Ternium S.A. · NYSE:TX
Ternium — Presentation (March 2019)
56 slides from Ternium's investor presentation, Mar 19, 2019
Slide 1: Annual Report 2018
ANNUAL REPORT 2018 "TH A
Slide 2: Contents
CONTENTS The Company Chairman's Letter Economic & Financial Highlights Innovation Health & Safety Environment Human Resources Value Chain Communities Governance Management's Report Consolidated Financial Statements Parent Financial Statements Risk Factors 3 . Annual Report 2018 THE COMPANY
Slide 3: About Ternium
4 . Ternium ABOUT TERNIUM Ternium is Latin America’s leading flat steel producer with an annual crude steel production capacity of 12.4 million tons. We operate in Mexico, Brazil, Argentina, Colombia, the southern United States and Central America through regional manufacturing facilities, service c
Slide 4: Forward-looking statements and basis of presentation
The financial and operational information contained in this annual report is based on Ternium’s operational data and on the Company’s consolidated financial statements, which were prepared in accordance with IFRS and IFRIC interpretations as issued by the IASB and adopted by the European Union and p
Slide 5: Our People and Deep Ties with Our Communities
OUR PEOPLE. A program for recently-graduated professionals is at the core of a strategy to recruit and retain talent. DEEP TIES WITH OUR COMMUNITIES We believe that having deep ties with our communities is also fundamental to the company's long- term sustainability. We are having a significant posit
Slide 6: Chairman's Letter
7 . Annual Report 2018 CHAIRMAN'S LETTER 2018 was a very good year for Ternium. Shipments rose 12% to a record 13 million tons as we incorporated a full year of sales from our new slab producing facility in Brazil. EBITDA rose 40% to a record $2.7 billion reflecting favorable market pricing conditio
Slide 7: Economic & Financial Highlights: Record Results in 2018
Paolo Rocca Chairman 9 . Annual Report 2018 ECONOMIC & FINANCIAL HIGHLIGHTS RECORD RESULTS IN 2018 Ternium produces flat and/or long steel products in Mexico, Brazil, Argentina, the United States, Colombia and Guatemala. We report steel shipments under three geographical regions: Mexico, the Souther
Slide 8: Economic Value Generated and Distributed (2018)
ECONOMIC VALUE GENERATED AND DISTRIBUTED (2018)
Slide 9: Five-year steel sales volume and financial indicators
10 . Ternium 2018 2017 2016 2015 2014 STEEL SALES VOLUME (THOUSAND TONS) Mexico 6,544.8 6,622.8 6,405.2 5,933.4 5,632.2 Southern Region 2,301.1 2,456.0 2,220.8 2,552.2 2,510.9 Other Markets 4,105.2 2,517.7 1,138.1 1,114.6 1,238.5 Total 12,951.1 11,596.6 9,764.0 9,600.3 9,381.5 FINANCIAL INDICATORS (
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Slide 12: Innovation
14 . Ternium We strive to run safe operations, creating value for our customers, increasing productivity, enhancing the value chain's competitiveness, achieving a highly efficient and sustainable industrial base and establishing a long-term presence in thriving communities. These tasks require our c
Slide 13: Inspection at Height: Drone Technology
INSPECTION AT HEIGHT. The drone technology replaces manual inspection, thus eliminating complex tasks. 15 . Annual Report 2018 INNOVATION
Slide 14: In-House Monitoring and SMART Factory
IN-HOUSE MONITORING. Ternium runs its own 24/7 monitoring center to oversee all operations and services. amount of data generated by our production lines. All these new technologies require to be adequately protected against unauthorized access. Currently, we are moving towards the construction of a
Slide 15: VR Training and Process Automation
VR TRAINING. Virtual reality offers a safe environment to train employees and avoid operational interruptions. 17 . Annual Report 2018 INNOVATION accounts payable, accounts receivable, sales back office and industrial engineering administration. We are advancing projects to gain productivity in acco
Slide 16: Collaborative Approach to Research Activities
relationships but also to plan and develop new processes, which may sometimes require the incorporation of new equipment and technology. At Ternium, we carry out applied research efforts in different ways. We develop steel products through in-house programs, joint projects with leading industrial cu
Slide 17: 2016 - 2018
125 100 18 50 28 00 14 15 2016 m7 2018
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Slide 19: Health & Safety Policy
20 . Ternium Ternium has a policy guiding its efforts to achieve excellence in occupational health and safety. According to this policy, the assessment of risks and management of our people's health and safety must be integrated in all our business processes. Management is responsible and accountabl
Slide 20: Injury Frequency Rate
INJURY FREQUENCY RATE Total quantity of injuries per million hours worked
Slide 21: Health & Safety: Safety First
21 . Annual Report 2018 HEALTH & SAFETY SAFETY FIRST Our Safety First program shows a number of initiatives to foster a more comprehensive safety culture to prevent incidents and accidents. Under the Safety Hour program, middle and senior managers tour operating areas for an hour, three times a week
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Slide 23: Environment
24 . Ternium The protection of the environment is a fundamental value for Ternium. Our goal is to reach the highest standards of environmental performance in order to minimize the environmental footprint of our operations. To achieve this, we are continuously working on the improvement of our integr
Slide 24: Energy Intensity
ENERGY INTENSITY Gigajoules per ton of steel produced. Year-end.
Slide 25: Environment: Energy and Climate
25 . Annual Report 2018 ENVIRONMENT ENERGY AND CLIMATE The steel industry is energy intensive. There are two main technologies for producing steel: the blast furnace / basic oxygen furnace (BF/BOF) route, which consumes mainly iron ore and uses metallurgical coal as its main energy source; and the e
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Slide 27: Co-products and Crude Steel
n Co-products l Crude steel (CS)
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Slide 30: Human Resources
32 . Ternium Over the last decade, Ternium has become a leading flat steel producer in the region by virtue of its main asset: a team of committed, innovative, industrious, diverse and highly qualified individuals. In 2018, Ternium's team was composed of approximately 20,500 persons, the majority of
Slide 31: Salaried Employees by Gender
33 . Annual Report 2018 HUMAN RESOURCES SALARIED EMPLOYEES BY GENDER # of people
Slide 32: Employees by Gender and Nationality
n Men n Women SALARIED EMPLOYEES BY NATIONALITY December 2018
Slide 33: Employee Survey, Development and Training
The overall participation rate reached 88% of targeted employees. The findings from the analysis of the poll included the following: • Hourly employees. 96% of surveyed participants indicated overall satisfaction in their responses; 97% stated that they felt proud of working at Ternium. • Salaried e
Slide 34: Performance Assessment
n Supervisors n Hourly Employees n Salaried Employees mandatory, 74% of our employees provided upward feedback in 2018's performance assessments, which is an indication of the credibility achieved by Ternium´s procedures. A performance assessment process based on a measurable set of objectives is an
Slide 35: Employee Evaluation of Supervisors
n Employees that evaluated their supervisor n Supervisors with at least one evaluation 35 . Annual Report 2018 VALUE CHAIN
Slide 36: Value Chain: ProPymes SME Program
36 . Ternium Ternium offers support to small and medium sized enterprises (SMEs) through a program that provides a variety of services, including training, industrial assistance, institutional assistance, commercial support and financial aid. With the participation of approximately 1,600 companies,
Slide 37: ProPymes Industrial and Institutional Assistance
n Mexico n Argentina ProPymes ' industrial assistance programs focus on a broad array of issues from the use of automation technology and the optimization of production facilities, to the development of environment, health and safety protocols and human resources management. During 2018, ProPymes de
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Slide 40: Communities
39 . Annual Report 2018 COMMUNITIES
Slide 41: Communities: Education and Local Programs
40 . Ternium With more than seventy years of industrial experience, Ternium´s corporate history has inspired our work with our communities along these years, which is guided by an underlying premise: We believe that the long-term success of an industrial project depends on the support it receives fr
Slide 42: Technical Gene Program - Teachers Trained
n Ongoing programs n ETRR in Pesquería, Mexico 41 . Annual Report 2018 COMMUNITIES TECHNICAL GENE PROGRAM – TEACHERS TRAINED # of Teachers
Slide 43: Technical Gene Program - Participants
TECHNICAL GENE PROGRAM – PARTICIPANTS # of Students
Slide 44: Technical Schools and Robotics Contest
Learning methodology in technical classes, an innovative way to learn and develop teamwork and leadership skills. The ETRRs holds standardized testing for math, reading and socio-emotional skills including items from the Program for International Student Assessment (PISA) Math and Reading tests. Dur
Slide 45: Volunteering Program and Scholarships
VOLUNTEERING PROGRAM. Ternium 's employees and their families volunteered to improve the Japão municipal school in Santa Cruz, Rio de Janeiro, Brazil. 43 . Annual Report 2018 COMMUNITIES SUPPORT TO HIGH-SCHOOL STUDENTS Our Merit Awards program was founded in 1976 in Argentina, making it the longest-
Slide 46: Merit Awards and Sports Programs
n Argentina n Mexico MERIT AWARDS # OF SCHOLARSHIPS MEXICO 2018 2017 2016 2015 ARGENTINA 2018 2017 2016 2015 OTHER COUNTRIES 2018 2017 2016 2015 ROBERTO ROCCA EDUCATION PROGRAM # OF SCHOLARSHIPS (2018) Mexico Argentina Colombia Guatemala Total SPORTS AND A HEALTHY LIFESTYLE As part of our drive to p
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Slide 48: Governance: Corporate Structure
46 . Ternium Ternium S.A. is organized as a public limited liability company (société anonyme) under the laws of the Grand Duchy of Luxembourg. The Company holds controlling stakes in steel companies operating in Latin America and the Southern United States. San Faustin S.A., the holding company of
Slide 49: Summary Results
52 . Ternium This review of Ternium’s financial condition and results of operations is based on, and should be read in conjunction with, the Company’s consolidated financial statements as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016 (including the notes ther
Slide 50: Light Vehicle Production - Mexico
Source: worldsteel LIGHT VEHICLE PRODUCTION - MEXICO Million tons
Slide 51: Management's Report
Source: Mexican Automotive Industry Association 55 . Annual Report 2018 MANAGEMENT'S REPORT technology tools. For more information on the development of new products and services for our customers see the chapter "Innovation" in this annual report. During the first quarter of 2018, steel prices in M
Slide 52: Southern Region and Other Markets
Source: Argentine Statistics Institute Region, mainly in Argentina, amounted to $68 million in 2018, mainly related to the upgrade of the hot-rolling mill, the improvement of environmental and safety conditions, the expansion of connectivity and equipment automation, and maintenance activities. OTHE
Slide 53: Management's Report: Ternium Brasil
Source: Argentine Automotive Producers Association 57 . Annual Report 2018 MANAGEMENT'S REPORT effect of the consolidation of Ternium Brasil on our shipments in the Other Markets region. Ternium Brasil has an agreement to supply slabs to thyssenkrupp AG’s former re-rolling facility in Calvert, Alaba
Slide 54: Consolidated Financial Statements
CONSOLIDATED FINANCIAL STATEMENTS *Proposed dividend FINANCIAL LIABILITIES Our financial liabilities consist mainly of loans with financial institutions. As of December 31, 2018, these facilities were mainly denominated in U.S. dollars (98.7% of total financial liabilities). Total financial debt (in
Slide 55: Ternium S.A. Société Anonyme
TERNIUM S.A. SOCIÉTÉ ANONYME Pablo Brizzio Chief Financial Officer 145 . Annual Report 2018
Slide 56: Risk Factors
RISK FACTORS Pablo Brizzio Chief Financial Officer 158 . Ternium