Ternium Posts Quarterly Profit on Increased Shipments (Update2)
February 24, 2010, 12:42 PM EST
(Adds shipments in seventh paragraph.)
By Carlos Manuel Rodriguez and Rodrigo Orihuela
Feb. 24 (Bloomberg) -- Ternium SA, Latin America’s second- largest steelmaker, returned to a profit in the fourth quarter on higher shipments.
Net income was $194.8 million, or 79 cents per American depositary share, compared with a loss of $348.5 million, or $1.67, in the year-ago period, the Luxembourg-based company said today in an e-mailed statement. Sales declined 21 percent to $1.4 billion.
Ternium sales dropped on lower prices as shipments increased on rising demand in the company’s main steel markets. The company said today it expects production to increase during the year as South American economies recover.
Higher sales in Argentina “partially offset” a decline in North American steel demand, Allaria Ledesma head of research Christian Reos, said in a note to clients before the earnings report was released.
Ternium added 39 cents, or 1.3 percent, to $30.29 as of 2:39 p.m. in New York Stock Exchange composite trading.
Mexico’s steel consumption is forecast to rise about 14 percent in 2010 to 19.2 million tons from 16.8 million in 2009 as the economy recovers, said Octavio Rangel, executive director of Mexico’s steel chamber. North America is Ternium’s largest market by sales.
Lower Prices
Ternium said it shipped 1.7 million tons of products in the fourth quarter, an increase of 7 percent from the previous year, mostly because of an increase in demand in its main markets. Revenue per ton dropped 25 percent from $795 in 2009’s fourth quarter, mainly as a result of lower prices, the company said.
Ternium said today that Venezuela’s government did not pay compensation of $298.9 million for a nationalized steel mill a day after a grace period ended. Corp. Venezolana de Guayana, the state-owned industrial holding company, owes Ternium $1.02 billion for the Siderurgica del Orinoco plant, or Sidor, which President Hugo Chavez took over in 2008, Ternium said on Feb. 9.
Ternium’s stock could drop as much as $5 a share if Venezuela decides not to pay anything for Sidor’s nationalization, Allaria Ledesma’s Reos said today in a telephone interview from Buenos Aires. “Shares could lose $2 or $3 if Venezuela attempts to open a new round of talks on the compensation pay,” said Reos, who has a “buy” recommendation for Ternium and doesn’t own any shares.
CFO Retirement
Chief Financial Officer Roberto Philipps will retire on Feb. 28 and continue as an adviser to Ternium’s chief executive officer, the company said. He will be replaced by Pablo Brizzio, who has been Ternium’s financial director since January 2006.
Ternium’s share price has more than tripled in New York trading in the past year as analysts from Allaria Ledesma, Banco Santander SA and Bull Market Brokers recommended buying shares of a Ternium unit, Siderar SAIC.
Profit at Siderar, Argentina’s biggest steelmaker, is likely to triple this year while South America’s second-biggest economy expands 4.1 percent, Santander said.
Gerdau SA is the biggest producer of steel in Latin America.
--With assistance from Thomas Black in Monterrey and Steven Bodzin in Caracas. Editors: Robin Saponar, Jessica Brice
