Ternium S.A. · NYSE:TX
Ternium — Investor Day (September 2018)
32 slides from Ternium's investor day presentation, Sep 7, 2018
Slide 1: Ternium Investor Day 2018
September 7, 2018 Máximo Vedoya - CEO 7 September 2018 Ternium Investor Day 2018 Ternium Investor Day 2018 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements and information relating to Ternium S.A. and its subsidiaries (collectively, “Ternium”) that are based on the current beliefs of its management as well as assumptions made by and information currently available
Slide 3: Event Schedule
Event Schedule . 8:30 a.m. Registration and breakfast . 9:00 a.m. Presentation by Máximo Vedoya, CEO, and Ternium management . 10:00 a.m. Q&A session . 11:00 a.m. Closing remarks Ternium Investor Day 2018 3
Slide 4: Speakers
Speakers Máximo Vedoya, Chief Executive Officer Mr. Vedoya has been Ternium’s CEO since March 2018. He is an Industrial Engineer from Instituto Tecnológico de Buenos Aires (Argentina) and holds a Master of Science in Management degree from Stanford University (USA). Mr. Vedoya is President of CANACE
Slide 5: Agenda
Agenda Sustainable Profitability Steel Markets The Next Phase in Ternium’s Development Conclusion Ternium Investor Day 2018 5
Slide 6: Sustainable Profitability
Sustainable Profitability Ternium Investor Day 2018 6
Slide 7: A comprehensive management approach
Sustainable Profitability A comprehensive management approach . Proactive approach to environment, health and EBITDA Margin (% of net sales) 25% safety (EHS) management Ternium Peers range1 . 20% Focus on differentiation through sophisticated 15% products and services 10% 5% . Deep ties with our com
Slide 8: Strong commitment to the environment, health and safety
Sustainable Profitability Strong commitment to the environment, health and safety . Standardized Environment Health & Safety (EHS) Lost time injury frequency rate management systems (# of events / million hours worked) . Extensive training and management performance accountability on EHS 2.6 . 1.4 D
Slide 9: Commitment to integrity through strong corporate governance
Sustainable Profitability Commitment to integrity through strong corporate governance . Audit committee (three independent directors) . Internal Audit Department reporting to the Chairman and the Audit Committee . Business Conduct Compliance Officer reporting to the CEO . Compliance department that
Slide 10: Fostering the steel industry value chain in Mexico and Argentina
Sustainable Profitability Fostering the steel industry value chain in Mexico and Argentina . Supporting 1,600 SMEs (customers and suppliers) through: . Training programs . Industrial projects and business consultancy . Institutional assistance . Commercial support and financial aid . Playing an acti
Slide 11: Deep ties with our communities
Sustainable Profitability Deep ties with our communities . Working together with local institutions to enhance the education and welfare of our communities . Scholarships, internships, teachers’ training, infrastructure funding, volunteering programs . Health prevention campaigns, infrastructure fun
Slide 12: Successful implementation of our business strategy
Sustainable Profitability Successful implementation of our business strategy . Strong operating performance Economic value generated (2017) . Solid financial position (1x net debt to EBITDA) Employees Suppliers . $900 $6.8 Increasing return to shareholders million billion R&D Capital Shipments (mill
Slide 13: Steel Markets
Steel Markets Ternium Investor Day 2018 13
Slide 14: Global Steel Markets
Global Steel Markets Steel consumption growing in a world that is raising barriers against unfair steel trade . Main steel consuming countries growing Apparent steel use (2018f) simultaneously . Chinese steel consumption increasing significantly year-to-date . Unfair steel trade in the agenda of gov
Slide 15: Mexico: Attractive steel market driven by the industrial sector
Mexico Attractive steel market driven by the industrial sector . Ternium’s steel shipments CAGR of 7% (2013-2017) Ternium’s steel shipments in Mexico . (million units) Ternium’s product range increasingly more value- Industrial Commercial 6.4 6.6 added over the years 5.6 5.9 5.0 . Growth driven main
Slide 16: Mexico: Industrial activity resilient to trade uncertainties
Mexico Industrial activity resilient to trade uncertainties . Automotive industry remains strong Light vehicle production – Mexico . (million units) Record 3.9 million light vehicles produced in 2017 3.9 4.0 3.5 3.2 3.4 (+13% vs 2016) 2.9 . 4.0 million units expected for 2018 . Other industry indica
Slide 17: Mexico: Construction activity supported by the private sector
Mexico Construction activity supported by the private sector . Private construction spending offsetting a decrease Construction spending – Mexico (billion of constant MXN) in government investment in infrastructure Private Government 255 255 . 238 241 Uncertainties related to Mexican elections and t
Slide 18: Argentina: Decreased flat steel consumption expected in 2018
Argentina Decreased flat steel consumption expected in 2018 . Flat steel use in Argentina revised down in 2018 Apparent flat steel use – Argentina (million tons) . 3.1 -5% Agribusiness sector affected by adverse weather 2.9 2.7 conditions (grain production down 18% y-o-y in 2.5 2017/18) . Significan
Slide 19: Argentina: Positive outlook for agribusiness and energy
Argentina Positive outlook for agribusiness and energy . Agribusiness sector recovery Grain production – Argentina (million tons) . Record acreage sown for the coming season 137 140 . 123 125 Projected grain production +24% y-o-y 105 111 113 91 . Development of the Vaca Muerta shale formation . Natu
Slide 20: Brazil: Steel consumption rebounding in 2018
Brazil Steel consumption rebounding in 2018 . Brazilian apparent steel use expected to increase Apparent steel use – Brazil 6% in 2018 (million tons) 25.6 . 21.3 Industrial activity growing, including automotive 18.2 19.2 +6% 20.4 manufacturing . Usiminas: . Operational performance improving 2014 20
Slide 21: Colombia: Growth opportunity in the long steel market
Colombia Growth opportunity in the long steel market . Colombian steel market is the fourth largest in Latin Apparent long steel use – Colombia (million tons) America Local production Imports 2.5 . 2.1 2.2 2.2 2.1 Imports account for a significant share of long steel 1.8 1.9 consumption . Ternium to
Slide 22: The Next Phase in Ternium's Development
The Next Phase in Ternium’s Development Ternium Investor Day 2018 22
Slide 23: Ternium Brasil: bringing a state-of-the-art facility to its full potential
The Next Phase in Ternium’s Development Ternium Brasil: bringing a state-of-the-art facility to its full potential . First actions WC headcount Productivity . (Sep 2017 = 100) (3Q 2017 = 100) Short-term plan to establish reliable operations 109 . 100 100 Focus on increasing production rates 85 . Imp
Slide 24: Consolidating our leadership in the Mexican flat steel market: hot-rolling mill
The Next Phase in Ternium’s Development Consolidating our leadership in the Mexican flat steel market . New state-of-the-art hot-rolling mill at Pesquería HRC dimensional range Industrial Center 2525 . Significant expansion of Ternium’s product range New HRC capacity 2020 . Replacement of high value
Slide 25: Consolidating our leadership: galvanizing and painting lines
The Next Phase in Ternium’s Development Consolidating our leadership in the Mexican flat steel market . New hot-dipped galvanizing and painting lines . Most advanced painting technology in Mexico for high-end value-added products . Targeting HVAC1, home appliance and automotive industries . Annual p
Slide 26: Opportunity to expand our footprint in Mexico with high-end steel products
The Next Phase in Ternium’s Development Opportunity to expand our footprint in Mexico with high-end steel products . Unmatched technological capabilities in Latin America Apparent flat steel use – Mexico (million tons) to strengthen Ternium's competitive position Ternium Other local Imports 18.1 . 1
Slide 27: A significant transformation of our industrial system
The Next Phase in Ternium’s Development A significant transformation of our industrial system . Crude steel capacity up 71% after acquisition of Rio Crude steel capacity Hot-rolled coils capacity (million tons / year) (million tons / year) de Janeiro facility 12.4 13.4 . Hot-rolled coils capacity to
Slide 28: Change in management structure designed to fit a more complex industrial system
The Next Phase in Ternium’s Development Change in management structure designed to fit a more complex industrial system . New centralized industrial management area . Engineering . Automation Countries People . Health, safety & environment . Focus on capacity utilization, quality and maintenance Int
Slide 29: Increased R&D efforts to maximize our new state-of-the-art facilities
The Next Phase in Ternium’s Development Increased R&D efforts to maximize our new state-of-the-art facilities . Expansion of Ternium’s R&D capabilities . New R&D Lab in Pesquería . Enhance of metallurgy training for R&D staff (PhD/Master programs) . Opportunity to develop cutting-edge products suppo
Slide 30: Conclusion
Conclusion Ternium Investor Day 2018 30
Slide 31: Conclusion
Conclusion . Growing consumption in world steel markets supporting healthy margins for the steel industry . Increasing awareness of unfair steel trade leading to trade measures around the world . Sustainable business model with superior profitability and solid financial position . Excellence in indu
Slide 32: www.ternium.com
7 September 2018 www.ternium.com Ternium Investor Day 2018 32