Ternium S.A., a leading Latin American steelmaker, reported Tuesday that its net income reached US$584.7 million in Q2, up 18 percent from the US$415.6 million earned in Q2 of last year and a reversal from its US$117.0 million net loss in Q1.
The company said these figures can be explained by the US$482.3 million gain due to the transfer of the Sidor shares to Venezuela, and a US$379.6 million increase in the net foreign exchange results. The company added that in the second quarter of 2009, net foreign exchange result was a gain of US$219.1 million compared to a gain of US$99.7 million in the year-ago period due to the impact of the Mexican Peso's eight percent revaluation on Ternium's Mexican subsidiary's US dollar denominated debt.
Net sales in the second quarter reflect the weakened business conditions from last year, however. Ternium's net sales in Q2 2009 were US$1.1 billion, 52 percent lower than net sales in the second quarter of 2008.
Ternium's operating result in Q2 was a loss of US$52.1 million, compared to a loss of US$26.5 million in Q1. The operating result in Q2 was US$658.3 million lower than that of the second quarter 2008. Factors affecting the company's Q2 2009 operations include decreased shipments, lower revenue per-ton and a decrease in operating cost per-ton (all compared to Q2 2008).
Ternium's operating result in the first half 2009 was a loss of US$78.6 million, compared to a gain of US$965.6 million in the first half of 2008. The disparity is explained by a decrease in shipments, declines in revenue per-ton while operating cost per-ton stayed relatively stable.
The firm reported net income of US$467.7 million in the first half of the year, down by 52 percent year on year. The yearly decrease was mainly due to reductions in operating income and a decrease in net foreign exchange results. Ternium's net foreign exchange result was a gain of US$58.5 million in the first half 2009 compared to a gain of US$139.9 million in the same period in 2008 due to the impact of the Mexican Peso's two percent revaluation on Ternium's Mexican subsidiary's US dollar denominated debt.
Looking forward, Ternium expects a brighter scenario due to the fact that the de-stocking process is almost completed in the Americas. In the third quarter, the firm also expects lower operating costs, higher shipments, relatively stable revenue and to reach about 70 percent capacity utilization.
Ternium manufactures a wide range of products at its operations in Argentina, Mexico, Guatemala and the United States. These include semi-finished steel, flat rolled products, long products, welded tubes and beam, and roll-formed products. Annual finished steel capacity totals approximately nine million mt.