UPDATE 2-Steelmaker Ternium upbeat on Mexico after earnings slide
(Updates with context)
By Kylie Madry
MEXICO CITY, April 25 (Reuters) - Steel producer Ternium on Tuesday predicted stronger core earnings in the second quarter of this year than the first, on the back of an anticipated rise in steel shipments and prices, even as its profits shrunk over the first quarter.
The company, which operates across the Americas, posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) down 58% from a year earlier at $508 million for January to March.
This brought its quarterly profit down 45% to $480 million as Ternium shipped out less iron ore and steel prices fell, with revenues dipping 16% to $3.62 billion.
While Ternium predicted lower raw material costs, it warned that "uncertainty regarding economic activity in (North America) in the second half of 2023 could affect steel prices."
In Argentina, Ternium said shipments should remain stable in the second quarter, though rampant inflation and the country's "significantly unstable macroeconomic environment" will likely hit demand in the second half.
In Mexico, Ternium's largest steel market, the company said it shipped record volumes in the first quarter as demand rose on a recovery in automotive manufacturing.
More demand from carmakers and commercial clients, as well as market share gains, should boost steel volumes in Mexico this quarter, it added.
In February, Ternium announced plans to build a new $2.2 billion steel production plant, to be completed by the first half of 2026.
Chief Executive Maximo Vedoya said at the time Ternium was considering building the plant near its
current Pesqueria site
in northern Mexico, though a final decision had not been taken.
Ternium did not mention the plant in Tuesday's release, but said it had allocated spending worth $197.9 million during the quarter to "the development of new expansion projects" and improvements at its main facilities.
A North American trade pact will require at least 70% of steel used in cars to be "melted and poured" in the region. (Reporting by Kylie Madry; Writing by Valentine Hilaire; Editing by Sarah Morland and David Gregorio)
