The EBITDA figure exceeded analyst expectations, driven by stronger shipments, rising realized prices and a sharp expansion in profitability.
Ternium's EBITDA margin widened to 17% from 12% in the first quarter, as steel shipments increased and prices improved in its key Mexican and Brazilian markets.
The stronger-than-expected results could be welcomed by investors looking for signs that trade protection measures are helping domestic steelmakers regain pricing power after years of pressure from imports.
Santander analysts said they expected a positive market reaction when trading resumes on Wednesday.
Mexico and Brazil market trends
In Mexico, Ternium said shipments should continue recovering as commercial demand remains firm, helped by pipeline projects, import substitution by manufacturers and public infrastructure works. The company's shipments in Mexico rose 17% from a year earlier during the quarter.
In Brazil, Ternium said demand remained mixed, with strength in autos and infrastructure equipment offset by weakness in agricultural machinery.
The company also highlighted a seasonal rebound in shipments from its mining unit in Brazil, while capital spending remained elevated as it advances the expansion of its Pesqueria steelmaking complex in northern Mexico.
Second-quarter profit and sales rise
Latin American steelmaker Ternium reported an 80% jump in second-quarter net income on Tuesday and forecast stronger earnings ahead, as recovering demand in Mexico, higher steel prices and widening margins pointed to an improving outlook for the region's steel sector.
The company posted net income of $465 million for the quarter, while adjusted EBITDA climbed 78% from a year earlier to $717 million. Net sales rose 10% to $4.34 billion.
Outlook points to another quarterly gain
Ternium said second-quarter performance was supported by stronger steel market conditions in Mexico, where measures against cheap imports and inventory normalization boosted demand, as well as improving sentiment in Brazil following government actions aimed at promoting fair competition.
The company said adjusted EBITDA should rise again in the third quarter compared with the second, driven by higher shipments and improved margins as gains in revenue per ton more than offset higher costs.
Steel shipments rose 4% from the previous quarter to nearly 3.9 million metric tons, while average realized steel prices increased to $1,072 per ton from $1,008 per ton in the first quarter.
TX•
