Ternium's Q4 2024 Results: A Financial Setback
In its financial report for Q4 2024, Ternium, a leading steelmaker controlled by the Techint group, posted a net profit of $333 million, marking a significant decrease from $554 million during the same period in 2023. This sharp drop reflects the challenges the company faced throughout the quarter and indicates ongoing difficulties in the global steel market.
Revenue and Profit Decline
Ternium’s net sales fell by 21% to $3.876 billion, a direct result of weaker demand for steel products and falling prices. The operational profit took an even bigger hit, plummeting by 93%, amounting to just $582 million, compared to higher figures in previous quarters. These declines are partly attributed to a combination of reduced shipments, declining prices, and global economic factors affecting the steel industry.
Volume and Shipment Decreases
The company’s shipment volumes in Q4 also showed considerable declines. Steel product shipments dropped by 7% to 3.764 million metric tons (mt), and iron ore shipments decreased by 12% to 1.752 million mt. This decline reflects the impact of reduced market demand and challenges in key regions where Ternium operates. Mexico, being the largest market, accounted for a significant portion of shipments, totaling 1.970 million mt, while other South American countries like Brazil and Colombia showed more moderate levels of shipments.
Regional Distribution of Shipments
• Mexico: 1.970 million mt
• Brazil: 965,000 mt
• Other South American Markets: 496,000 mt
• Other Regions: 333,000 mt
The regional breakdown of shipments highlights the importance of Mexico as Ternium’s main market, but the decline in volumes across multiple regions shows how the global slowdown in steel consumption is impacting the company’s operations.
Ternium’s 2024 Overview: A Year of Declines
Looking at the full year of 2024, Ternium’s performance was considerably weaker compared to 2023. The company’s net profit declined by 82%, falling to just $174 million, a significant setback. Despite these declines, Ternium’s net sales remained stable at $17.649 billion, showing that the company managed to maintain its revenue streams, though without significant growth. However, the operational profit dropped by 43%, reaching $1.263 billion.
Annual Shipment Performance
While the overall financial results were disappointing, Ternium’s shipment volumes showed some positive growth. Steel product shipments rose by 10% to 15.622 million metric tons (mt), and iron ore shipments grew by 56% to 6.426 million mt. This growth in volume indicates that Ternium was able to increase its output in certain sectors, but the continued downward pressure on prices and global demand has prevented significant profitability gains.
Regional Operations: A Diverse Global Footprint
Ternium operates in multiple countries across Latin America and the United States, with production facilities located in Mexico, Argentina, Brazil, Colombia, Guatemala, and the US. The company’s diverse geographical presence has allowed it to tap into different markets, but it has also exposed the company to the varying economic challenges faced by these regions.
• Mexico continues to be Ternium’s most significant market, contributing a substantial share to its overall shipments.
• Brazil and other South American nations are also important markets but are affected by their own regional economic challenges, including inflation, currency devaluation, and supply chain issues.
• The United States represents an additional strategic market for Ternium, providing access to a more stable steel market, though competitive pressures and fluctuating tariffs can impact profitability.
Ternium’s ability to navigate these diverse markets will be crucial for its future performance. However, the economic slowdown and reduced steel demand, particularly in the construction and automotive sectors, are affecting both domestic and international demand.
Challenges in the Steel Industry and Ternium's Strategy
The steel industry in general has been under considerable pressure in 2024 due to a global slowdown in industrial activity, rising energy prices, and geopolitical instability. For Ternium, the company faces the challenge of maintaining its competitive edge while dealing with these external pressures.
The decline in steel prices and reduced demand, especially in key markets such as China, the EU, and the United States, is a significant challenge for Ternium. Despite its growth in iron ore shipments and a 10% increase in steel shipments, the company is still unable to achieve a strong return on its operations.
Ternium will likely need to adopt strategic measures, including cost-reduction initiatives, improving product offerings, and exploring new markets to weather these tough conditions and return to profitability.
Key Takeaways:
• Net profit in Q4 2024: $333 million, a 40% decline compared to Q4 2023 ($554 million).
• Net sales for Q4: Declined by 21% to $3.876 billion.
• Operational profit: Dropped by 93%, totaling $582 million.
• Steel product shipments: Decreased by 7% to 3.764 million mt.
• Iron ore shipments: Declined by 12% to 1.752 million mt.
• Annual 2024 performance:
o Net profit decreased by 82%, down to $174 million.
o Net sales remained stable at $17.649 billion.
o Operational profit fell by 43%, reaching $1.263 billion.
• Increase in shipments: Steel product shipments up by 10% to 15.622 million mt, iron ore shipments up by 56% to 6.426 million mt.
• Regional shipment breakdown: Mexico remained the largest market with 1.970 million mt, followed by Brazil (965,000 mt), other South American markets (496,000 mt), and other regions (333,000 mt).
• Operational challenges: Global economic factors, price declines, and reduced demand in key markets have significantly impacted Ternium’s financials in 2024.
