6-K 1 a5394528.txt TERNIUM S.A. 6-K 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 5/3/2007 Ternium S.A. (Translation of Registrant's name into English) Ternium S.A. 46a, Avenue John F. Kennedy L-1855 Luxembourg (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 first quarter 2007 results. 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: May 3, 2007 Ternium Announces First Quarter 2007 Results LUXEMBOURG--(BUSINESS WIRE)--May 3, 2007--Ternium S.A. (NYSE:TX) today announced its results for the first quarter ended March 31, 2007. 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 First Quarter 2007 Results 1Q 2007 1Q 2006 4Q 2006 Shipments (million tons) 2.5 2.2 11% 2.1 16% Net Sales (US$ million) 1,798.3 1,531.0 17% 1,586.5 13% Operating Income (US$ million) 415.4 392.5 6% 259.2 60% EBITDA(a) (US$ million) 530.7 500.5 6% 376.8 41% EBITDA Margin (% of net sales) 30% 33% 24% Net Income (US$ million) 251.6 194.5 29% 158.2 59% Equity Holders' Net Income (US$ million) 222.1 165.0 35% 140.4 58% Earnings per ADS (US$) 1.11 0.70 58% (a) First quarter 2007 EBITDA equals operating income of US$415.4 million plus depreciation and amortization of US$115.3 million. Net sales increased 17% during the first quarter 2007 compared to net sales in the first quarter 2006 as a result of an 11% increase in shipments and 6% increase in revenue per ton. During the first quarter 2007, operating income was 6% higher than it was in the first quarter 2006. This was due mainly to higher shipments and steel prices, partially offset by higher raw material and labor costs. Equity holders' net income during the first quarter 2007 was 35% higher compared with that of the first quarter 2006 as a result of higher operating income and lower financial expenses. Outlook In the immediate future, margins are expected to remain stable due to slightly higher demand and prices expected in the North America Region as steel inventory levels are normalizing. In the South & Central Region, steel demand is expected to continue growing, while Ternium's average cost is expected to increase moderately due to higher raw material and labor expenses. Analysis of First Quarter 2007 Results versus First Quarter 2006 Results Net income attributable to the company's equity holders for the first quarter 2007 was US$222.1 million, compared with US$165.0 million in the first quarter 2006. Including minority interest, net income for the first quarter 2007 was US$251.6 million, compared with US$194.5 million in the first quarter 2006. Earnings per ADS were US$1.11 in the first quarter 2007. Net sales for the first quarter 2007 increased 17% to US$1.8 billion compared with the same period in 2006 mainly due to higher demand and prices in Ternium's core markets. Shipments of flat and long products reached 2.5 million tons during the first quarter 2007, an increase of 11% compared to shipment levels in the first quarter 2006, as a result of higher demand in most of Ternium's markets. Revenue per ton shipped increased 6% to US$701 in the first quarter 2007 versus the same quarter in 2006. Net Sales (million US$) 1Q 1Q Dif. 2007 2006 South & Central America 821.8 692.7 19% North America 522.5 491.2 6% Europe & other 48.7 14.5 235% -------- -------- ------- Total flat products 1,392.9 1,198.5 16% South & Central America 164.9 121.3 36% North America 192.9 161.3 20% -------- -------- ------- Total long products 357.7 282.6 27% Total flat and long products 1,750.7 1,481.0 18% Other products (1) 47.6 49.9 -5% -------- -------- ------- Total Net Sales 1,798.3 1,531.0 17% Shipments (thousand Revenue / ton tons) (US$/ton) 1Q 1Q Dif. 1Q 1Q Dif. 2007 2006 2007 2006 South & Central America 1,111.8 1,045.3 6% 739 663 12% North America 698.4 642.3 9% 748 765 -2% Europe & other 82.7 26.6 211% 589 547 8% -------- -------- ----- ------ ------------- Total flat products 1,892.9 1,714.2 10% 736 699 5% South & Central America 292.8 237.3 23% 563 511 10% North America 313.3 296.5 6% 616 544 13% -------- -------- ----- ------ ------------- Total long products 606.1 533.8 14% 590 529 12% Total flat and long products 2,498.9 2,248.0 11% 701 659 6% Other products (1) Total Net Sales (1) Includes iron ore and pig iron. Sales of flat products during the first quarter 2007 totaled US$1.4 billion, an increase of 16% compared with the same quarter in 2006, as a result of higher demand and prices in Ternium's core markets. Shipments totaled 1.9 million tons in the first quarter 2007, an increase of 10% compared with the same period in 2006. Revenue per ton shipped increased 5% to US$736 in the first quarter 2007 compared with the same period in 2006. Moderating this increase was a 2% decrease versus the first quarter 2006 in revenue per ton of flat products shipped in the North America Region resulting from a higher concentration of slabs in Ternium's sales mix during the first quarter 2007, which offset higher prices in the region. Sales of long products were US$357.7 million during the first quarter 2007, an increase of 27% compared to the same period in 2006, due to higher demand and prices in Ternium's core markets. Shipments totaled just over 606,000 tons in the first quarter 2007, representing a 14% increase versus the same quarter in 2006. Revenue per ton shipped increased 12% to US$590 in the first quarter 2007 over the first quarter 2006. Sales of other products totaled US$47.6 million during the first quarter 2007, a decrease of 5% compared to the same period in 2006. This was due mainly to a decrease in shipments to third parties of iron ore pellets from Ternium's mines in Mexico as a result of higher usage levels at the company's own mills. Flat and long product sales in the South & Central America Region were US$986.6 million during the first quarter 2007, an increase of 21% versus the same period in 2006. This increase was mainly due to higher volumes and prices. Shipments in the region totaled 1.4 million tons during the first quarter 2007, or 10% higher than in the first quarter 2006, due to an increase in the demand for steel products. Revenue per ton shipped in the region increased 11% to US$702 in the first quarter 2007 over the same quarter in 2006, mainly due to price increases implemented in both product categories. Sales of flat and long products in the North America Region were US$715.4 million in the first quarter 2007, an increase of 10% versus the same period in 2006, mainly due to higher volumes. Shipments in the region totaled 1.0 million tons during the first quarter 2007, or 8% higher than the same period in 2006, mainly due to slab shipments of approximately 84,000 tons. Revenue per ton shipped in the region increased 2% to US$707 in the first quarter 2007 over the same quarter in 2006. This resulted from higher steel prices in the region that were partially offset by a higher concentration of long and semi-finished steel products in Ternium's sales mix during the first quarter 2007. Cost of sales totaled US$1.2 billion in the first quarter 2007, or 68% of net sales, compared to US$989.7 million, or 65% of net sales, in the first quarter 2006. The higher year-over-year cost of sales was due mainly to an increase in the price of raw materials such as iron ore, zinc and scrap, as well as lower efficiencies and higher maintenance costs associated with the relining of one of the blast furnaces in Argentina. Natural gas and electricity costs were lower in Mexico during the first quarter 2007 than they were in the same period in 2006, while they increased in Venezuela. Additionally, first quarter labor costs increased year-over-year in Mexico, Argentina and Venezuela. Selling, general and administrative (SG&A) expenses in the first quarter 2007 were US$164.5 million, or 9% of net sales, compared with US$151.0 million, or 10% of net sales, in the first quarter 2006. The increase in the SG&A dollar figure was due mainly to the higher level of shipments. Operating income in the first quarter 2007 was US$415.4 million, or 23% of net sales, compared with US$392.5 million, or 26% of net sales, in the first quarter 2006. EBITDA(b) in the first quarter 2007 was US$530.7 million, or 30% of net sales, compared with US$500.5 million, or 33% of net sales, in the first quarter 2006. Equity holders' EBITDA in the first quarter 2007 was 67% of EBITDA. Net financial expenses totaled US$82.3 million in the first quarter 2007, compared with US$123.5 million in the same period in 2006. This reduction was due mainly to a US$16.0 million decrease in net interest expense that was primarily associated with a reduction in net debt; US$8.0 million decrease in bank commissions relating to the absence of a one-time charge for debt issuance recognized in the first quarter 2006; and a gain of US$16.8 million associated with changes in the fair value of some derivative instruments entered into by Ternium related to energy prices and interest rates fluctuations. Sidor's excess cash distribution related to the participation account was US$225.2 million in the first quarter 2007 compared with US$206.9 million in the first quarter 2006. The recognition of payments to minority shareholders of Sidor resulted in expenses for Ternium of US$90.7 million in the first quarter 2007, compared with expenses of US$83.3 million in the same period in 2006. Income tax expense for the first quarter 2007 was US$80.5 million, or 24% of income before income tax and minority interest, compared with US$72.7 million, or 27% of income before income tax and minority interest, in the first quarter 2006. Income attributable to minority interest for the first quarter 2007 was US$29.5 million, similar to the first quarter 2006. Cash Flow and Liquidity Net cash provided by operating activities in the first quarter 2007 was US$530.3 million, of which US$110.3 million was related to a reduction in working capital caused primarily by lower inventory levels, and an increase in accounts payable and other liabilities net of an increase in trade receivables. Net cash used in investing activities in the first quarter 2007 was US$97.2 million, mainly related to capital expenditures of US$102.4 million. The main investments made during the first quarter 2007 were: the upgrading of the hot strip mill in Mexico; the relining of one of the blast furnaces and the construction of new coking facilities in Argentina; and the construction of a new ladle furnace in Venezuela. Net cash used in financing activities during the first quarter 2007 was US$92.4 million related to the reduction in financial debt, which decreased to US$959.5 million in the period. Ternium's cash position, net of borrowings, as of March 31, 2007, was US$24.2 million. 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, producing a wide range of flat and long steel products. With operations in Mexico, Argentina and Venezuela and 18,000 employees, Ternium had net sales of US$6.6 billion and a production of 9.0 million tons of finished steel products in 2006. More information about Ternium is available at www.ternium.com. (b) EBITDA equals operating income of US$415.4 million plus depreciation and amortization of US$115.3 million. Consolidated income statement US$ million 1Q 2007 1Q 2006 Dif. Net sales 1,798.3 1,531.0 267.3 Cost of sales (1,223.9) (989.7) (234.2) --------- -------- ------- Gross profit 574.4 541.3 33.1 Selling, general and administrative expenses (164.5) (151.0) (13.5) Other operating income, net 5.6 2.2 3.4 --------- -------- ------- Operating income 415.4 392.5 22.9 Interest expense (16.9) (34.3) 17.4 Interest income 10.8 12.2 (1.3) Other financial expenses, net (76.1) (101.3) 25.2 Equity in losses of associated companies (1.0) (1.8) 0.8 --------- -------- ------- Income before income tax expense 332.2 267.2 65.0 Income tax expense (80.5) (72.7) (7.9) Net income for the period 251.6 194.5 57.1 Attributable to: Equity holders of the Company 222.1 165.0 57.1 Minority interest 29.5 29.5 (0.0) --------- -------- ------- 251.6 194.5 57.1 Consolidated balance sheet US$ million March 31, December 31, 2007 2006 Property, plant and equipment, net 5,351.4 5,420.7 Intangible assets, net 547.8 551.6 Investment in associated companies 15.3 16.3 Other investments, net 13.5 13.4 Deferred tax assets 35.0 36.4 Receivables, net 93.0 78.9 ------------ -------------- Total non-current assets 6,056.0 6,117.3 Receivables 164.0 175.8 Derivative financial instruments 9.8 7.9 Inventories, net 1,181.4 1,241.3 Trade receivables, net 640.4 577.9 Cash and cash equivalents 983.7 643.4 ------------ -------------- Total current assets 2,979.2 2,646.2 Non-current assets classified as held for sale 6.0 7.0 ------------ -------------- Total assets 9,041.2 8,770.5 Shareholders' equity 3,938.7 3,757.6 Minority interest in subsidiaries 1,747.6 1,729.6 Minority interest & shareholders' equity 5,686.4 5,487.1 Provisions 64.8 60.5 Deferred income tax 962.7 985.2 Tax liabilities 1.2 0.0 Other liabilities 290.0 274.6 Trade payables 7.2 7.2 Borrowings 399.7 548.4 ------------ -------------- Total non-current liabilities 1,725.5 1,875.9 Current tax liabilities 177.2 103.2 Other liabilities 205.4 158.4 Trade payables 687.0 621.8 Derivative financial instruments 0.0 15.5 Borrowings 559.8 508.7 ------------ -------------- Total current liabilities 1,629.3 1,407.5 ------------ -------------- Total liabilities 3,354.8 3,283.4 Total liabilities, minority interest & shareholders' equity 9,041.2 8,770.5 Consolidated cash flow statement US$ million 1Q 2007 1Q 2006 Dif. Net income for the period 251.6 194.5 57.1 Adjustments for: Depreciation and amortization 115.3 106.3 9.0 Income tax accruals less payments 58.0 10.9 47.0 Derecognition of property, plant & equipment - 1.6 (1.6) Equity in losses of associated companies 1.0 1.8 (0.8) Interest accruals less payments (4.7) (15.9) 11.2 Changes in provisions (3.3) 11.4 (14.7) Changes in working capital 110.3 (12.6) 122.9 Others 2.1 (1.1) 3.2 --------- -------- ------- Net cash provided by operating activities 530.3 297.0 233.2 Capital expenditures (102.4) (90.0) (12.4) Acquisition of business (1) - (55.2) 55.2 Proceeds from sale of property, plant & equipment 5.2 0.5 4.6 --------- -------- ------- Net cash used in investing activities (97.2) (144.7) 47.4 Net proceeds from Initial Public Offering - 525.0 (525.0) Contributions from shareholders - 3.1 (3.1) Proceeds from borrowings 120.1 11.4 108.8 Repayment of borrowings (212.5) (553.5) 340.9 --------- -------- ------- Net cash used in financing activities (92.4) (14.0) (78.4) Increase in cash and cash equivalents 340.7 138.4 202.3 (1) Corresponds to the purchase of Impeco and other assets from Acindar in 1Q 2006. Shipments Thousand tons 1Q 2007 1Q 2006 Dif. South & Central America 1,111.8 1,045.3 66.5 North America 698.4 642.3 56.1 Europe & other 82.7 26.6 56.1 ---------- ---------- -------- Total flat products 1,892.9 1,714.2 178.7 South & Central America 292.8 237.3 55.5 North America 313.3 296.5 16.8 Europe & other 0.0 0.0 0.0 ---------- ---------- -------- Total long products 606.1 533.8 72.3 Total flat and long products 2,498.9 2,248.0 250.9 Revenue / ton US$/ton 1Q 2007 1Q 2006 Dif. South & Central America 739 663 76 North America 748 765 (17) Europe & other 589 547 42 ---------- ---------- -------- Total flat products 736 699 37 South & Central America 563 511 52 North America 616 544 72 Europe & other 0 0 0 ---------- ---------- -------- Total long products 590 529 61 Total flat and long products 701 659 42 Net Sales US$ million 1Q 2007 1Q 2006 Dif. South & Central America 821.8 692.7 129.1 North America 522.5 491.2 31.3 Europe & other 48.7 14.5 34.1 ----------- --------- -------- Total flat products 1,392.9 1,198.5 194.5 South & Central America 164.9 121.3 43.6 North America 192.9 161.3 31.6 Europe & other 0.0 0.0 0.0 ----------- --------- -------- Total long products 357.7 282.6 75.2 ----------- --------- -------- Total flat and long products 1,750.7 1,481.0 269.6 Other products (1) 47.6 49.9 (2.3) ----------- --------- -------- Total net sales 1,798.3 1,531.0 267.3 (1) Includes iron ore and pig iron. CONTACT: Ternium Investor Relations: Sebastian Marti USA: +1-866-890-0443 Mexico: +52 (81) 8865 2111 Argentina: +54 (11) 4018 2389 www.ternium.com