Ternium S.A. · NYSE:TX
Ternium — Investor Day (June 2015)
31 slides from Ternium's investor day presentation, Jun 18, 2015
Slide 1: Investor Day 2015
TERNIUM lInvestor Day –June 18, 2015 TERNIUM INVESTOR DAY 2015 Solomon R. Guggenheim Museum June 18, 2015
Slide 2: Forward-Looking Statements
TERNIUM lInvestor Day –June 18, 2015 2 Forward-Looking Statements This presentation contains certain forward-looking statements and information relating to Ternium S.A. andits subsidiaries (collectively, “Ternium”) that are based on the current beliefs of its management as well as assumptionsmadebya
Slide 3: Event Schedule
TERNIUM lInvestor Day –June 18, 2015 3 8:30am Registration and breakfast 9:15am Presentation by Daniel Novegil, CEO 10:00am Q&A session with Ternium management 11:00am Closing remarks Event Schedule
Slide 4: Speakers
TERNIUM lInvestor Day –June 18, 2015 4 Daniel Novegil, Chief Executive Officer Mr.Novegil, who has been Ternium’s CEO since 2005, is an Industrial Engineer. He graduated from Universidad de Buenos Aires and has a Master of Science in Management degree from Stanford University. Mr.Novegil is a member
Slide 5: Agenda: Safety
TERNIUM lInvestor Day –June 18, 2015 5 Safety Steel Markets Competitive Positioning Usiminas Performance Conclusion
Slide 6: Safety: Significant improvement in safety performance
TERNIUM lInvestor Day –June 18, 2015 6 • Safety program launched in 2010 • Main ongoing initiatives: oDuPont technical assistance to address potential process hazards oOHSAS18001 certification oIntegral safety and environmental investment plan • Health & Safety excellence recognition by worldsteelin
Slide 7: Agenda: Steel Markets
TERNIUM lInvestor Day –June 18, 2015 7 Safety Steel Markets Competitive Positioning Usiminas Performance Conclusion
Slide 8: Steel Markets: World ex-China outlook for 2016 improving
TERNIUM lInvestor Day –June 18, 2015 Ref: (million tons) Crude steel capacity Nafta Europe CIS China Japan RoW South America 162 82 49 93 60 Crude steel use Overcapacity 417 20 287 72 426 152 1154 131 Apparent steel use (ASU) ASU/capita y-o-y growth rate (kg) 2014 2015 2016 2016 China -3.3% -0.5% -0
Slide 9: Steel Markets: Increasing unfair trade cases
TERNIUM lInvestor Day –June 18, 2015 9 Steel Markets Increasing unfair trade cases • Trade remedy case initiations at highest levels since 2001 • The US and Eurozone governments showing concern about unfair trade • AISI, Eurofer and Alacero highlighted the importance of a level playing field for the
Slide 10: Latam Steel Market: Mexico is the most promising
TERNIUM lInvestor Day –June 18, 2015 10 LatamSteel Market Mexico is the most promising steel market in the region • Latam’s four largest markets (MEX, BRA, ARG, COL) account for: o67% of population o71% of GDP o77% of steel use • Import substitution potential (direct and indirect) • Mexico is one of
Slide 11: Agenda: Competitive Positioning
TERNIUM lInvestor Day –June 18, 2015 11 Safety Steel Markets Competitive Positioning Usiminas Performance Conclusion
Slide 12: Competitive Positioning: Footprint in the Americas
TERNIUM lInvestor Day –June 18, 2015 12 • TX is a leading steel company in Latin America • 9.4 million tons of steel products shipped in 2014 • NAFTA is driving TX’s growth and accounted for 64% of shipments in 2014 • Ternium participates in Usiminas’ control group Competitive Positioning Footprint
Slide 13: Flexible and diversified production configuration
TERNIUM lInvestor Day –June 18, 2015 13 Competitive Positioning Flexible and diversified production configuration • Diversified raw material base supports margin stability • TX’s mix of technologies provides production flexibility 34% 28% 38% Iron ore DRI EAF CC Iron ore Coking coal BF BOF CC Purcha
Slide 14: Competitive Positioning – Mexico: Solid growth in the Mexican market
TERNIUM lInvestor Day –June 18, 2015 10.3 11.5 12.7 12.6 14.2 2010 2011 2012 2013 2014 Industrial Commercial 14 Competitive Positioning –Mexico Solid growth in the Mexican market • Highest ASU per capita in the region (189 kg) • Strong link to the US manufacturing industry • Substantial opportunitie
Slide 15: Mexican Industrial Market: Differentiation based on products and services
TERNIUM lInvestor Day –June 18, 2015 15 Competitive Positioning –Mexican Industrial Market Ternium’s differentiation based on products and services • Strengthened positioning in Mexican industrial market through: oNew products development oCertification of new steel grades oConsolidation of operatio
Slide 16: Mexican Auto Industry
TERNIUM lInvestor Day –June 18, 2015 16 Competitive Positioning –Mexican Auto Industry Ternium is the largest supplier to the auto industry in Mexico Light vehicle production in Mexico (million units) • Among the fastest growing auto industries in the world • Growth coming from competitive labor cos
Slide 17: Commercial Market: Enhancing our service offering in Mexico
TERNIUM lInvestor Day –June 18, 2015 17 Competitive Positioning –Commercial Market Enhancing our service offering in Mexico TX distribution network in Mexico • High-margin market resulting from customization and service • Value coming from branding, local presence & logistics management • High entry
Slide 18: Argentina: Resilient steel market with a positive outlook
TERNIUM lInvestor Day –June 18, 2015 18 Competitive Positioning –Argentina Resilient steel market with a positive outlook • Shipments remain stable at relatively high levels • Mixed performance of end markets oConstruction improving and becoming more steel intensive oOil & gas investments growing oA
Slide 19: TX service differentiation
TERNIUM lInvestor Day –June 18, 2015 19 Competitive Positioning TX service differentiation • TX developed a technology infrastructure to support its service differentiation oMain characteristics: full coverage, real-time processing, reliability and highest security standards oBenchmarking from innov
Slide 20: Agenda: Usiminas
TERNIUM lInvestor Day –June 18, 2015 20 Safety Steel Markets Competitive Positioning Usiminas Performance Conclusion
Slide 21: Usiminas: A leading player in the Brazilian steel market
TERNIUM lInvestor Day –June 18, 2015 21 Usiminas A leading player in the Brazilian steel market • Usiminas is the leader in the Brazilian flat steel market oLargest supplier of steel to the automotive industry oIntegrated producer from iron ore to high-end products • Brazil’s potential oLargest econ
Slide 22: Usiminas: Latest developments
TERNIUM lInvestor Day –June 18, 2015 22 Usiminas Latest developments • Investment in Usiminas not performing as initially expected, leading to carrying value impairment oRecession of Brazilian economy oWeakening of steel consumption oDecrease of iron ore prices • Brazilian steel market under pressur
Slide 23: Agenda: Performance
TERNIUM lInvestor Day –June 18, 2015 23 Safety Steel Markets Competitive Positioning Usiminas Performance Conclusion
Slide 24: Performance: TX is executing its strategic plan
TERNIUM lInvestor Day –June 18, 2015 24 • Strong market share in growing markets • Focus on value-added, high-end products and service differentiation • Flexible and diversified production configuration • Innovation, industrial expertise and long-term view EBITDA margin (%) Performance TX is executi
Slide 25: Cost cutting initiatives: Logistics management program
TERNIUM lInvestor Day –June 18, 2015 • Streamlining of the supply chain, from raw material procurement to steel product distribution • Main savings achieved in: oFreight services optimization oFreight rates negotiations based on productivity gains oReduction of external warehousing oNew centralized
Slide 26: Cost cutting initiatives: Contractors management program
TERNIUM lInvestor Day –June 18, 2015 • Innovative program to improve productivity of Ternium’s services suppliers • Main savings achieved in: oLabor productivity of maintenance services oPackaging services and materials costs oOptimization of mobile equipment rental oConsolidation of contractors’ fr
Slide 27: Cost cutting initiatives: Energy saving program
TERNIUM lInvestor Day –June 18, 2015 27 Energy saving program Performance Cost cutting initiatives • Program aimed at reducing consumption of natural gas, electricity, steam and industrial gases • Program based on: oEnergy audits in main facilities oTechnical assistance (Innowatio) oShared best prac
Slide 28: Performance: Solid financial position
TERNIUM lInvestor Day –June 18, 2015 1.3x 1.0x 1.2x 1.1x Dec12 Dec13 Dec14 Mar15 577 1023 883 444 ˜500 2011 2012 2013 2014 2015f 28 Performance Solid financial position • Low indebtedness gives TX flexibility in a challenging environment • End of capex cycle reinforces net debt reduction • 20% incre
Slide 29: Agenda: Conclusion
TERNIUM lInvestor Day –June 18, 2015 29 Safety Steel Markets Competitive Positioning Usiminas Performance Conclusion
Slide 30: Conclusion: TX's Strategic Agenda
TERNIUM lInvestor Day –June 18, 2015 30 Conclusion TX’s Strategic Agenda Our Focus •Leader in attractive markets, high market share •Focus on value-added products •Differentiation •Profit sustainability •Growth Our Objectives •Expansion in North America, mainly Mexico •Increase high-end product offe
Slide 31: TERNIUM lInvestor Day –June 18, 2015 31
TERNIUM lInvestor Day –June 18, 2015 31