Ternium ((TX)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Ternium’s recent earnings call presented a balanced outlook, highlighting both achievements and challenges. The company reported notable improvements in EBITDA, net income, and operational cash flow, reflecting a positive trajectory. However, hurdles in the Brazilian market and shipment declines were also acknowledged. Ternium’s commitment to cost reduction and sustainable development underscores its forward-thinking strategy.
Improved EBITDA Performance
Ternium’s adjusted EBITDA saw a significant 25% increase in the second quarter, primarily driven by stronger realized steel prices in Mexico and operational improvements. This boost in EBITDA underscores the company’s ability to capitalize on favorable market conditions and enhance its financial performance.
Positive Net Income
The company reported a net income of $259 million for the second quarter of 2025, with an adjusted net income of $299 million when excluding provisions. This positive outcome was supported by improved operational performance and favorable deferred tax results, highlighting Ternium’s effective financial management.
Cost Reduction Initiatives
Ternium is actively pursuing a $300 million cost reduction target. This initiative focuses on procurement improvements, process stability, and enhanced productivity measures, aiming to bolster the company’s financial health and operational efficiency.
Strong Cash Flow from Operations
The second quarter saw Ternium generating $1 billion in cash from operations, significantly reducing working capital. The company maintained a solid cash position of $1 billion by the end of June, demonstrating strong financial resilience.
Sustainable Development Commitment
Ternium released a sustainable report outlining its efforts to advance environmental performance and foster social responsibility across its operations. This commitment to sustainability reflects the company’s dedication to long-term, responsible growth.
Challenges in Brazil
The Brazilian steel market poses significant challenges for Ternium, primarily due to a surge in unfair imported steel, which is impacting local competitiveness and demand. Addressing these challenges remains a priority for the company.
Decline in Shipments
There was a decline in shipments in Mexico and the U.S., although this was partially offset by higher volumes in the Southern region. Ternium is working to mitigate these declines and stabilize its shipment volumes.
Provision Adjustment in Usiminas Litigation
A $40 million provision adjustment was made due to ongoing litigation related to the acquisition of a participation in Usiminas. This adjustment reflects Ternium’s proactive approach to managing its legal and financial obligations.
Forward-Looking Guidance
Looking ahead, Ternium anticipates a sequential improvement in EBITDA in the third quarter, with a slight increase in shipments expected, particularly in Mexico. The company plans significant capital expenditures, with a peak of $2.5 to $2.6 billion projected for 2025. Ternium remains focused on cost reduction and operational efficiency, targeting $300 million in cost savings for the year, and is optimistic about its expansion projects in Pesqueria and the long-term sustainability of its operations.
In summary, Ternium’s earnings call reflected a mix of positive achievements and ongoing challenges. The company’s strategic focus on cost reduction, operational efficiency, and sustainable development positions it well for future growth. While challenges in the Brazilian market and shipment declines pose hurdles, Ternium’s proactive measures and forward-looking strategy offer a promising outlook.