonal slowdown and the impact of the macroeconomic reform in our value chain as Max Max, on the following page, number five.
The increase in volume for the corporate in the second half of 'twenty three.
Primarily reflected the consolidation of Oslo.
We're gonna start favorite Siemens in the first quarter of 'twenty 'twenty four.
Shipments in the southern region decreased by 7% in the fourth quarter.
Government imposed restrictions on imports of inputs affected steel production grade and people.
In the coming quarter, we expect demand to decrease compared to the fourth quarter due to the usual.
She's one of them.
No doubt the impact of the macroeconomic reform.
Our value chain Usmagazine looks great.
The photo on page number five.
Pablo Daniel Brizzio: You will see that with this factor combined, we achieve a very similar achievement compared to the third. Looking ahead, in the first quarter of 2024, We anticipate slightly higher shipments in the USMCN region to be offset by lower shipments in Argentina. Moving on to Steel Prices, Steel Revenue per Ton Decreased Further in the 4th Quarter as Expected, Reflecting Lower Realized Prices in Most of Ternium. Looking forward, as market prices in the USMCA region increase during the fourth quarter, contract prices in Mexico are resetting at higher levels in the third quarter. On the other hand, during January and February, market prices in the ESMCA region have been decreasing.
We see that these factors combined we achieved in the fourth quarter basis, even after the humans compared with third quarter.
Looking ahead in the first quarter 'twenty to 'twenty four.
We anticipate slightly higher humans and do you have a sense of your improved from three upset by lower feed and then you have to do.
Yeah.
Moving on to steel prices did revenue per therm decreased further in the fourth quarter as expected, reflecting lower realized prices most of the market.
Portola as market.
Market prices in the U S and so you have recently increased during the fourth quarter contract prices in Mexico are reshaping, how you're live in the first quarter.
Hum using January and February market prices in the U S. Since the original have been decreasing all in all we expect higher realized prices in Mexico in the upcoming quarter.
Now, let's review, our adjusted EBITDA and net income on a quarterly basis on page six.
Pablo Daniel Brizzio: All in all, we expect higher realized steel prices in Mexico in the upcoming... Now, let's review Adjusted EVDA and Net Income on a quarterly basis on page 6. In the chart at the top, the primary factor contributing to a sequential decrease in adjusted VDA was a decline in realized steel prices, partially offset by better cost performance and a more profitable mining operation. Can you see me?
In the chart at the top the primary factor contributing to the sequential decrease in adjusted EBITDA was a decline in realized prices powerful upset by a better car for four months.
Perfect every mining operation you.
Excuse me.
As shown in the chart at the bottom net income increased sequentially driven by several positive factors.
109 million gain from the reversal of corporate recovery of malaria in Africa.
63 million game forever contingency reversal, Bluetooth reseller partners to relax and they're going to choose you mean.
The favorable effect of the devaluation of the Argentine peso.
Pablo Daniel Brizzio: As shown in the chart at the bottom, net income increased sequentially, given by several positive facts, such as a $109 million gain from the reversal of post-retirement liability to Xisiminas and a $63 million gain for a contingency reversal due to the dismissal of a public civil action against Xisiminas. The favorable effect of the devaluation of the Argentine pesos on Ternium S.A.'s net short local currency. Finally, I'll include this one.
There hasn't been a net short local currency position.
Finally, unimproved before tax.
Net income was nearly negatively impacted by the decrease.
Current operating income and an impairment charge on everyone's mind me methods in the fourth quarter of 2023.
Yeah.
Now let me review in the next page our cash performance.
You can see healthy gosh.
Generation from operations in the fourth quarter aided by a degree working capital.
Capex in the fourth quarter increased sequentially.
Pablo Daniel Brizzio: On the other hand, net income was negatively impacted by the decrease in recurrent operating income and an impairment charge on Ternium's mining assets in the fourth quarter of 2020. Now, let's review on the next page our cash performance. You can see that we have healthy cash. Generation from operations in the fourth quarter, aided by a decrease in working generation from operations in the fourth quarter, aided by a decrease in working, CAPEX in the fourth quarter increased sequentially and significantly, reflecting the investment we are currently doing at our Pesqueria facility for our new project. It was partially offset by lower CAPEX at Usiminas as the bulk of the investment in the reliance of glass furnaces is now being. Despite this higher capex level, Ternium managed to record a positive free cash flow in the year. By the close of 2023, Ternium maintains a solid net cash position of $1.9 billion.
And significantly reflecting the investments we are currently.
During our first Goodyear facility for our new projects was partially upset by lower Capex.
Uh huh.
Bulk of the investment and the related I'm Gonna affirming are.
Now being left behind.
Despite these higher capex level that we managed to record positive free cash flow in the period.
But the class of 2023 and maintained a solid net cash position of $1 9 billion declined by around $500 million in the quarter, mainly due to a decrease in the fair value of the bonds that mature routes are hurt by government of Argentina.
These bonds are valued using hasn't been our business quotation and reported in U S dollar using the official.
Isn't that peso exchange rate.
The increase in valuation was mainly the result of the significant devaluation of different things there. So by the end of the year.
And it was reflected in other comprehensive income as long as these bonds are not sold.
Whereas eventually these bonds are sold every possible and they got there besides the medical because it didn't come with recycled two pregnant episodic being kind of thing.
Let's now shift our focus to bridge back to assess our full year performance.
Shipments of past dose of 20 points too.
But an increase of 19%.
Zooming to Mexico, and the consolidation of music.
Pablo Daniel Brizzio: This decline by around $500 million in the quarter, mainly due to a decrease in the fair value of the Argentine bonds, the majority of which are held by Ternium S.A. These bonds are valued using the Argentinian Pesos Quotation and reported in U.S. dollars using the official exchange rate. I was going to take this section. This decrease in valuation was mainly the result of a significant devaluation of the Argentine peso by the end of the year and is reflected in our comprehensive income as long as these bonds are not sold. When, eventually, these bonds are sold, any positive or negative results in adequate pension income are recycled to financial results in the income. Let's now shift our focus to page 8 to assess our full-year performance, achievements surpassed those of 2022 by an increase of 19 percent with higher achievements in Mexico and the consolidation of Ternium. Adjusted EVA was $2.7 billion, supported by a record level of finished achievements and a healthily adjusted EVDA margin. Despite the negative effects of the consolidation of Simina's operation, I feel reliant on my blood, kidney
Standalone adjusted EBITDA.
Well, it's two 7 billion supported by a very good level of things.
And a healthy adjusted EBITDA margin.
Despite the negative effect of the concerns that constantly vigilant of casinos operation.
Now you may blow surface.
Yeah.
Adjusted net income remain unchanged in 2020 with.
With weaker operating performance offset by positive effect on deferred tax of local governments and fluctuations.
Bedroom is Florida et cetera is that mostly related to the fluctuation of the Argentine peso.
Moving on to shareholders' return Mexican mentioned, they're going to do.
The fourth proposal for an annual dividend of $3 33 years.
The company already paid an interim dividend of $1 10, since November 2023, and intend to pay the remaining $2 in 'twenty or.
'twenty 'twenty four.
Shareholder approval.
As you can see in the Jack Daniels has been consistently increasing return to shareholders over the last four years, but he was a proposal for 'twenty to 'twenty three is equivalent of around 9%.
Now in the final slide you can see the strength of 30th Gosh in the lead generation in 2023.
Cash from operations was $2 $5 billion of free cash flow.
$1 billion. After Capex of 1.5 billion looking ahead, we anticipate capex to be around one $8 billion in 2024.
Alright, we have concluded our prepared remarks, thank you for your time and attention.
Pablo Daniel Brizzio: Adjusting Net Income, Remain and Change in 2020 Adjusting Net Income, Remain and Change in 2020, with weaker operating performance, offset by positive effects on deferred tax on low-concurrency fluctuations and better net foreign exchange results mostly related to the fluctuation of the ASG. Moving on to shareholders' returns, as Maximo mentioned, Ternium's board of directors put forth a proposal for an annual dividend of $3.03 per ADR The company already paid an interim dividend of $1.10 in November 2023 and intends to pay the remaining $2.20 on May 8, 2024, pending shareholder approval. As you can see in the chart, Ternium has been consistently increasing its return to its holders over the last four years. [inaudible] Now, on the final slide, you can see the strengths of Ternium Cash Generation in 2021, cash flow operations will be 2.5 billion dollars, and free cash flow of $1 billion after CAPEX of $1.5 billion. Looking ahead, we anticipate CAPEX to reach around $1.8 billion in 2020. All right, we have concluded our prepared remarks. Thank you for your time and attention.
We are now ready to take any questions that you may have.
Please operator proceed with the Q&A session.
Ladies and gentlemen, we are now opening the floor for a question and answer if you'd like to ask a question. Please.
Our style and number one on your telephone keypad. Our first question comes from Carlos de Alba from Morgan Stanley. Your line is now open.
Yeah, good morning, maximal I'm Pablo so Austin. So two questions first one is very straightforward one how much of the $2 2 billion in Capex has been spent already.
How should we think about the distribution between 'twenty 'twenty four 'twenty five of the remaining portion that has not yet spent being spent.
Yes, Hello, Carlos how are you.
So I give you first the number of 2024.
2025.
If you want.
They talked about Capex, we are seeing in 2024, it's around 1.8 billion. This includes as you need us.
And the total Capex of 2023, probably is going to be around two five.
Also including what you mean.
35 years of 30 to 35 is two five.
If you're talking about the $3 five here, particularly of the project.
A deaf ear eats.
It's around 200.
2023 was around $200 million.
Well sorry.
No it's 400.
400.
It's $400 million.
Operator: And we are now ready to take any questions you may have. Please operate and proceed with the Q&A session. Ladies and gentlemen, we are now opening the floor for questions and answers. If you'd like to ask a question, please press star and number one on your telephone keypad. Our first question comes from Carlos de Alba from Morgan Stanley. Your line is now open.
Because there are some payments, we make with equipment.
Next year, it's going to be at around 800 and $800 million.
And the big part is going to be around $1 5 billion in 2025.
Alright, okay.
Scared. Thank you my second question is so now.
Carlos De Alba: Good morning Maximo, Pablo, and Sebastian. So, two questions. The first one is very straightforward.
So you have been operating for a for about six months or so.
What what are the plans are that you're.
Carlos De Alba: How much of the 3.2 billion CAPEX has been spent already? And how should we think about the distribution between 2024 and 2025 of the remaining portion that has not yet been spent? Yes, hello Carlos, how are you?
That you have for it for the operation.
In particular regarding do you know what you're going to do.
Tao.
Or are you going to restart I'm curious your production there.
What is the overall total capex that you see for it for the company and a third point there you say when what is the timing for you or for them.
Maximo Vedoya: So I will give you first the numbers of 2024 and 2025 that you want. The total capex we are seeing in 2024 is around 1.8 billion. This includes Susy Minas.
The company to reach I think the $150 per ton EBITDA target and that I think you mentioned in the past that you wanted to bring that operation too.
Maximo Vedoya: And the total CAPEX of 2023 is probably going to be around 2.5, also including Lucy Mina. 25. 25. Yeah.
Yeah.
Well, yes, we have been operating loss you mean us for the last number we have been in your management team has been operating as you mean that for the last six months and they are making a lot of changes that is already mentioned in my remarks, I think that from your questions. There's still no answer for the question I mean, it's.
Maximo Vedoya: Of 2025, it's 2.5. If you're talking about the 3.5, in particular of the project... uh, this year it's around 200. I mean, 2023 was around 200 million dollars. Um, what? Sorry.
Cuba is a great asset he has a wonderful hubs for meals on a very solid.
Maximo Vedoya: No, it's 400. Yeah, it's 400 million dollars because there is some payment we make with equipment. Next year it's going to be around $800 million. And the big part is going to be around $1.5 billion in 2025. All right, okay.
Coke with meals.
Yeah.
Booking the absolute capacity there is not an option with the equipment I mean, we are going to do.
As opposed to our blast furnace operation again.
But there could be some alternatives, but we are going to take a little bit of time before.
I'm, taking a decision over kubota, all I think that the focus today and as you need us.
Carlos De Alba: Thank you, Maximo. And the second question is, so now that you have been operating Ucimina for about six months or so, what are the plans that you have for the operation in particular regarding Do you know what you're going to do in Cubatau? Are you going to restart it?
Is the industrial facility at the hold co, but our army putting us on how we make much more part of the T.
Maximo Vedoya: Curiosity Production there. What is the overall total capex that you see for the company? And the third point is, what is the timing for you or for the company to reach, I think, the $150 per ton EBITDA target that I think you mentioned in the past that you wanted to bring that operation? Well, yes, we have been operating in Usimina for the last... No, we have been... A new management team has been operating in Usimina for the last six months, and they are making a lot of changes, as I I think that from your questions, there's still no answer for the Cubatau. I mean, it's clear that Cubatau is a great asset. He has a wonderful hot stream meal and a very solid cold stream meal.
D V D on my competitor.
That operation as I said, we are seeing a lot of opportunities to increase the productivity of <unk> in both facilities.
And we're going to forecast I think this year is that safe.
Our capex will be around a $360 million in 2024.
That's the number we are seeing today, it's lower than the number of 2023 because of course of the realignment of the blast hurdles.
But that's the idea.
I think I don't know if you have another one oh, yeah. A question that was related to what we were expecting to collect the virus itself.
Maximo Vedoya: Putting the absolute capacity there is not an option with the equipment. I mean, we are not going to put a blast furnace operation again. But there could be some alternatives. But we are going to take a little bit of time before taking a decision on Cubatau. I think that the focus today in Ximena is the Industrial Facility as a whole, Cubatao and Ipatinga, and how we can make it much more productive or more competitive that operation. As I said, we are seeing a lot of opportunities to increase the productivity of the seminars in bold facilities.
Shall I take it.
Yes, as you know Carlos we always will.
Work with the I V.
Getting turned him too.
Margin of around 15% to 20%.
We were able to achieve that during the year.
They are in 2023 margin.
Or maybe that was a 15, 6% for the year clearly we view it.
Percentages during the last quarter clearly because of the consolidation because you may not be a review of margins that you've seen in the house during the day.
Maximo Vedoya: And we're going to focus, I think, this year in that sense. CapEx will be around $360 million in 2024. That's the number we are seeing today. Lower than the number of 2023 because, of course, of the relining of the glass hurricane. But that's the idea.
The second semester of 2023 due to the related savings and the.
The lack of that production.
We are expecting to two to start recovering from that situation.
Hopefully.
<unk> by the end of this year, we should be.
To be able to reach a better margins and reaching.
The number of around 15% that would be my sense.
Pablo Daniel Brizzio: And I think, I don't know if you have another one. Yeah. Ah. The question was related to, and we were expecting to take the margins of Yosemite. As you know, Carlos, we always work with the idea of getting Ternium to a margin of around 15 to 20%. We were able to achieve that during last year; at year-end 2023, the margin on EBITDA was 15.6% for the year. Clearly, we reduced percentages during the last quarter clearly because of the consolidation of Yosemite and the reduced margins that Yosemite had during the second semester of 2023 due to the reliance of the black furnace and the lack of that production.
Although there are plenty of course and also you see meeting so that's the potential library of high expectations, but I would have.
That Oh, we're working on on that front.
We'd be the management's views I mean this is working.
Got you.
In the coming in the coming quarters.
Thank you Paula I'm actually just one maybe for what I, what I wanted to get at.
<unk> with the Capex question I'm, assuming that if you have already a ballpark maybe a range of the amount of capex that needs to be invested in <unk> in order to really bring that that that operation both guar down, but you can get to a level that you think is more.
Close to the standard <unk> standard.
Yeah.
No I think that the three.
Pablo Daniel Brizzio: So we are expecting to start recovering from that situation, and hopefully, by the end of this year, we should be able to reach better margins and reach a number of around 15% EBITDA margins, all together at Ternium, of course, and also in Yosemite. So that's the expectation, a very high expectation that we have for that, and we are working on that front together with the management of Yosemite in order to achieve it. Thank you Pablo and Maximo. What I wanted to get at, Maximo, with the CAPEX question about Usiminas, is if you already have a ballpark, maybe a range, of the amount of CAPEX that needs to be invested in Usiminas in order to really bring that operation, both Cubatá and Ipatinga, to a level that you think is more, No, I think that the $320 million is part of that project And for several years, around that number, Ushimina has to do three or four things.
320 million, it's part of that project.
And several years at around that number.
What do you mean that first to do so.
Four things.
Some environmental <unk>.
Then we'd have to take a decision, but it's part of that decision easier went in the numbers that we are expecting of the coke ovens.
And some also improvement in the downstream operation.
But with that level.
Of topics in the following years I think we are going to be okay.
The real issue in the long term is a mining operation that's a completely different number of course.
But as you know we are in the process of analyzing and preparing all the necessary studies in engineering ease. These projects. So that we can go forward if we approve that project.
Alright, okay.
I don't want them too much time, but just on Cuba in Golar power.
The location of the.
Our facility.
Maximo Vedoya: [inaudible] Some environmental issues, in Ipatinga, we have to take a decision, but it's part of an easier decision when, with the numbers that we are expecting for the co-covens and some improvements in the downstream operations of CAPEX in the following years, I think we are going to be okay. The other issue in the long term is the mining operation. That's a completely different number, of course.
Mentioned, the downstream operations our asset there.
And are you considering it you see the possibility for <unk> down the road to invest in an electric car foreigners, maybe together with our Pelletizing an idea right.
In town.
I think that each partially yes, I would say a white, partially I think that the in electric arc furnaces.
Carlos De Alba: But as you know, we are in the process of analyzing and preparing all the necessary studies and engineering for this project so that we can go forward if we approve it. All right, okay, and I don't want to take too much time, but just in Cubapao, given the location of the facility plus what you mentioned, the downstream operations or assets there, are you considering, is it a possibility for Usimina down the road to invest in an electric car furnace, maybe together with a pelletizing and a DRI in Cubatown? I think that it's partially a yes, I would say, and why partially? I think that an electrical furnace is...
Is that is an option there of course.
DIY facility he said differently.
If a matter because of the cash cost.
Natural gas in Brazil, you have cost of $16 in Brazil of medium Btu is not possible to put at the facility.
But you can put a on electric arc furnaces without that yard facility.
But again.
This is.
In the medium long term, we are not today, saying anything about that.
Thank you very much.
Youre welcome.
Yeah.
Thank you our next question comes from.
Jeremy.
Maximo Vedoya: It's an option there, of course. The DRI facility is a different matter because of the cost of natural gas in Brazil. If you have a cost of $16.00, in Brazil, 1,000,000 BTU is not possible to put at the RF facility. But you can put an electrical furnace without the DRM facility.
From Bank of America. Your line is now open.
Okay.
Thank you for taking my questions.
Questions.
My first one is on second half restarted the downstream lines.
Johnson.
That's been a pretty long term EBITDA margins, what kind of increase should we expect.
Maybe the percentage.
Yes. This is my modeling going forward and my second one is a mine that is seamless.
Maximo Vedoya: But again... in the medium and long term. We are not today saying anything about that. Thank you very much.
Have a decision yet and you're still spending.
What time line should we expect.
Life's minus Janice unless somebody is quite close and if so when should we expect.
Carlos De Alba: You're welcome. Thank you. Our next question comes from Yulia Luisito from Bank of America. Your line is now open. Questions?
And of course different circumstance Brooks told you about that sits across Latin American current crosses my does it make sense for us to remain in aeronautics corner going forward.
Operator: Second half, we're starting. [inaudible] So you guys don't have a decision yet, and you're still studying? What timeline should we expect? Where should we start?
Yeah.
Yeah.
I can remember so let me let me take your first question.
Clearly.
The investment plan that we have around especially the one that you mentioned are.
Operator: Foley, Bob Assett, The Cross-Latin American. Thank you, gentlemen. This is Pablo.
In order to sustain and increase our EBITDA margins.
Yeah, we are talking about projects that are really up and bravery by beginning of next year or so.
Pablo Daniel Brizzio: Let me take your first question. Clearly, every investment plan that we are doing, especially the one that you mentioned, is in order to sustain and increase our ADA margins. Here we are talking about projects that will be up and ready by the end of next year. This is a project that we developed to contribute to position Ternium in the upper part of the range that we want to be in.
Difficult to tell you a number exactly on that because we want to see exactly which is environment of prices, but we are.
Always a steady process.
We will not need to contribute to position certainly in the upper part of the range that we're in.
We want to win.
Pablo Daniel Brizzio: As we always mention, this is between 15 to 20 percent, and clearly this project of adding value to the product line that we have today. Remember that these plans that we are currently putting forward are to increase the value added after the big investment that we did to have a new hot rolling mill. So, with the new CAPEX and the new plans that we have in Mexico, we will be able to supply a full range of products for the auto industry, as Maximo mentioned in his opening remarks, and clearly increase our margins. It's very difficult to give you an exact number on how the margin will improve, but clearly, this will position Ternium to be closer to the upper side of a range where we want to be.
So as we always manage them decent returns to 20%.
Perfect for adding value.
The new product lines. There are a couple that I remember about this plan.
Government.
Going forward are to increase the value added after the big investment that we need to have a new.
The new cold Rolling mill, so with the new the new Capex and the new plans that we have in Mexico, we were able to supply <unk> rental portfolio.
You mentioned in the opening remarks and.
Clearly increase our margins.
To give you an exact number on how that market will improve but clearly these will produce I'm telling him to be closer to the upper sides of a range, where we want to be.
Yeah.
Oh, Hi, Emily regarding notes, you mean at mining or moves.
Maximo Vedoya: Hi, regarding Uximinas Mining or Mursa and the new project, we have at least two years to make the decision. I mean, MUSA is going to continue the actual production with the ups and downs that are normal in a mining operation until 2028 or 2029. So to decide on the project, we have time. What Ushimita's management is doing now is a team analyzing in very detail all the projects, which so far seems to be working very well. Very attractive indeed.
The new project.
Have at least.
Two years to make that decision.
Most of that is going to continue the actual production with the ups and downs.
Normally in a in a mining operation.
Till 'twenty 'twenty eight 'twenty to 'twenty nine.
So to decide on the project we have time.
What do you mean that management is doing now is.
Putting forward a team analyzing in very detail all of the projects, which so far seems.
Very attractive.
Maximo Vedoya: But I cannot tell you more than that because the decision is going to be taken in at least more than one year. But again, once we make the decision, we're going to go forward quickly, and that's why you see me next, doing all the studies that are necessary and even asking some permission. You're welcome. This comes from Henrique Marquez from Goldman Sachs. Your line is now open.
But I cannot tell you more than that because of it she shouldn't it's gonna be taken.
And at least more than one year.
But again once we make the decision we're going to go forward quickly and that's why you see me Ness is putting a team together and making all the studies that are necessary and even asking some permissions.
Okay.
That's perfect. Thanks, a lot of them.
So welcome.
Yeah.
Comes from the weekend like Paris from Goldman Sachs. Your line is now open.
Okay.
Okay.
Operator: Hi. Hi. Hi.
Hi.
Okay.
Okay.
Can you hear me.
Maximo Vedoya: Yes. Hi, yeah. Thank you for taking my question. Wanted to understand a little bit better the prospects for demand in Argentina after the whole devaluation. Thank you and Pesos. Comment a little bit more on the expectations for the Public Infrastructure Project. Yes, thank you, Enrique. Yes, I mean, there are all numbers we are putting up in our forecast. We are seeing a decrease in demand for the year, around 10%. Uh, this is a high decrease and probably could be a little bit less than that.
Yes.
Hi, Yes. Thank you for taking my question just wanted to understand a little bit better the prospectus for demand in Argentina. After the whole devaluation from there.
Argentinian peso, which you guys can comment a little bit more on the on your expectations for.
For the men.
Even.
Any impact.
Impacts from.
From public infrastructure projects that would be great. Thank you.
Yes. Thank you Enrique yes, I mean, they're all numbers, we are putting up in our forecast.
We are seeing a decrease in demand for the year around 10%.
This is a high decrease.
And probably could be a little bit less than that.
Maximo Vedoya: But in doing our planning of the production facility, we are putting that number as the number in demand. Infrastructure projects We didn't have a lot of sales to infrastructure projects in Argentina, except those of oil and gas. And the ones of oil and gas, I don't think they are decreasing that project. So we are not, I mean, demand for all Baca Muerta and for the reversion of the north gas pipe will continue forward. So we don't see a decrease in demand for infrastructure, but of course, the recession that we speak about is going to take some of this decrease in demand in the market. Probably, with this number, we are being a little bit cautious, and by July or August.
But in doing our planning of the production facility, we are putting that number.
The number in demand.
If a such a project we don't we didn't have a lot of off.
Sage two infrastructure projects in Argentina, except those dose of oil and gas on.
And the ones that <unk> gosh, I don't think they are decreasing dot projects. So we're not I mean demand for for all but a lot of.
And for the reversion of the of the North.
Gas pipe.
We're continuing forward. So we don't see a decrease in demand of infrastructure, but of course, the recession that we speak he's going to take.
Some D V.
This increase in the demand in the market.
Probably with the number we are being a little bit cautious.
And by July or August.
Maximo Vedoya: Things could start getting better again if the government succeeds in implementing all these reforms that, as I said, are very much needed reforms in Argentina. I hope I answered your question, Enrique. Ladies and gentlemen, if you'd like to ask a question, please press star and number 1 on your telephone keypad, then press star and number 1 on your telephone keypad.
<unk> could be start doing better again, if the government has success in implementing all these reforms, but as I said, a very well needed reforms in Argentina.
Okay.
Yeah.
I Hope I answer your question I think that yeah.
Thank you.
Cool.
[noise].
Ladies and gentlemen, if you'd like to ask a question. Please press star and number one on your telephone keypad that start and number one on your telephone keypad. Our next question comes from Meyer Shields from.
Operator: Our next question comes from Marcio Feld from Goldman Sachs. The line is now open. Thank you. Good morning, everyone.
From Goldman Sachs. Your line is now open.
Hey, good morning, everyone. Good morning, Mark from Juan Pablo Thanks for taking my questions. A couple of follow ups for me. The first one there was a marginal increase in capex for fiscal year <unk>. So just trying to understand is sort of confident that no more cops are revisions are gonna be rebid.
Marcio Farid Filho: Morning, Maximo and Pablo. Thanks for taking my questions. A couple of thoughts from me. The first one is that there was a marginal increase in CapEx at Pescaria. So just trying to understand if you're confident that no more capsule revisions are going to be needed and if the timing for the project is still on track. And secondly, I think we've talked about the outlook for demand in Mexico and the US, but could you give us some visibility into expectations going into the first quarter and maybe into the year as well? I know there are some structural drivers that seem to be quite interesting for where Ternium is positioned, but anything else that you can provide in terms of details, that would be great.
So timing for the project to you on truck.
And secondly, I think <unk> talked about the.
The outlook for demand for Mexico.
But if you can give us some oh, some visibility into our expectations going into the first quarter and maybe into the year as well I know there are some structural driver does seems to be quite interesting for what goodness position, but anything else that you can provide in terms of sit there that'll be great and long.
Marcio Farid Filho: And last, in terms of dividend, obviously, three point three dollars announced for the year in total. Trying to understand if you still have the view of a continuously increasing dividend and if the one that we have seen for 2023 is now a new base to think about for 2024 onward. Thank you.
In terms of dividend other than the three $3 an ounce for the year in total are trying to understand if you still have the view of a continuous increase in Pittsburgh and it's the one that we have seen for 2023 is now a new base to think about sports women's winter for onward. Thank you.
Maximo Vedoya: Thank you very much, Marcio. Let me start with the Pesquera CAPEX question. I think it's the correct number today. There are two things that, as I said, change the number. First, when we did the project more than one year ago, there was an inflation in equipment and also some inflation in construction. So, I mean, it's...
Thank you very much Marshall, let me start with the Pesky a capex question.
I think it's it's the correct number today there are two things that as I said change number first when we did the project more than one year ago. There was some inflation in equipment and also some inflation in the construction.
So I.
I mean, it's.
Maximo Vedoya: Some part logic to improve, to increase a little bit. The other important issue is that when we approved the project, some of the equipment that we bought, or a lot of the equipment that we bought, was in euros. And the euros, at that time, were $1.00, one euro.
Some part logic to improve to.
The increase that you did it the other important issue is that when we approved the project some of the equipment that we bought a lot of equipment that we bought well no dose.
With us on that time was one one dollar one amador and today, it's $1 1.0908. So there was an increase also they are those are the two main factors that make us increase the capex, we don't see so far.
Maximo Vedoya: And today it's $1.00, 1.09, and 0.08. So there is an increase also there. Those are the two main factors that make us increase the capex. We don't see them so far. [inaudible] Something else that can move that number, of course, we can have some bumps in the road. But to be honest, we don't see it today. And I think it's a quite safe number to put the 3.5. And to add to that, we are perfectly on time, so we are not taking any delay on the project, which was the second part of that. Yeah, there were no delays in any of the lines.
Something else that is going to that can move that number.
Of course, we can have some bumps in the road, but to be honest, we don't see it today and I think it's a quite safe number to put the three five.
The.
To add to that.
We are perfectly on timing so.
Any delay on depression, which will become part of that question.
Yeah, no no delays.
Any other lines.
Maximo Vedoya: Then you have the dividend question, the 3.3. I mean, this is, as we always said, I mean, we want to take steps, but steps that we can sustain in the future. And so we think that 3.3 is something that we can sustain in the future. So that's why we're putting it out. And if you see our track record, it is a big increase in the last five or six years. If you remember, before the pandemic, I think the number was 1.2.
Then do you have the dividend question the $3 three.
This is as we always said I mean, we want to take steps.
Steps that weekend.
Sustained in the future.
And so we think that the $3 three something that we can sustain in the future. So that's why we're putting and any of you can see our track record. It is a big increase in the last five or six years. He can remember before the pandemic I think the number was one two.
Maximo Vedoya: And today, five, six years later, we are in 3.3. So I think it's safe to say, except something extraordinary happened, that 3.3 is a new level, and we are going to analyze, or the board is going to analyze, as it always does, if we can increase a little bit. And you have a question in the middle about Mexico. I don't remember exactly what the question was, Marcio, about Mexico. Just about overall demand and prices within Mexico, please. Okay, I mean, demand in Mexico, and I say demand not only in Mexico but in North America is good. I mean, because it's very linked North America to Mexico.
And two days five six years later, we own three three.
So I think it's safe to say.
San Francisco any happy that the $3 three Isa new level.
We are going to analyze what the board is going to annualize that she's always asks if we can increase a little bit less and you have a question in the middle about Mexico I don't remember exactly what it was it got question Marshall about Mexico.
Just about overall demand and prices are being Mexico. Please.
Okay.
I mean, the mundane in Mexico, and I think demand not only in Mexico, but in.
North America is good.
Because it's very linked North America to Mexico.
Maximo Vedoya: I mean, on the last several conference calls, we were always talking about when the recession was coming, and to be honest, today we don't see that in demand. We see healthy demand in both countries, in the U.S. and in Mexico. Mexico, of course, is driven by industrial production.
I mean in the last several months.
First of all we are all we were always talking about when the recession is coming on to be honest today, we don't see that.
And the demand, we see healthy demand in both countries and the U S and in Mexico, Mexico is of course, driven by industrial production construction ease a little bit low on each going to be a little bit low.
Maximo Vedoya: Construction is a little bit low, and it's going to be a little bit low, the commercial market, for the next probably one or two months before prices settle down and start probably increasing a little bit again. But demand, in general, you see activity. Pretty much good.
The commercial market for the next probably one or two months.
Before prices settle down and start probably increase them ready to be again, but the man in general you see.
D V D.
Please do much good of course, they the and I don't think the increasing consumption is going to be that much as it was in 2023.
Maximo Vedoya: Of course, I don't think the increase in consumption is going to be that much as it was in 2023, when world steel demand was that demand. The consumption of steel in Mexico was going to grow by two percent that number now, more or less. And as I remember in my remarks, it grew by 14% in 2023. But again, we are seeing healthy demand. Perfect. Thanks a lot. I hope that answers all the questions, Marcio. It does, it does!
The last number of.
Of water steel was that demand the consumption of steaming.
Mexico, what's going to grow by 2%.
Remember now more or less.
Remember in my remarks, it grew up by 14% in 2020.
But again, we are seeing healthy demand.
Perfect. Thanks, a lot.
I hope that answers all the questions about itself.
It does it does thank you very much.
Marcio Farid Filho: Thank you very much. Our last question comes from Caio Greiner from the... Your line is now open. Yes, good morning.
You're welcome.
Our last question comes from Colorado.
Good and you are from.
Actual your line is now open.
Yes. Good morning, everyone. Thank you. So two questions. One quick one on an HRC prices in North America, just wanted to hear your thoughts on what do you think the next short term move is gonna be a prices are trading out of relevant premium to other regions. I mean, we haven't seen some players trying to announce even further price hikes.
Operator: So, two questions, one quick one on HRC prices in North America. Here are your thoughts on what you think the next short-term move is going to be. Prices are trading at a relevant premium to other regions. We have been seeing some players trying to announce even further price hikes, but the point is that we're seeing prices trending down. Even lead times are moving lower.
The point is that we've seen prices trending down even lead times from moving lower so just wanted to hear your thoughts on why you think that that the next move for interesting prices again, it wasn't going to be working and we expect for the first quarter.
Caio Greiner: So I just wanted to hear your thoughts on what you think the next move for HRC prices will be in the second quarter of 2024. And my second question, guys, is a broader one on Ternium's valuation and corporate simplification. Uh, I remember some time ago, a few years ago, you guys attempted a Corpus in Argentina, which didn't really move forward.
The second quarter of 2024.
And my second question guys on just just a broader one on on turnarounds of evaluation and in the corporate simplification.
I remember sometime ago, a few years ago, you guys attempted a corporate simplification in Argentina, which didn't really move forward I just wanted to hear an update on bad.
Caio Greiner: I just wanted to hear an update on that. I mean, we have a new... Tina, have you guys been in talks whatsoever with the president of the new administration, so Ternium could try to address that issue? And one more thing on the call. Do you guys think that Uzi Minas could also be a part of it?
Administration in Argentina have you guys been in talks whatsoever.
With president and with the New administration. So maybe we can so trillium could try and address that issue and one more thing on cargo corporate simplification, maybe Oh do you guys think that that Uzi munis could also be a part of this and that.
Maximo Vedoya: In the future, because when we think about valuation for both talks, it's been interesting to see that Ternium, uh, the... So when you think about the company's corporate structure, I mean, there could be maybe some room to simplify all that and try to. I just wanted to hear your thoughts on the latest updates on COVID-19 and on those two items. Thank you very much. Thank you very much, Caio. I will start with the second one. And also, if Pablo wants to add something, please do so, Pablo. And then the first one, Caio.
Because when we think about valuation for both stocks I mean, it's interesting to see the attorney them. The the controller is actually trading at a discount to do so so when you think about the about the company's corporate structure I mean, there could be maybe some room to simplify all of that and try to get a re rating.
For the stock so I just wanted to hear your thoughts on the.
The latest updates on corporate simplification on on those two items. Thank you very much.
Thank you very much.
I will start with the second one.
And also if Pablo wants to add something please pablo.
And then the first one carrier corporate simplification is still.
Maximo Vedoya: Corporate simplification is still on our agenda, at least on the agenda of Ternium Management and the Board. We don't have anything to inform you about that yet. We haven't talked with the new government about this issue. I mean, the government has a lot of things going on in their hands. But I think it's something that, at some point, this government should be able to analyze. As I always said, this is a transaction that favors Ternium, it favors Ternium Argentina, and it favors the government. So, if we reason... With that in mind, it should be something that can happen at some point.
On our agenda at least on the agenda of 10, New management and the board.
Hum.
We don't have anything to inform about that yet.
We haven't talked with the new government.
These are of this issue.
I mean, the government has a lot things going on in their hands the new government.
But I think it's something that that at some point.
This government should be able to analyze it.
As I always said this is a transaction but tables.
You could save us plenty of Argentina, I tell you what the government. So he free E. If we wish them well.
With that in mind, it should be something that at some point kind of happened but.
Maximo Vedoya: But... To be honest, we haven't talked about anything like that. Ushinibia is kind of different because, as you remember, we have an agreement with our partner, Nippon Steel, there, and so we are not going to do anything for the next... year, year and a half. In the future, it could be something, but today I think we are happy where we are, in Uciminas, and working to improve. Oh, she means it.
To be honest, we haven't talk anything like that.
Well she need is a it is kind of different because as you remember we have an agreement with our partner.
Nippon steel, there and and so we are not going to do anything for the next.
Yeah, yeah in the half.
In the future could be something.
Today I think we are happy on where we are.
So you mean us and working to improve.
Well she Minas.
Maximo Vedoya: Yes, Caio, hi, how are you, Pablo? Sorry, Pablo, go ahead. Well, I just wanted to say, as you said, we have been discussing this for a long, a very long period of time. Clearly, it's part of our strategy. Clearly, it's in our minds.
Yeah, Hi, how are you Paul.
Uh huh.
Yeah, sorry publicly yet.
Nonetheless, I wanted to say that as you said we.
We have been discussing do for a very long period of time clearly is part of our threat basically everything that was mined and us.
Pablo Daniel Brizzio: And as soon as we see the chances to move forward with this, it's clearly something that we consider important for the future of Ternium from a different standpoint, and clearly valuation is one of those. It's a follow-up to the... Sponsored ADR, Ah! Ah!
As soon as we see returns is to move forward with this clearly something that we consider.
Important for the future of turned him from different at some point and clearly what valuation one of that pool.
Yeah.
And just one follow up on that.
Corporate simplification I mean, how do you guys do you have the possibility of the listing.
You mean us two years down the road when the on the agreement.
With Nippon that's pretty much expires.
Pablo Daniel Brizzio: That's a difficult question to answer, Caio, because not only do we have an agreement that Maximo mentioned that will take some time for us to move forward, but there are other shareholders in Yusimina, and the corporate laws and regulations in Brazil are a little particular, so they are quite complicated. [inaudible] As I said, corporate simplification is in our minds, so it's something that we are always thinking about, but it's not something that we can move forward with right now, so it's very difficult to speculate on that at this moment. Clearly, it's something for me to start to think about the future in relationship to that. The closer one that we have, and hopefully we'll have the chance to analyze it more in depth, is the Argentine one, which is probably easier for this new government to do than in the past.
That's a difficult question to answer because not only do we have an agreement that Max.
Max you mentioned that it would take some time for us to move forward with them there are others of holders.
In Mena.
The corporate.
Loss.
So your emissions in Brazil in particular, so they are quite complicated we know there are some.
Securities instead of as bad.
That regulations, but it's not something that we are.
We're seeing at the moment.
As I said.
Got corporate simplification is in our minds.
It's something that we all were thinking about but it is not something that we can move forward right now.
If it got to speculate on that at this moment.
Nearly is something for something in the future in relationship to that the closer one though would have.
Hopefully, we will have the chance to analyze it more in depth.
Oftentimes they are sometimes one which is probably these new government easier to do that in the past.
Yeah.
Great. Thank you.
Pablo Daniel Brizzio: So, oil prices in the U.S., well, yeah, you're right, Caio, that prices have been coming down in recent weeks, in the last three, four weeks. As I said, it's not a problem of demand, but it is a problem of imports that are coming mainly to the U.S. and some part also to Mexico. So that's the main reason.
So corporate prices in the U S, but yeah Youre right Guy you that breakfast has been coming down and the recently weeks in the last three or four weeks.
As I said, it's not a problem of the demand, but it is a problem of imports that are coming mainly to the U S and some some parallel just like in Mexico.
So that's the main reason the good news is that demand is already is still there.
Maximo Vedoya: The good news is that demand is already there, and I think this is going to be something that stabilizes in the near future, going much further down. As I always said, there is a new floor or a new Sponsored Advertisement. Thank you very much, guys. You're welcome, Caio. We don't have any pending questions at the moment.
And I think this is gonna be something that.
It's going to stabilize in the near future I don't see prices going much further down I always said the reason you a floor or a new stand that prices in North America that is around a little bit higher of 900 leap. So I don't think.
<unk> are going to two to change.
Operator: I'd now like to hand back over to Ternium's CEO for closing remarks. OK, thank you again all for participating in today's call. As usual, please feel free to contact us for any questions or comments. Thank you very much, and goodbye. I'm sending today's call. Have a wonderful day.
Again, because the demand is there and we know imports for the top for the following months as in May June July are coming much more lower so I am positive all all of that.
Yeah.
Thank you very much guys.
Welcome gentlemen.
Got you.
Yeah.
We don't have any pending questions as at the moment I'd now like to hand back over to rich.
Yeah.
For her closing remarks.
Okay. Thank you again for participating in today's call as usual, please feel free to contact us for any questions or.
Comments, thank you very much and goodbye.
[noise] attending today's call have a wonderful day.
Hello.
Yeah.