Q1 2025 Ternium SA Earnings Call
Hello, everyone and welcome to <unk> first quarter 2025 results call. Please note that this call is being recorded.
After the Speakers' prepared remarks, there will be a question and answer session. If you'd like to ask a question during that time. Please press star followed by one on your telephone keypad.
Speaker Change: I'd now like to hand, the call over to Sebastian Marti. Please go ahead.
Sebastian Marti: Good morning, and thank you for joining us.
Sebastian Lucky: My name is Sebastian Lucky and I am trying to split out what I hope I'm biased.
Sebastian Marti: Yesterday getting released its financial results for the first quarter of 'twenty five is.
Sebastian Lucky: This call is meant to provide additional context throughout the presentation.
Maximo: Today by Maximo me, though yeah, Kenny Chief Executive Officer, and Pablo we took that as Chief Financial Officer, who will discuss the company's business environment and performance.
Speaker Change: I'll take those remarks, we will open up the floor to your questions.
Speaker Change: Before we begin I would like to remind you that this conference call contains forward looking information and that actual results may vary from those expressed or implied.
Speaker Change: Yeah that's helpful. Thanks.
Speaker Change: It's a huge essential formation.
Speaker Change: Page two in today's webcast presentation.
Speaker Change: You will also find any references to non <unk> financial measures reconciled to the most directly comparable.
Speaker Change: Comparable <unk> measures in the press release issued yesterday.
Speaker Change: Got it.
Speaker Change: Turn the call over to Mr.
Speaker Change: Good morning, and thank you all for joining us Tony and conference calls.
Speaker Change: The first quarter of the year, we reported a sequential increase in EBITDA, driven by improved margins and slightly higher shipments.
Speaker Change: Trade tension in recent months have created a climate also incidentally.
Speaker Change: Facing.
Speaker Change: Business confidence unforeseen risks to global economic growth.
Speaker Change: The other there is a consensus that I'm sort of trade practices in recent decades have adversely impacted manufacturing around the world. Many countries are now addressing this issue, which is a promising development.
Speaker Change: In this content the operating environment in Mexico crashing challenging certainly is affecting.
Speaker Change: Investment and consumption.
Speaker Change: However, the current administration has shown support for reducing reliance on Asia suppliers, we seen the north American regional market.
Speaker Change: And my view is that they are doing a very good job in this front.
Speaker Change: In this line the recent announcement of the land in Mexico.
Speaker Change: James <unk> seen just realization and import substitution to strengthen north American supply change. The plan include strategic strategies to attract investment and increase the local and regional content of manufactured goods through.
Speaker Change: Nearshoring, if a chunk of development support for them.
Sebastian Marti: S M.
Sebastian Marti: In addition, the future renegotiation of U S. MCA presents a significant opportunity for Mexico to further align it straight.
Sebastian Marti: Great strategy with that of the United States, while also enhancing the defense of America Mexican market against unfair trade practices from Asian countries.
Sebastian Marti: Moving now to Brazil.
Sebastian Marti: The local market is showing resilient steel demand, but the issue was unfair trade practices persist without significant year over year increase in imports during the first quarter of this year.
Sebastian Marti: Brazilian trade a third piece, we tend to be released preliminary results are in.
M T dumping investigations on imports from China of cold rolled steel corrosion resistant steel.
Sebastian Marti: You didn't define substantial dumping margins.
Sebastian Marti: But unlike the usual practice in many countries. The authorities did not recommend that Larry and position of anti dumping sorry, a final determination is expected to be made in October.
Sebastian Marti: In Argentina, the macroeconomic situation is showing signs of improvement which provides optimism for what she meant in this market India coming quarters.
Sebastian Marti: Yeah.
Speaker Change: In these demanding trade environment. Our goal is to enhance study its competitiveness by increasing operational efficiency and reducing costs basically J b in recent quarters, we have been focusing on several initiatives that have already yield good results on <unk> numbers.
Speaker Change: We will continue to implement similar rock shows in the coming orders to maximize the profitability of operation. During these uncertain times for the second quarter, we anticipate well anticipate achieving a double digit EBITDA margin supported by the increase in realized prices in Mexico.
Speaker Change: Well as by our cost reduction initiatives.
Speaker Change: I would now like to provide an update on our expansion project in Mexico. Following the completion of our most recent review.
Speaker Change: The Pea cleanup, finishing lines have already started operation and they were cold Rolling mill and Calvin Klein are scheduled to begin on time by the end of December.
Speaker Change: They still slapped me DRA facilities no not the upstream project and now anticipate to be operational by the fourth quarter of 2026, which represent a slight delay from the original schedule.
Speaker Change: In this review the total capex for the cone expansion project a different device.
Speaker Change: Two 4 billion, representing an increase of.
Speaker Change: <unk>.
Speaker Change: Approximately 16% compared to our previous estimate disclosure.
Speaker Change: In February of 2024.
Speaker Change: The primary focus contributing to the project's cost increase right.
Speaker Change: Assembly and construction prices, a larger volume of structures and civil works. The project will put me in a whole new competitive position integration of advanced technology in our peaking finishing cold rolling and galvanizing lines.
Speaker Change: We will not only increase operational efficiency, but also enhance product quality and expand our product range. In addition.
Speaker Change: Completing the upstream project, we will be able to provide our customers with a complete.
Speaker Change: Project range up to the most demanding industrial applications.
Speaker Change: We'd be the first time that an electric arc furnace based meal will be able to produce exposed material automotive steel with significantly lower C. O two emissions that previously possible.
Speaker Change: In addition, this expand still capacity will enable us to meet our.
Speaker Change: Our.
Speaker Change: The expectation of growing melted and poured requirement in the U S M T a region.
Speaker Change: Let me conclude by my prepared comments with some final remarks global trade is currently undergoing major changes, resulting in considerable market uncertainty.
Speaker Change: However, adjustments where necessary as China's progress with no competitive trade practices have contributed to the decline in manufacturing employment and value addition over the past two decades in North America, both the U S and Mexico administration are working to address this issue there.
Speaker Change: It would be we still expect an agreement on trade issues between the two countries.
Speaker Change: Although uncertainty and volatility are currently affecting consumption and investment.
Speaker Change: Hum.
Speaker Change: Impacting steel demand in Mexico market, we expect the implementation of Plum, Mexico to work together with a better alignment of Mexico trading trade strategy with that of the U S will enable discounted to better define the region against unfair trade. This would result in a gradual shifting production from Asia and other countries.
Speaker Change: To the U S M C a region.
Speaker Change: All in all I expect the U S MCA to become stronger and better prepare to group to continue growing.
Speaker Change: Pablo.
Pablo: Please go ahead with a review of stunning performance in the first quarter of this year.
Speaker Change: Thanks, Maximo and thanks, everybody for being in this conference call.
Speaker Change: Let's now move to the webcast presentation for a detailed review of our finances out yourself.
Speaker Change: If we move to page three you will see the adjusted EBITDA improvement this quarter.
Speaker Change: This was driven mainly by better margins like are you still in iron ore shipments the main contributor to the slight improvement in the margins. Both a decrease in steel cost per ton, which was partially upset by a decline in realized steel prices. Looking ahead, we expect a sequential increase.
Speaker Change: EBITDA in the second quarter supported by higher realized prices on another slight decrease in cost per ton.
Speaker Change: With together to help our adjusted EBITDA, unless you get to double digit territory as Maximo.
Speaker Change: Now moving to next slide net income for the first quarter of 2000 $25 million to $142 million.
Speaker Change: Figure includes the 45 million provisional adjustment charge related to the ongoing litigation in connection with the acquisition of our participation.
Speaker Change: It does not reflect both the interest accrual.
Speaker Change: Precision of the Brazilian real against the U S dollar during the quarter.
Speaker Change: I've just got it.
Clearly the most with judge was 188 million, marking a significant improvement over the prior year quarter.
Speaker Change: The main differences net financial result, improved by $130 million, mainly due to the.
Speaker Change: The foreign exchange gain realized gain from the partial divestment of bond holdings.
Speaker Change: Matt.
Speaker Change: Now, let's take a look at the performance of our steel segment on page five.
Speaker Change: This quarter, we saw higher shipments in Brazil, and other markets, partially upset by lower sales volumes in Mexico.
Speaker Change: Entering the second quarter, we expect to see shipments to remain stable on a sequential basis.
Speaker Change: Mexico volumes are anticipated to remain subdued.
Speaker Change: It will go with tariff situation in Argentina humans are anticipated to increase during the second quarter supported by their employer.
Speaker Change: Market economic environment. Meanwhile, in Brazil, you'll see me, that's anticipate sequentially favorite achievement in the city.
Speaker Change: Where do we see steel demand.
Speaker Change: In the other market.
Speaker Change: Or do you see a decrease in shipments to the U S market.
Speaker Change: Moving on let's say the food segment was slightly higher in the first quarter.
Speaker Change: Although revenue per Boe declined.
Speaker Change: Declined mostly sequential drop in raw material costs and purchase and that's cost us with efficiency improvements in our facilities supported better medicine.
Speaker Change: Yeah.
Speaker Change: Let's move to slide seven for a summary of the mining segment performance shipments increased slightly quarter over quarter and rose 14% year over year, we were a bit higher production levels in Mexico and in Brazil.
Speaker Change: The sequential decrease in margins in the first quarter was due.
Speaker Change: Cost per tonne, which was partially upset by higher realized prices.
Speaker Change: Moving to the final slide presentation, we can review the cash flow performance and balance sheet.
Speaker Change: We continue to show significant capex level this quarter as well.
Speaker Change: Made progress on the construction of a new facility.
Speaker Change: Yeah and that you said.
Speaker Change: Mexico I mentioned earlier, the total cost of the toxic what's increase compared to our latest review, which was in February last year of afford me billion Newark.
Speaker Change: One four.
Speaker Change: For William Hello, really invested as of March.
Speaker Change: Looking ahead, the remaining Capex is expected to be roughly $1 4 billion over the next nine months of 2025.
Speaker Change: 1 billion next year and to have the invoice.
Speaker Change: Considering both the expansion project.
And the rest of our Capex investment we project turning to continue to have capex in 'twenty 'twenty five to be around $2 $5 million.
Speaker Change: Finally, these video very Capex is supported by a very strong balance sheet.
Speaker Change: With a net cash position of $1 $3 billion at the end of March 2025.
Speaker Change: So we'd be we conclude our prepared remarks, and we're ready to take any questions you may have leased.
Speaker Change: Please operator.
Speaker Change: The Q&A session.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: We are now opening for a question and answer session.
Speaker Change: I ask a question. Please press Star then.
Speaker Change: One on your telephone keypad, that's titanfall day, one on your telephone keypad, we will pause for a brief moment to me cleanup questions pardon me.
Speaker Change: Yeah.
Speaker Change: Okay.
Your first question comes from the line of Carlos de Alba, marking and Morgan Stanley. Your line is now.
Speaker Change: Thank you very much and good morning.
Speaker Change: So first question is regarding the situation in Mexico, we will see what happens with GDP. This morning, I think he has he's gonna be announced but most likely.
Speaker Change: Mexico as you know, taking a conversation or a very very low growth environment and so I hear your comments on the industrial customers are still doing all right and you just have to believe that they're not making adjustments. So you can share a little bit more colors.
Speaker Change: Color around what maybe beyond just the next second quarter or the ongoing quarter.
Speaker Change: And what sort of measures are they taking taking or planning on taking given the uncertainty.
Speaker Change: Auto supply chain and also the impact that he would have on other businesses in the Mexican economy, and then the second question.
Speaker Change: Has to do with the level of.
Speaker Change: Margins and profitability overall that the company is a U S.
Speaker Change: For the second consecutive quarter.
Speaker Change: And actually.
Speaker Change: Last year in the past, we've only seen these level of margins and if I remember correctly in 2009 2015.
Speaker Change: And 2019.
Speaker Change: 19.
Speaker Change: So.
Speaker Change: In those instances, we had severe crisis not only in one of the countries that you operate like Argentina and to be fair, Indiana had exposure in your business overall has decreased dramatically. So.
Speaker Change: I, how do you what can you tell us when do you expect things to really improve the cost prices in your biggest market not necessarily low in Mexico.
Speaker Change: I really I'm struggling to understand what.
Speaker Change: What we can see an improvement in operation a brain module.
Speaker Change: Yeah.
Scott: Yes, Scott Hello, how are you Ah well, let me start with Mexico.
Scott: What is happening in Mexico, I don't know the numbers of the GDP in the first quarter, so I'm not going to comment on that.
Scott: What I can say is what is happening in the steel industry and Youre right I mean apparent consumption of steel decrease.
Scott: Almost 5%.
Scott: In 2024 last year. So we are operating at a level of consignment shouldn't that.
Scott: It's lower than in the past.
Scott: This is mainly due for the commercial market.
Scott: I mean, the infrastructure and construction in Mexico.
Scott: But because of the new government and they change I'll call them unusually big infrastructure projects.
Scott: And with it.
Scott: Ongoing are the outgoing.
Scott: Ration and the New administration always take time to lease and also construction is not doing very well in Mexico.
Scott: So that's what is happening in Mexico and steady demand.
Scott: I expect.
Scott: That.
Scott: Demand is going to start increasing in the following quarters, especially in the commercial market because fresh and it has to pick up.
Scott: And the numbers are not going to be.
Scott: Yeah.
Scott: I mean, a significant increase but theyre going to be good enough to be better.
Scott: The other bodies go.
Scott: Imports are coming down and we are gaining are we're gonna start gaining market share with the new lines.
Scott: Summing up to date in the Piscataway project, So I think.
Scott: Overall consumption is not very good as you said, but I think our shipments are going to start moving forward in the second half of the year because all of these.
Scott: So I caught my eye on Mexico question.
Scott: With this.
Scott: You you talk also about industrial customers key Leds.
Speaker Change: Yeah, Ethan uncertainty and and he has to do or it's going to be resolved when.
Speaker Change: Ah the trait.
Speaker Change: Discussions between Mexico, and the U S. Our finish I don't know when this is going to happen in time, but it's going to happen.
Speaker Change: At some moment in time.
Speaker Change: In my initial remarks.
Speaker Change: I, we are operating on the assumption.
Speaker Change: That the U S. MCA is another.
Speaker Change: Only going to go forward, but it's going to be stronger.
Speaker Change: So we will continue.
Speaker Change: <unk>, that's the ultimate outcome of these.
Speaker Change: Yes.
Speaker Change: Negotiations.
Speaker Change: Second question was.
Speaker Change: Literally minds at Pablo Okay, Okay, Yeah, hi.
Speaker Change: Hi, Carlos how are you.
Speaker Change: Let me make a couple of companies universities that Youre right that there was a decrease in margins in the latest quarter, but let me point out that the.
Speaker Change: The situation that we saw in 'twenty to 'twenty four was a decrease of margin through the year. So we started with very good margins and then we'd be crazy then through the year until the fourth quarter would reach probably lowest in this.
Speaker Change: Sirius which was 7%.
Speaker Change: Going with the decline in prices in the market now what we're seeing is probably.
Speaker Change: Expectations the opposite situation, we have already in March in the first quarter, which is not only higher of course not that significantly.
Speaker Change: Compared to the fourth quarter or about anything like we've been marching that we saw in the third quarter of last year.
Speaker Change: Secondly, with our Reis se maximal I mentioned these are the very beginning our expectations whatever they're modestly in the second quarter, which is of course, we took vehicles will position us or what was it last year will be better than the third quarter.
Speaker Change: Last year, so again.
Speaker Change: There is a lot of uncertainty seems to be clarified issues to be negotiated but the expectation is for this to sustain or even.
Speaker Change: Be a little water moving forward so is that right.
Speaker Change: We follow we shouldn't be able to.
Speaker Change: We increased our medicines through the rest of the year and be in a position to be at least are all above the levels that we saw last year. So if that situation is.
Speaker Change: He is the one that was a good year.
Speaker Change: Will we see you in the coming quarter, we would return to more or at least one of them margins that we have seen in the last two quarters the fourth the first quarter.
Speaker Change: But our view.
Speaker Change: Hmm.
Speaker Change: The situations that we can't predict from all of them.
Speaker Change: Hopefully answering your question Carlos.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: The next question comes from the line of <unk>.
Speaker Change: Oh Whoops research your line is now open.
Speaker Change: Yeah, Hello, good morning.
Speaker Change: Good morning.
Speaker Change: I wanted to ask about cost a little bit further.
Speaker Change: You talked about more cost declining into Q2. So could you elaborate on is that going to be the lowest or are there still areas to continue to cut costs.
Speaker Change: Yeah.
Hi, Timna how are you.
Speaker Change: Yeah.
Speaker Change: There are there issues that.
Speaker Change: Moving because you know that we have put into the polka with orders and so we are still.
Speaker Change: Seeing the reduction in cost.
Speaker Change: That we saw in the last quarter, especially the slab, although some raw materials. What your model has been producing in the law.
Speaker Change: Yes.
Speaker Change: A couple of quarters.
Speaker Change: We have reflected building.
Speaker Change: We continue to expect to see that I mean, the second quarter that instead of them.
Speaker Change: Also maximo mentioned remarks, but we are going through a broad I'm of course reaction.
Speaker Change: And that's important.
Speaker Change: In fact during the first quarter and we are expecting these to continue so again, we are saying already that our margins will move towards that in D. C region that.
Speaker Change: Of course, the most interesting part of that would be the impact of price we said.
Speaker Change: In our sales, especially the Mexican market, but also an impact to the cost reduction program we.
Speaker Change: Our expectation is.
Speaker Change: But to continue of course, we need to see how the raw material side have not moved forward on in the coming in the coming quarter to have a full answer to your question, but it's not that we have.
Speaker Change: Finalize our plans we continue to work in that and the expectation for US is to continue having.
Speaker Change: Production cost in the coming in the coming quarters.
Speaker Change: Okay, great. Thank you and then with regards to volumes I know you gave volume guidance, but broadly speaking I think you have still quite a bit of spare capacity in Mexico.
Speaker Change: Assuming a better demand and clarity.
Speaker Change: Talk about what order of magnitude volumes tick gratitude to take some share.
Speaker Change: Yeah.
Speaker Change: We're still getting imports.
Speaker Change: Or has that trade flow kind of stopped both ways lately. Just wondering if you can elaborate on that opportunity for further volumes even before.
Speaker Change: And just yesterday my guess, but let's just talk about maybe some market share opportunities that you might.
Speaker Change: Progressive.
Speaker Change: Yeah, Tim that of course, we are in our capacity to increase volumes in Mexico today.
Speaker Change: The input cost decrease.
Speaker Change: From.
Speaker Change: Yeah.
Speaker Change: I am going to take rough numbers about 600000 tons for.
Speaker Change: So flat products in.
Speaker Change: In the middle of 2024, or two day 400000 tons.
Speaker Change: Every month, so there is a huge.
Speaker Change: Possibility of increase in that says most of those imports are industrial customers. So we are going through.
Speaker Change: The process of certifying all our products in that customers.
Speaker Change: 70% of that imports come from the U S from Japan and Korea.
Speaker Change: So I think there are.
Speaker Change: The places or customers that.
Speaker Change: We will be able to get a share of that imports.
Speaker Change: So again, we have the capacity today, and we are working and trying to increase so there is opportunities it's up to us how much we get.
Speaker Change: Got it I appreciate that thank you.
Speaker Change: Welcome.
Your next question comes from the line of Xiaomi barrel of Bank of America. Your line is now.
Speaker Change: Yeah.
Speaker Change: Yes. Good morning, Thank you for the opportunity.
Speaker Change: So my first question is on cash returns right in Sarnia has been consistently increasing its dividend per share ratio over the past years right yet in 2020 with the pandemic the company off to suspend the dividend payments. So wanted to see if you could discuss how the trade tension escalation of the announced tariffs could impact those dish.
Speaker Change: With regards to the Dps if at all going forward.
Speaker Change: And then secondly, just wanted to see if you can focus a little bit more in Argentina, and you know in light of the recent IMF agreement, how you see the outlook for the steel sector changing the country and if you know those macro improvements you know could lead you to eventually expand capacity in Argentina.
Speaker Change: Thank you.
Speaker Change: I'll tell you how are you let me much about the.
Speaker Change: First question in relationship to the cash return.
Speaker Change: First of all Yokohama was right we have been increasing.
Speaker Change: Oh gosh.
Speaker Change: Payment in relationship to that besides the yogurt, but then it.
Speaker Change: If you remember we have always said is that whenever we talk bad decision of increasing our dividend.
Speaker Change: Asia is because we believe that we've got some things that are.
Speaker Change: During the.
Speaker Change: Right.
Speaker Change: The long video or original video I would continue to say per se.
Speaker Change: You know, but even that we are in the median of our big Capex plan.
Speaker Change: Capex plan that we have in our history. We continue to have a very solid financial position on these two proposals a thing.
Speaker Change: But of course, we are in the middle of Cellcom PTO.
Speaker Change: Video we are in the middle of negotiations, we don't know exactly how things will land on the impact of the real impact that we would have.
Speaker Change: You can grow.
Speaker Change: All right.
Speaker Change: Mexico worldwide, although three of them.
Speaker Change: But we haven't specifically with the World Cup, but.
Speaker Change: Taking into consideration everything that we have.
Speaker Change: Yeah.
Speaker Change: But most of them are mentioned in the opening remarks on the view that we have on this process as of today, we continue to have exactly the same position of obtaining.
Speaker Change: These kind of off of that.
Speaker Change: [laughter].
Speaker Change: Good morning, Kyle Argentina, Yeah, the outlook improving for the steel sector and for the economy in general I think that what the Argentina government is doing well, it's clearly a positive.
Speaker Change: Theyre still.
Speaker Change: I know, it's a free scores in Argentina.
Speaker Change: I don't want to say that.
Speaker Change: We are over the problem inflation is too high.
Speaker Change: But in a sense shipments of Argentina, probably Q1 would be the lowest in the last skus.
Speaker Change: Halloween Skus are going to increase.
Speaker Change: Our projection is at least 20% next SKU off of.
Speaker Change: The increase in shipments and we don't see any decreasing in the third and fourth SKU.
Speaker Change: So yeah expansion in that <unk>, we are not seeing yet that we have spare capacity in that.
Speaker Change: Our Argentina meals. So I think we are going to be able to sustain or to growth. Those shipments. We just spare capacity we have.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you that's very clear amongst human Pablo.
Speaker Change: One competitor.
Speaker Change: Got you.
Speaker Change: Your next question comes from the line of Henry can my Cats of Goldman Sachs. Your line is now open.
Speaker Change: Yeah.
Hi, Thanks for taking my question.
Speaker Change: Just wanted to better understand the key reasons to do it.
Speaker Change: Kris.
Speaker Change: On the Capex and the extended deadline, just just wondering just to understand them.
Speaker Change: If it was more of a mistake from the budget plenty or was there any operational issues during the construction.
Speaker Change: And just to make sure when should we see this increasing topics should this hit this year.
Speaker Change: There's additional.
Speaker Change: 500 minutes should it be next year or so are you just distribute adapt overdo it over the two years.
Speaker Change: Sure.
Speaker Change: Yes, Thank you and we can I mean, the capex youre going through and see that over the project I mean D. C. R. Just to be give you an idea this year is going to be.
Speaker Change: One well I know the total capex of seven U D. C is going to be two five.
Speaker Change: Next year is going to be around two.
Speaker Change: In 2027 around one <unk>.
Speaker Change: That's the total from the project I would tell you that D C. It from that what I would tell you the project is indeed.
Speaker Change: It's one for one.
Speaker Change: One four already invested in the project until March of this year.
Speaker Change: Then in.
Speaker Change: The rest of the year the nine months the rest of is going to be around one four.
Speaker Change: 20 to 36 around 120 27.
Speaker Change: 200 million. So that's the idea of the Capex.
Speaker Change: The decrease as I said.
Speaker Change: We received a different.
Speaker Change: Budgetary process and then when we start negotiating the the reality.
Speaker Change: A lot of contract game with inflation and came with increase in some of the prices.
Speaker Change: And that's the main reason why we are.
Speaker Change: Increasing the the the Capex. There is also some increase in the structure in the amount of a structure that we have to have especially in the DIY facility.
Speaker Change: And the steel shop, but the main reason is increasing prices of the vendors and of the.
Speaker Change: Of all the construction.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Youre welcome.
Speaker Change: It's just like to ask a question. Please press star followed by one on your telephone keypad. That's time, followed by one on your telephone keypad.
Pause for a brief moment to make for any questions.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of clean year of UBS. Your line is now open.
Speaker Change: Yeah.
Speaker Change: Hi, good morning, everyone. Thank you. So two questions here the first one circling back to the U S Mexico relationship.
Speaker Change: I know that you mentioned that your base case is currently for that that the U S. MCA agreement is going to get stronger and that this is going to positively impact the the the outlook for the region as a whole.
Speaker Change: But the fact is that for steel has been negative for Mexico right. I mean, we're seeing the U S Mexico prices.
Speaker Change: Prices for each or see specifically decoupling.
Speaker Change: And I wanted to see how do you all see this going forward because at the end of the day in Mexico also has a 25% tariff, but it also has several trade agreements with.
Speaker Change: So I'm not really sure how to interpret.
Speaker Change: The recent moves to the Mexican supply demand balance for a four for steel and then more specifically where do you see the new pricing agreement ethical Libya at this new at this new market environment. The second question.
Speaker Change: And again.
Speaker Change: I know that but the base case is for us for a stronger U S. MCA agreement, but I wanted to explore a little bit more the downside or the bear case as to how do how does journey and see its capital allocation in this scenario.
Speaker Change: And that's an area that the Mexican economy slows down that U S. In fact restrict imports of circle goods are coming from Mexico.
Speaker Change: Turning to position itself in a bear case scenario, which which the U S Mexico.
Speaker Change: The U S Mexico relationship because it's actually not it's not the same as it has been I don't know.
Speaker Change: Sorry, if I may squeeze the squeeze in a final real quick one how do you see the reason with the recent changes in FX controls in Argentina impacting your ability to pay dividends.
Speaker Change: From turning them at Argentina to the to the controlling company. Thank you.
Speaker Change: Thank you Kai you well I thought I tried to answer the first and second question altogether U S. Mexico relationship in steel, particularly as I said.
Speaker Change: One thing is the global picture and where we think are going you are right about steel steel east still a problem.
Speaker Change: Between the U S and Mexico.
Speaker Change: My view is that.
Speaker Change: And I think there's a view of the Mexican authority of the Mexican government.
Speaker Change: Is that.
Speaker Change: Steel and aluminium has to be solved.
Speaker Change: Yeah.
Speaker Change: More quickly than that in the long term.
Speaker Change: I mean, the when you see the what is happening with the steel industry between Mexico and the U S.
Speaker Change: I mean, it's clearly that Mexico is not.
Speaker Change: The problem for the U S steel industry.
Speaker Change: He views take the numbers of the two or three new 232 of theaters, where you put steel and steel derivatives.
Speaker Change: The U S has a huge surplus in the export to Mexico.
Speaker Change: Then the export from Mexico to the U S.
Speaker Change: In rough numbers I think that there are that the U S export <unk>.
Speaker Change: $17 billion.
Speaker Change: In 2024, so a little bit more in Mexico export $11 billion still and still everybody sites I'm talking about.
Speaker Change: So it doesn't make sense.
Speaker Change: To put tariffs to Mexico, or the Mexico has to put tariffs to the U S.
Speaker Change: I hope, we don't get to there, but at the end.
Speaker Change: If we have to get there.
Speaker Change: I mean, we are going to be.
Speaker Change: Better off.
Speaker Change: Again, it's not.
Speaker Change: The idea and we are working very close with Mexican administration with the Mexican government.
Speaker Change: To try to.
Speaker Change: Meg visa are very reasonable negotiation.
Speaker Change: So I I think that MTN because the logical is to have an agreement is that we are going to have an agreement I mean, I think it's in the best interest of the U S. Steel industry also do have an agreement in this the other issues that we have to work together.
Speaker Change: Arthur steel industry to try to enhance the market I mean, there are.
Speaker Change: Roughly speaking 11 12 million tons of finishing products that today are finishing steel products and this is nuts I'm not taking account devry ready products.
That are coming to the U S into Mexico from Asian countries. While the agreement has to do he said we have to work together.
Speaker Change: To enhance the market and defend.
Speaker Change: Theyre region against those imports are not put tariffs between Mexico and the U S. Both ways. So I think that's.
Speaker Change:
Speaker Change: Well, we have to go.
Speaker Change: Ina bearish scenario of Mexico, I would said Theres still a lot of.
Speaker Change: Market to gain in Mexico, and we are working to that so we are of course you have the capacity we are going to have in some cases, we don't have today.
Speaker Change: The product of the quality of the product to go to send market within your investment we are starting to get done. So we are going to go.
Speaker Change: Little by little gaining market share of those 400000 tons of flat part of that today every month.
Speaker Change: Fortunate to Mexico, So we have a huge market to grow scale.
Speaker Change: The third one Pablo Okay yeah.
Speaker Change: So.
Speaker Change: You mentioned the effects and measure it.
Limiting hasn't seen that first of all it is.
Speaker Change: Very positive to this because we know that that was one of the uncertainties, but I can't think of a market that's how the ASIC development.
Speaker Change: And then getting out well from the capital control or a bad scenario so that on their own.
Speaker Change: The very positive side. So you have these uncertainties.
Speaker Change: Over.
Speaker Change: Yeah.
Speaker Change: You'll know that the program wasn't limited hasn't seasonality say complete openness of the market.
Speaker Change: Within our population, but there is still some limitations for companies.
Speaker Change: The government is asking for you also.
Speaker Change: Specifically.
Speaker Change: On dividend payments a couple of things that you can do as a company you have to do that but clearly that is not an open market.
Speaker Change: So the whole thing.
Speaker Change: The government allowed was for such an already during this year.
Speaker Change: That would be familiar our 11th we paid.
Speaker Change: In dollars if you want so all putting in something that isn't anything.
Speaker Change: During 2025 would be able to read.
Speaker Change: After these numbers are released.
Speaker Change: Let's say in April next year so.
Speaker Change: From now on.
Speaker Change: It's something that like any company I don't think that the.
Speaker Change: Three we are.
Speaker Change: They've asked for more.
Speaker Change: Please go on from there.
Speaker Change: Ladies and stock.
Speaker Change: Being paid in the last year and the government is now.
Speaker Change: But we don't have yet the final details the issuance of a bond similar to the one the government issue.
Speaker Change: The question of unpaid commercial debt with suppliers to Argentina that was all the way to view the government that was very successful. So the government is planning to do exactly the same on allowing companies to buy these wants to pay.
Speaker Change: Oh, no that exceed a certain restrictions.
Speaker Change: We don't have to dig into the confusion because if there's no I can't do that but there is a path for companies to moving the additional thing to read into there.
Speaker Change: The immediate future.
Speaker Change: Hopefully I answered your questions.
Speaker Change: Yeah.
Speaker Change: Tess. Thank you broke so much.
Speaker Change: Thank you Danielle.
Speaker Change: There are no further questions I'd now like to hand, the call back to CEO. Please go ahead.
Speaker Change: Okay. Thank you very much we all we appreciate very much your participation today's call and we welcome your feedback.
Speaker Change: I Hope you talked to you in the next conference call. Thank you very much.
Speaker Change: Thank you for attending today's call you may now disconnect Goodbye.
Speaker Change: Yeah.