Rich Emmerson

Rich Emmerson asked for the 4Q outlook on cash cost performance, specifically breaking down expected efficiencies in Usiminas, Mexico, and Argentina. He also questioned the price expectations for Argentina and Mexico given subdued activity, and sought clarification on whether the company still plans to reach $2.5 billion in CapEx for the year, following a recent decline.

Answer

Máximo Vedoya, Ternium's CEO, confirmed that CapEx for 2025 is projected to be between $2.5 billion and $2.6 billion, with 2026 CapEx expected around $1.9 billion. He noted slight price decreases in Mexico and Argentina for 4Q due to mix changes, but stable North American prices with potential increases in Mexico by early 1Q. Pablo Brizzio, CFO, explained that 3Q margin increases were driven by lower raw material costs and the cost reduction plan, with further cost reductions expected in 4Q across all regions, helping sustain margins despite slight price declines.

Rich Emmerson, Managing Director at Goldman Sachs, sought clarity on Ternium's fourth-quarter outlook, specifically requesting a breakdown of cash cost performance and expected improvements across Usiminas, Mexico, and Argentina operations. He also inquired about price expectations for Argentina and Mexico, given subdued construction activity and overall market conditions. Additionally, Mr. Emmerson asked for an update on the full-year CapEx target, noting a recent quarterly decline.

Answer

Máximo Vedoya, Ternium's Chief Executive Officer, confirmed that Q2 2025 was the peak for CapEx at $800 million, with Q3 at $700 million, and Q4 projected at $600 million, aligning the full-year 2025 CapEx between $2.5 billion and $2.6 billion. He also provided CapEx projections for 2026 ($1.9 billion) and 2027 ($1.1 billion). Mr. Vedoya noted a slight decrease in Q4 prices for Mexico and Argentina, partly due to seasonal mix changes, but anticipated stable North American prices and potential increases in some Mexican sectors by late Q4/early Q1. Pablo Brizzio, the company's Chief Financial Officer, attributed Q3 margin improvements to lower raw material costs and the ongoing cost reduction plan, which is expected to be fully implemented by year-end. Mr. Brizzio stated that despite slight price declines, margins are expected to be sustained in Q4 due to continued cost efficiencies.