-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D5oguI2hRGkCZ6ErUloqgsKvadfUhlfsa4ySL4d59onnZ92JWrkfYoHzCARQ2UZ3 MSQQILOdGvS14EbxplML9A== 0001157523-06-007779.txt : 20060802 0001157523-06-007779.hdr.sgml : 20060802 20060802134403 ACCESSION NUMBER: 0001157523-06-007779 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060801 FILED AS OF DATE: 20060802 DATE AS OF CHANGE: 20060802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Ternium S.A. CENTRAL INDEX KEY: 0001342874 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 000000000 STATE OF INCORPORATION: N4 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32734 FILM NUMBER: 06997238 BUSINESS ADDRESS: STREET 1: 46A, AVENUE JOHN F. KENNEDY 2ND FLOOR CITY: LUXEMBOURG STATE: N4 ZIP: L-1855 BUSINESS PHONE: (352) 4661-11-3815 MAIL ADDRESS: STREET 1: 46A, AVENUE JOHN F. KENNEDY 2ND FLOOR CITY: LUXEMBOURG STATE: N4 ZIP: L-1855 6-K 1 a5200899.txt TERNIUM S.A. 6K FORM 6 - K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a - 16 or 15d - 16 of the Securities Exchange Act of 1934 As of 08/01/2006 Ternium S.A. (Translation of Registrant's name into English) Ternium S.A. 46a, Avenue John F. Kennedy - 2nd floor L-1855 Luxembourg (352) 4661-11-3815 (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F. Form 20-F __X__ Form 40-F ____ Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934. Yes____ No__X__ If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended. This report contains Ternium S.A.'s press release announcing its results for the second quarter of the year 2006. Ternium Announces Second Quarter 2006 Results LUXEMBOURG--(BUSINESS WIRE)--Aug. 1, 2006--Ternium S.A. (NYSE:TX) announced today its results for the second quarter ended June 30, 2006. The financial and operational information contained in this press release is based on consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and presented in U.S. dollars. Summary of Second Quarter 2006 Results -- Net sales of US$1.7 billion. -- Shipments of flat and long products of 2.4 million tons. -- Operating income of US$476.7 million, or 28% of net sales. -- EBITDA(a) of US$582.2 million, or 34% of net sales. -- Equity holders net income of US$232.6 million. -- Earnings per American Depositary Share (ADS) of US$1.16 (each ADS represents 10 shares of Ternium's common stock). (a) EBITDA equals operating income plus depreciation, amortization and other non cash transactions Ternium's results continued to improve in the second quarter 2006. Revenue increased compared to the first quarter of 2006 as a result of better prices and higher sales volumes. The Company's EBITDA margin also improved due to better prices and relatively stable costs. Market Background and Outlook Demand for steel products in Ternium's core markets maintained a positive trend during the second quarter, as the main economies in the South & Central America Region continued to perform well. Additionally, steel prices increased in the period mainly in Ternium's North American markets. In the immediate future, Ternium expects demand and prices for its products to remain stable, and does not foresee any sizeable impact related to fluctuations in raw material and energy costs. Production Ternium's consolidated production increased during the second quarter of 2006 versus the first quarter of the year. The Company's production reached 2.5 million tons of crude steel, while 1.9 million tons of hot rolled coils and 0.5 million tons of long products were manufactured from semi-finished products, 0.9 million tons of cold rolled coils were manufactured from hot rolled coils, and 0.4 million tons of flat products were processed in the coating lines. Analysis of Second Quarter 2006 Results versus First Quarter 2006 Results As a result of the consolidation of Amazonia's and Hylsamex's results and other financial data since February 15, 2005, and August 22, 2005, respectively, Ternium's results and other financial data for the year 2006 or any quarters in 2006 are likely to vary significantly from the results and other financial data for the year 2005 or the corresponding quarters in 2005. Accordingly, Ternium currently intends to make quarterly comparisons on a sequential basis until the third quarter of 2006. From the fourth quarter of 2006 onwards, comparisons are intended to be made on a quarterly year-over-year basis. Second quarter of 2006 and first quarter of 2006 figures consolidate the results of Hylsamex, Siderar and Sidor together with all other consolidating subsidiaries. Net income for the second quarter was US$289.2 million, compared to US$194.5 million in the first quarter. Net income attributable to the Company's equity holders was US$232.6 million in the second quarter compared to US$165.0 million in the first quarter. Earnings per ADS were US$1.16 in the second quarter, based on 2,004,743,442 shares outstanding and a conversion rate of 10 shares of common stock per ADS. Net sales for the second quarter increased 12% to US$1.7 billion, compared to net sales of US$1.5 billion in the previous quarter due to higher volumes and prices. Shipments of flat and long products reached 2.4 million tons, while revenue per ton shipped increased 3% to US$681 in the second quarter. Net Sales Shipments Revenue / ton (million US$) (thousand tons) (US$/ton) -------------------- -------------------- --------------- 2Q 1Q 2Q 1Q 2Q 1Q 2006 2006 Dif. 2006 2006 Dif. 2006 2006 Dif. -------------------- -------------------- ---- ----- ---- South & Central America 772.1 691.2 12% 1,161.9 1,044.7 11% 665 662 1% North America 520.1 491.8 6% 656.2 643.2 2% 792 765 4% Europe & other 7.8 14.3 -45% 15.9 26.6 -40% 493 537 -8% -------------------- -------------------- ---- ----- ---- Total flat products 1,300.0 1,197.3 9% 1,834.1 1,714.5 7% 709 698 2% South & Central America 130.8 121.5 8% 237.3 236.9 0% 551 513 7% North America 211.9 161.4 31% 341.5 296.5 15% 620 544 14% -------------------- -------------------- ---- ----- ---- Total long products 342.7 282.9 21% 578.8 533.4 9% 592 530 12% Total flat and long products 1,642.7 1,480.2 11% 2,412.9 2,247.9 7% 681 658 3% Other products(1) 66.4 48.7 36% -------------------- Total Net Sales 1,709.1 1,528.9 12% (1) Includes pig iron and pellets. Sales of flat products during the second quarter totaled US$1.3 billion, an increase of 9% compared to the first quarter of the year. This was the result of higher volumes and prices. Shipments were 1.8 million tons in the second quarter, an increase of 7% compared to the previous quarter as a result of improved demand in Ternium's core markets and increased production of hot and cold rolled products. Revenue per ton shipped increased 2% to US$709 in the second quarter from the prior quarter. While prices of flat products increased in several of Ternium's markets, the sales mix during the second quarter was not as favorable as that of the previous quarter. Sales of long products were US$342.7 million during the second quarter, an increase of 21% compared to the previous quarter. This increase was mainly due to higher volumes and prices. Shipments increased to 578.8 thousand tons in the second quarter, representing a 9% increase versus the first quarter, due to higher production and a tighter demand/supply balance for Ternium's long products in the North America Region. Within this context, revenue per ton shipped increased 12% quarter-over-quarter to US$592. Sales of other products were US$66.4 million during the second quarter, an increase of 36% compared to the previous quarter, as pellet sales recovered from low levels in the first quarter. This increase was the result of the planned revamping of Ternium's pellet production facilities in Venezuela during the first quarter. Flat and long products sales in the South & Central America Region were US$902.9 million during the second quarter, an increase of 11% versus the previous quarter. This increase was mainly due to higher volumes and prices. Shipments reached 1.4 million tons during the second quarter, or 9% higher than the previous quarter, mainly as a result of higher shipments of flat products. Revenue per ton shipped increased 2% quarter-over-quarter to US$645 during the second quarter mainly supported by increases in long products. Sales of flat and long products in the North America Region were US$732.0 million in the second quarter, an increase of 12% compared to the previous quarter, due to higher volumes and prices. Shipments totaled 1.0 million tons during the second quarter, or 6% higher than the previous quarter. This increase was mainly attributable to higher sales of billets and cold rolled coils. Revenue per ton shipped increased 6% quarter-over-quarter to US$734 in the second quarter, mainly due to price increases implemented in both product categories. Cost of sales totaled US$1.1 billion for the second quarter, or 63% of net sales, compared to US$987.2 million, or 65% of net sales, in the previous quarter. The increase in shipments drove the increased cost of sales in the second quarter. Higher prices for raw materials were offset by the normalization of iron ore pellets production at Sidor following the revamping of its pellet production facilities carried out in the previous quarter that allowed the Company to reduce its purchases of hot briquetted iron. Natural gas and electricity prices for the Central and South America operations remained relatively stable compared to the previous quarter, while Ternium's Mexican subsidiary experienced a decrease in electricity prices and stable natural gas costs. Labor costs remained at similar levels to those of the previous quarters. Selling, general and administrative (SG&A) expenses in the second quarter were US$155.4 million, or 9% of net sales, compared to US$151.0 million, or 10% of net sales, in the previous quarter. The increase in the SG&A figure versus the previous quarter is mainly due to higher freight charges for Ternium's finished products caused by the increase in shipments during the second quarter. Operating income in the second quarter was US$476.7 million, or 28% of net sales, compared to US$392.5 million, or 26% of net sales, in the previous quarter. EBITDA(b) in the second quarter was US$582.2 million, or 34% of net sales, compared to US$500.5 million, or 33% of net sales, in the previous quarter. Net financial expenses were US$108.2 million in the second quarter, compared to US$123.5 million in the previous quarter. This reduction was primarily the result of a US$6.0 million decrease in net interest expenses mainly associated with a reduction in net debt, US$8.6 million in lower bank commissions related to the absence of a one-time charge for debt issuance recognized in the previous quarter and US$9.1 million in lower excess cash distribution related to the participation accounts in Sidor. This was partially offset by a higher loss of US$10.4 million related to changes in the fair value of some derivative instruments entered into by Ternium in order to mitigate energy prices and interest rates fluctuations. Sidor's excess cash distribution related to the participation account was US$184.4 million in the second quarter compared to US$206.9 million in the previous quarter. Ternium subsidiaries received US$110.2 million in the second quarter compared to US$123.6 million in the first quarter, while payments to minority shareholders of Sidor resulted in expenses of US$74.2 million in the second quarter, compared to expenses of US$83.3 million in the previous quarter. Income tax expense for the second quarter was US$80.2 million, or 22% of income before income tax and minority interest. Income attributable to minority interest for the second quarter was US$56.6 million, compared to income of US$29.5 million in the previous quarter. (b) EBITDA equals operating income of US$476.7 million plus depreciation and amortization of US$105.4 million and other non-cash items of US$0.1 million. Cash Flow and Liquidity Net cash provided by operating activities in the second quarter was US$357.0 million. This included an increase in working capital of US$71.4 million mainly due to a higher activity level partially offset by a decrease in tax credits. Net cash used in investing activities during the second quarter was US$140.1 million, mainly due to capital expenditures of US$98.2 million and Ternium's purchase of Worthington Industries' remaining 50% equity interest in Acerex for US$44.6 million, which was approved by Mexico's antitrust authorities on May 11, 2006. Net cash used in financing activities during the second quarter was US$203.4 million. Financial debt decreased by US$176.2 million quarter-over-quarter to US$1.6 billion, mainly due to the repayment of certain borrowings. Net debt as of June 30, 2006 was US$670.2 million. In addition, dividends paid to minority shareholders in Siderar and Acerex totaled US$27.2 million during the second quarter. Forward-Looking Statements Some of the statements contained in this press release are "forward-looking statements." Forward-looking statements are based on management's current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to gross domestic product, related market demand, global production capacity, tariffs, cyclicality in the industries that purchase steel products and other factors beyond Ternium's control. About Ternium Ternium is one of the leading steel companies in the Americas, offering a wide range of flat and long steel products. Ternium has operating locations in Mexico, Argentina and Venezuela that provide it with a strong position from which to serve its core markets. In addition, Ternium reaches the global markets through its own distribution network. More information about Ternium is available at www.ternium.com. Consolidated income statement 2Q 1Q US$ million 2Q 2006 1Q 2006 6M 2006 2005(1) 2005(1) 6M 2005(1) - ------------ --------- -------- --------- -------- -------- ---------- Net sales 1,709.1 1,528.9 3,238.0 1,060.3 767.6 1,827.8 Cost of sales (1,078.1) (987.2) (2,065.2) (493.4) (418.2) (911.5) --------- -------- --------- -------- -------- ---------- Gross profit 631.0 541.7 1,172.7 566.9 349.4 916.3 SG&A expenses (155.4) (151.0) (306.4) (114.6) (65.0) (179.6) Other operating income (expense), net 1.1 1.8 2.9 (6.8) (1.0) (7.8) --------- -------- --------- -------- -------- ---------- Operating income 476.7 392.5 869.2 445.5 283.4 728.9 Financial expenses, net (108.2) (123.5) (231.7) (63.8) (38.9) (102.7) Excess of fair value of net assets acquired over cost -- -- -- -- 188.4 188.4 Equity in earnings (losses) of associated companies 0.9 (1.8) (0.9) (0.2) 19.3 19.1 --------- -------- --------- -------- -------- ---------- Income before income tax expense 369.4 267.2 636.5 381.5 452.2 833.7 Income tax expense (80.2) (72.7) (152.8) (57.1) (48.6) (105.7) Net income for the period 289.2 194.5 483.7 324.4 403.6 727.9 Attributable to: Equity holders of the Company 232.6 165.0 397.6 140.0 337.6 477.6 Minority interest 56.6 29.5 86.1 184.4 66.0 250.3 --------- -------- --------- -------- -------- ---------- 289.2 194.5 483.7 324.4 403.6 727.9 (1) Combined consolidated financial information on the basis of common control. Consolidated balance sheet June 30, December 31, US$ million 2006 2005 - --------------------------------------------- ----------- ------------ Property, plant and equipment, net & other assets 5,332.0 5,464.8 Intangible assets, net 524.6 552.9 Investment in associated companies, net 8.2 9.1 Other investments, net 12.4 12.6 Deferred tax assets 35.2 29.1 Trade & other receivables, net 60.2 47.9 ----------- ------------ Total non-current assets 5,972.7 6,116.4 Receivables 219.4 291.3 Other assets -- 3.2 Derivative financial instruments 11.6 5.4 Inventories, net 1,113.4 1,000.1 Trade receivables, net 551.9 472.8 Other investments -- 5.2 Cash and cash equivalents 915.6 765.6 ----------- ------------ Total current assets 2,812.0 2,543.6 Non-current assets classified as held for sale 9.4 -- ----------- ------------ Total assets 8,794.1 8,660.0 Shareholders' equity 3,276.9 1,842.5 Minority interest in subsidiaries 1,693.3 1,733.5 Minority interest & shareholders' equity 4,970.2 3,575.9 Provisions 57.9 53.5 Deferred income tax liabilities 991.2 1,048.2 Other liabilities 206.3 187.9 Trade payables 1.1 1.2 Borrowings 1,088.0 2,399.9 ----------- ------------ Total non-current liabilities 2,344.5 3,690.6 Provisions -- 0.7 Current tax liabilities 143.0 127.0 Other liabilities 179.7 194.1 Trade payables 648.8 555.3 Derivative financial instruments 10.2 -- Borrowings 497.8 516.4 ----------- ------------ Total current liabilities 1,479.4 1,393.4 ----------- ------------ Total liabilities 3,823.9 5,084.1 Liabilities, minority interest & shareholders' equity 8,794.1 8,660.0 Consolidated cash flow statement US$ million 2Q 2006 1Q 2006 6M 2006 6M 2005(1) - ---------------------------------- ------- ------- -------- ---------- Net income 289.2 194.5 483.7 727.9 Adjustments for: Depreciation and amortization 105.5 106.3 211.8 117.6 Income tax accruals less payments (7.4) 10.9 3.5 (87.3) Excess of fair value of net assets acquired over cost -- -- -- (188.4) Equity in (earnings) losses of associated companies (0.9) 1.8 0.9 (19.1) Derecognition of property, plant & equipment 0.1 1.6 1.7 -- Interest accruals less payments 17.8 (15.9) 1.9 0.2 Changes in provisions 13.6 11.4 25.0 4.5 Changes in working capital (71.4) (12.6) (84.0) (17.1) Currency translation adjustment and others 10.6 (3.0) 7.6 62.8 ------- ------- -------- ---------- Net cash provided by operating activities 357.0 295.2 652.1 601.1 Capital expenditures (98.2) (88.1) (186.3) (81.4) Change in trust funds 5.2 -- 5.2 88.8 Acquisition of business(2) (47.9) (55.2) (103.1) -- Proceeds from sale of property, plant & equipment 0.7 0.5 1.3 1.4 ------- ------- -------- ---------- Net cash (used in) provided by investing activities (140.1) (142.8) (282.9) 8.8 Dividends paid in cash and other distributions to company's equity shareholders -- -- -- (171.4) Dividends paid in cash and other distributions to minority shareholders (27.2) -- (27.2) (108.7) Net proceeds from Initial Public Offering -- 525.0 525.0 -- Contributions from shareholders -- 3.1 3.1 54.8 Proceeds from borrowings 25.2 11.4 36.5 102.4 Repayment of borrowings (201.4) (553.5) (754.8) (367.2) ------- ------- -------- ---------- Net cash used in financing activities (203.4) (14.0) (217.4) (490.2) Increase (decrease) in cash and cash equivalents 13.4 138.4 151.9 119.7 (1) Combined consolidated financial information on the basis of common control. (2) Corresponds to the purchase of Impeco and other assets from Acindar in 1Q 2006 and to the purchase of Worthington Industries' 50% equity interest in Acerex in 2Q 2006. Shipments ------------------------------------------------------- 2Q 1Q Thousand tons 2Q 2006 1Q 2006 6M 2006 2005(1) 2005(1) 6M 2005(1) - -------------- -------- -------- -------- -------- -------- ---------- South & Central America 1,161.9 1,044.7 2,206.6 926.9 593.5 1,520.4 North America 656.2 643.2 1,299.5 260.3 245.6 505.9 Europe & other 15.9 26.6 42.5 145.4 171.5 316.9 -------- -------- -------- -------- -------- ---------- Total flat products 1,834.1 1,714.5 3,548.6 1,332.6 1,010.6 2,343.2 South & Central America 237.3 236.9 474.3 168.4 89.0 257.4 North America 341.5 296.5 638.0 30.2 37.8 68.0 -------- -------- -------- -------- -------- ---------- Total long products 578.8 533.4 1,112.2 198.7 126.8 325.4 Total flat and long products 2,412.9 2,247.9 4,660.8 1,531.3 1,137.3 2,668.6 (1) Combined consolidated financial information on the basis of common control. Revenue / ton ------------------------------------------------------- 2Q 1Q 6M US$/ton 2Q 2006 1Q 2006 6M 2006 2005(1) 2005(1) 2005(1) - -------------- -------- -------- -------- -------- -------- ---------- South & Central America 665 662 663 725 704 717 North America 792 765 779 549 577 562 Europe & other 493 537 520 607 712 664 -------- -------- -------- -------- -------- ---------- Total flat products 709 698 704 677 674 676 South & Central America 551 513 532 498 550 516 North America 620 544 585 526 556 542 -------- -------- -------- -------- -------- ---------- Total long products 592 530 562 502 552 521 Total flat and long products 681 658 670 655 661 657 (1) Combined consolidated financial information on the basis of common control. Net Sales ------------------------------------------------------- 2Q 1Q US$ million 2Q 2006 1Q 2006 6M 2006 2005(1) 2005(1) 6M 2005(1) - -------------- -------- -------- -------- -------- -------- ---------- South & Central America 772.1 691.2 1,463.3 671.7 417.9 1,089.5 North America 520.1 491.8 1,011.9 142.9 141.6 284.5 Europe & other 7.8 14.3 22.1 88.2 122.1 210.4 -------- -------- -------- -------- -------- ---------- Total flat products 1,300.0 1,197.3 2,497.3 902.8 681.6 1,584.4 South & Central America 130.8 121.5 252.3 83.9 48.9 132.8 North America 211.9 161.4 373.3 15.9 21.0 36.9 -------- -------- -------- -------- -------- ---------- Total long products 342.7 282.9 625.6 99.8 69.9 169.7 -------- -------- -------- -------- -------- ---------- Total flat and long products 1,642.7 1,480.2 3,122.9 1,002.6 751.5 1,754.1 Other products(2) 66.4 48.7 115.1 57.7 16.1 73.8 -------- -------- -------- -------- -------- ---------- Total net sales 1,709.1 1,528.9 3,238.0 1,060.3 767.6 1,827.8 (1) Combined consolidated financial information on the basis of common control. (2) Includes pig iron and pellets. CONTACT: Ternium S.A. Investor Relations: Sebastian Marti USA: +1-866-890-0443 Mexico: +52-81-8865-1240 Argentina: +54-11-4018-2389 www.ternium.com SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TERNIUM S.A. By: /s/ Roberto Philipps By: /s/ Daniel Novegil - ----------------------------- ------------------------------ Name: Roberto Philipps Name: Daniel Novegil Title: Chief Financial Officer Title: Chief Executive Officer Dated: August 1, 2006 -----END PRIVACY-ENHANCED MESSAGE-----