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Cost cutting bolsters Ternium's Q1 net income

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Cost cutting bolsters Ternium's Q1 net income

Ternium SAhas widened its net income attributable to equity holders to US$94.4 million, or48 cents per share, in the first quarter, from US$68.5 million, or 35 cents pershare, a year earlier.

The improved bottom line was largely driven by a substantialreduction in the Luxembourg-based steelmaker's costs and an improvement in the EBITDAmargin.

According to the April 26 results, the cost of sales during thequarter declined US$441.5 million to US$1.29 billion, while selling, general andadministrative expenses dropped US$33.4 million to US$164.0 million compared tothe same quarter of 2015.

Ternium's EBITDA margin climbed to 18.3% from 14.7% in the year-agoperiod, but EBITDA slipped 3% to US$303.0 million.

Net sales of steel products in the first quarter amounted toUS$1.66 billion, a 22% decrease on net sales in the first quarter of 2015 due toa US$190 decrease in steel revenue per tonne shipped and stable shipments of 2.4million tonnes.

Revenue per tonne decreased 22%, reflecting lower steel pricesin Ternium's main steel markets, partially offset by a better product mix.

Net sales of mining products in the first quarter were 23% loweryear over year at US$43.8 million, mainly as a result of an 11% drop in revenueper tonne and a 13% reduction in iron ore shipments, which totaled 834,400 tonnes.

Meanwhile, TenigalS.R.L. de C.V., a joint venture between Ternium and in Mexico, will double its capacity for the manufacturing of hot-dip galvanizedand galvannealed steel sheets to serve the Mexican industrial and automotive markets.

Once facility and technical studies are completed, Tenigal willbuild a second hot-dip galvanizing line with yearly production capacity of 430,000tonnes.

The new facility, which will be located in Ternium's industrialcenter in Pesqueria, is expected to begin production in 2019, taking Tenigal's annualproduction capacity to 830,000 tonnes at a cost of roughly US$300 million.