UPDATE 3-Steelmaker Ternium reports near 100% drop in Q4 net profit as costs rose
(Adds announcement of $2.2 bln investment in paragraph 7-8)
MEXICO CITY, Feb 14 (Reuters) - Steel producer Ternium reported on Tuesday a fourth-quarter net profit of $59 million, down almost 100% from the $1.1 billion it reported in the year-ago period, as costs increased and steel prices fell.
The company, which operates in Mexico, Brazil, Argentina, Colombia, the United States and Central America, posted revenue of $3.546 billion in the three months to the end of December, an 18% decrease.
Cost of sales in the quarter stood at $3.1 billion, a rise of $399 million from the same period the year before, mainly due to a hike in raw material prices.
Revenue per ton in the fourth quarter of 2022 dropped, compounded by lower steel prices in Ternium's steel markets, a company statement said.
On a year-over year basis, revenue per ton decreased $352 in 2022, the statement added.
"The company expects this dynamic to gradually reverse itself over the course of the next few quarters, with margins expected to normalize as cost per ton decreases and steel prices in the USMCA region recover," the statement said.
The company also announced on Tuesday an estimated $2.2 billion investment in a new steel production plant, which it expects to be operational by the first half of 2026 and to have an annual production capacity of 2.6 million tonnes.
It also said it was increasing its forecast of investments in fixed assets in 2023 to $1.1 billion from $1.0 billion due to a new wind farm in Argentina.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter fell 80% from the year before to $303 million.
Ternium added it anticipates a continued increase in steel volumes in Mexico during the first half of 2023.
Meanwhile, in Argentina, the firm expects a moderate sequential decrease of steel shipments in the first quarter of 2023 due to a seasonal decline in customer orders. (Reporting by Valentine Hilaire and Marion Giraldo; Editing by Isabel Woodford)
