Ternium S A : First Quarter 2025 Financial Statements

Published: 2025-04-29 19:34:06 ET TX

26 Boulevard Royal, 4th floor L - 2449 Luxembourg

R.C.S. Luxembourg: B 98 668

Page

Consolidated Condensed Interim Income Statements

Consolidated Condensed Interim Statements of Comprehensive Income

Consolidated Condensed Interim Statements of Financial Position

Consolidated Condensed Interim Statements of Changes in Equity

Consolidated Condensed Interim Statements of Cash Flows

Notes to the Consolidated Condensed Interim Financial Statements

General information and basis of presentation

Accounting policies

Acquisition of business - Increase of the participation in Usiminas Control Group and new governance structure of Usiminas

Segment information

Cost of sales

Selling, general and administrative expenses

Finance expense, Finance income and Other financial income (expenses), net

Property, plant and equipment, net

Intangible assets, net

Investments in non-consolidated companies

Distribution of dividends

Income tax - Pillar Two

Contingencies, commitments and restrictions on the distribution of profits

Related party transactions

Financial instruments by category and fair value measurement

Foreign exchange restrictions in Argentina

Recently Announced Tariffs on Imports in the United States

(All amounts in $ thousands)

Notes

Three-month period ended March 31,

2025 2024

Net sales 4

Cost of sales 5

(Unaudited)

3,932,808 4,778,297

(3,401,858) (3,674,744)

Gross profit

530,950

1,103,553

Selling, general and administrative expenses Other operating income (expense), net

6 (396,200)

(2,924)

(431,166)

2,469

Operating income

131,826

674,856

Finance expense 7

Finance income 7

Other financial (expense) income, net 7

Equity in earnings of non-consolidated companies 10

Provision for ongoing litigation related to the acquisition of a participation in Usiminas 13

(54,342)

68,491

48,512

15,871

(45,300)

(44,879)

82,554

(200,225)

19,560

Profit before income tax expense

165,058

531,866

Income tax expense

12 (22,727)

(40,435)

Profit for the period

142,331

491,431

Profit for the period

Attributable to: Owners of the parent Non-controlling interest

66,978

142,331

75,353

361,436

491,431

129,995

Weighted average number of shares outstanding

1,963,076,776

Basic and diluted earnings per share for profit attributable to the equity holders of the company (expressed in $ per share)

0.03

0.18

The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2024.

Three-month period ended March 31,

2025

(Unaud

2024

ited)

Profit for the period

142,331

491,431

Items that may be reclassified subsequently to profit or loss:

Currency translation adjustment

212,629

(100,278)

Currency translation adjustment from participation in non-consolidated

companies

Changes in the fair value of financial instruments at fair value through other

26,307

(11,785)

comprehensive income

(46,981)

269,729

Income tax related to financial instruments at fair value

36,112

111,581

Changes in the fair value of derivatives classified as cash flow hedges

51,443

(15,393)

Income tax related to cash flow hedges

(15,299)

4,618

Items that will not be reclassified subsequently to profit or loss:

Remeasurement of post employment benefit obligations (1,519) (5,414)

Remeasurement of post employment benefit obligations from participation

in non-consolidated companies 4 53

Other comprehensive income for the period, net of tax

262,696

253,111

Total comprehensive income for the period

405,027

744,542

Attributable to:

Owners of the parent

139,812

610,462

Non-controlling interest

265,215

134,080

Total comprehensive income for the period

405,027 744,542

December 31, 2024

Balances as of

March 31, 2025

Notes

(Unaudited)

ASSETS

Non-current assets

Property, plant and equipment, net

8,803,071

8,381,155

Intangible assets, net

1,018,919

1,022,111

Investments in non-consolidated companies

509,476

468,516

Other investments

340

22,979

Deferred tax assets

1,298,306

1,194,398

Receivables, net

1,029,511

12,659,623

961,298

12,050,457

Current assets

Receivables, net

738,958

772,726

Current income tax assets

142,895

129,713

Derivative financial instruments

7,619

4,483

Inventories, net

4,591,291

4,750,511

Trade receivables, net

1,812,062

1,562,058

Other investments

1,924,210

2,160,051

Cash and cash equivalents

1,831,183

11,048,218

1,691,263

11,070,805

Assets classified as held for sale

7,734

7,285

11,055,952

11,078,090

Total Assets

23,715,575

23,128,547

EQUITY

Capital and reserves attributable to the owners of the

parent

12,107,998

11,968,186

Non-controlling interest

4,428,598

4,163,383

Total Equity

16,536,596

16,131,569

LIABILITIES

Non-current liabilities

Provisions

592,331

552,600

Deferred tax liabilities

94,653

88,707

Non current tax liabilities

25,272

21,436

Other liabilities

782,569

765,961

Trade payables

967

5,402

Lease liabilities

171,316

163,666

Borrowings

1,828,945

3,496,053

1,560,047

3,157,819

Current liabilities

Provision for ongoing litigation related to the acquisition of a participation in Usiminas

455,500

410,200

Current income tax liabilities

32,810

106,883

Other liabilities

670,097

629,678

Trade payables

1,835,824

1,925,526

Derivative financial instruments

563

50,342

Lease liabilities

47,498

46,458

Borrowings

640,634

3,682,926

670,072

3,839,159

Total Liabilities

7,178,979

6,996,978

Total Equity and Liabilities

23,715,575

23,128,547

Attributable to the owners of the parent

Capital Treasury

stock shares

(1) (1)

Initial public offering expenses

Reserves (2)

Capital stock issue discount (3)

Currency translation adjustment

Retained earnings

Total

Non-controlling interest

Total Equity

Balance as of January 1, 2025

2,004,743

(150,000)

(23,295)

1,342,753

(2,324,866)

(2,129,551)

13,248,403

11,968,186

4,163,383

16,131,569

Profit (Loss) for the period

66,978

75,353

142,331

Other comprehensive income (loss) for the period

Currency translation adjustment

47,811

191,125

238,936

Remeasurement of post employment benefit obligations

(351)

(1,164)

(1,515)

Cash flow hedges and others, net of tax

31,846

4,298

36,144

Others (4)

(6,472)

(4,397)

(10,869)

Total comprehensive income (loss) for the period

25,023

47,811

66,978

139,812

265,215

405,027

Balance as of March 31, 2025 (unaudited)

2,004,743

(150,000)

(23,295)

1,367,776

(2,324,866)

(2,081,740)

13,315,381

12,107,998

4,428,598

16,536,596

The Company has an authorized share capital of a single class of 3.5 billion shares having a nominal value of $ 1.00 per share. As of March 31, 2025, there were 2,004,743,442 shares issued. All issued shares are fully paid. Also, as of March 31, 2025, the Company held 41,666,666 shares as treasury shares.

Includes legal reserve under Luxembourg law for $ 200.5 million, undistributable reserves under Luxembourg law for $ 1.4 billion and reserves related to the acquisition of non-controlling interest in subsidiaries for $ (72.4) million.

Represents the difference between book value of non-monetary contributions received from shareholders under Luxembourg GAAP and IFRS.

Includes mainly the changes of the fair value of financial instruments at fair value through other comprehensive income, net of tax.

Dividends may be paid by Ternium to the extent distributable retained earnings calculated in accordance with Luxembourg law and regulations exist. Therefore, retained earnings included in these consolidated condensed interim financial statements may not be wholly distributable.

Attributable to the owners of the parent

Capital Treasury

stock shares

(1) (1)

Initial public offering expenses

Reserves (2)

Capital stock issue discount (3)

Currency translation adjustment

Retained earnings

Total

Non-controlling interest

Total Equity

Balance as of January 1, 2024

2,004,743

(150,000)

(23,295)

965,211

(2,324,866)

(1,963,827)

13,910,629

12,418,595

4,393,264

16,811,859

Profit for the period

361,436

129,995

491,431

Other comprehensive income (loss) for the period

Currency translation adjustment

(21,685)

(90,378)

(112,063)

Remeasurement of post employment benefit obligations

(1,216)

(4,145)

(5,361)

Cash flow hedges and others, net of tax

(9,616)

(1,159)

(10,775)

Others (4)

281,543

99,767

381,310

Total comprehensive income (loss) for the period

270,711

(21,685)

361,436

610,462

134,080

744,542

Balance as of March 31, 2024 (unaudited)

2,004,743

(150,000)

(23,295)

1,235,922

(2,324,866)

(1,985,512)

14,272,065

13,029,057

4,527,344

17,556,401

The Company has an authorized share capital of a single class of 3.5 billion shares having a nominal value of $ 1.00 per share. As of March 31, 2024, there were 2,004,743,442 shares issued. All issued shares are fully paid. Also, as of March 31, 2024, the Company held 41,666,666 shares as treasury shares.

Represents the difference between book value of non-monetary contributions received from shareholders under Luxembourg GAAP and IFRS.

Includes mainly the changes of the fair value of financial instruments at fair value through other comprehensive income, net of tax.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

(All amounts in $ thousands)

2024

Three-month period ended March 31,

2025

Notes

(Unaudited)

Cash flows from operating activities

Profit for the period

142,331

491,431

Adjustments for:

Depreciation and amortization

8 & 9

184,099

170,858

Income tax accruals less payments

(50,381)

(12,653)

Equity in earnings of non-consolidated companies

(15,871)

(19,560)

Interest accruals less payments/receipts, net

8,928

(1,562)

Changes in provisions

2,966

(7,284)

Changes in working capital (1)

(54,586)

(265,710)

Net foreign exchange results and others

(55,749)

119,957

Provision for ongoing litigation related to the acquisition

participation in Usiminas

45,300

Net cash provided by operating activities

207,037

475,477

Cash flows from investing activities

Capital expenditures

8 & 9

(517,799)

(449,194)

Decrease (Increase) in other investments

242,828

377

Proceeds from the sale of property, plant and equipment

512

554

Dividends received from non-consolidated companies

1,089

1,023

Net cash used in investing activities

(273,370)

(447,240)

Cash flows from financing activities

Finance lease payments

(20,478)

(18,361)

Proceeds from borrowings

573,070

131,380

Repayments of borrowings

(385,108)

(165,649)

Net cash provided by (used) in financing activities

167,484

(52,630)

Increase (Decrease) in cash and cash equivalents

101,151

(24,393)

Movement in cash and cash equivalents

At January 1,

1,691,263

1,846,013

Effect of exchange rate changes

38,769

(41,156)

Increase (Decrease) in cash and cash equivalents

101,151

(24,393)

Cash and cash equivalents as of March 31, (2)

1,831,183

1,780,464

Non-cash transactions:

Acquisition of PP&E under lease contract agreements

22,144

9,386

The working capital is impacted by non-cash movements of $ 115.9 million as of March 31, 2025 ($ (60.1) million as of March 31, 2024) due to the variations in the exchange rates used by subsidiaries.

It includes restricted cash of $ 2,966 and $ 3,409 as of March 31, 2025 and 2024, respectively. In addition, the Company had other investments with a maturity of more than three months for $ 1,924,393 and $ 2,317,778 as of March 31, 2025 and 2024, respectively.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Ternium S.A. (the "Company" or "Ternium"), was incorporated on December 22, 2003 to hold investments in flat and long steel manufacturing and distributing companies. The Company has an authorized share capital of a single class of 3.5 billion shares having a nominal value of $ 1.00 per share. As of March 31, 2025, there were 2,004,743,442 shares issued. All issued shares are fully paid.

Ternium's American Depositary Shares ("ADS"), each representing 10 shares, trade on the New York

Stock Exchange under the symbol "TX".

The name and percentage of ownership of subsidiaries that have been included in consolidation in these Consolidated Condensed Interim Financial Statements are disclosed in Note 2 to the audited Consolidated Financial Statements for the year ended December 31, 2024.

The preparation of Consolidated Condensed Interim Financial Statements requires management to make estimates and assumptions that might affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the statement of financial position, and also the reported amounts of revenues and expenses for the reported periods. Actual results may differ from these estimates. The main assumptions and estimates were disclosed in the Consolidated Financial Statements for the year ended December 31, 2024, without significant changes since its publication.

These Consolidated Condensed Interim Financial Statements have been prepared in accordance with IAS 34, "Interim Financial Reporting" and are unaudited. These Consolidated Condensed Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2024, which have been prepared in accordance with IFRS Accounting Standards (International Financial Reporting Standards) as issued by the International Accounting Standards Board and in conformity with IFRS Accounting Standards as adopted by the European Union ("EU"). Recently issued accounting pronouncements were applied by the Company as from their respective dates.

These Consolidated Condensed Interim Financial Statements have been prepared following the same accounting policies used in the preparation of the audited Consolidated Financial Statements for the year ended December 31, 2024.

None of the accounting pronouncements issued after December 31, 2024, and as of the date of these Consolidated Condensed Interim Financial Statements have a material effect on the Company's financial condition or result or operations.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

The participation in Usiminas as of June 30, 2023

On January 16, 2012, the Company's subsidiaries, Ternium Investments and Ternium Argentina (together with its wholly-owned subsidiary Prosid Investments S.A., or "Prosid", and the Company's affiliate, Confab Industrial S.A., a subsidiary of Tenaris, or TenarisConfab), joined the existing control group of Usiminas, a leading steel company in the Brazilian flat steel market, through the acquisition of 84.7, 30.0, and 25.0 million ordinary shares, respectively, and formed the so-called Ternium/Tenaris (T/T) Group.

On October 30, 2014, Ternium Investments acquired 51.4 million additional ordinary shares of Usiminas. On April 20, 2016, Ternium Investments subscribed to 7.0 million preferred shares of Usiminas and Ternium Argentina, together with Prosid, subscribed to an aggregate 1.5 million preferred shares of Usiminas. On July 19, 2016, Usiminas' extraordinary general shareholders' meeting homologated a capital increase, and Ternium Investments acquired 62.6 million additional ordinary shares, and Ternium Argentina and Prosid acquired an aggregate 13.8 million additional ordinary shares. As a result of these transactions, Ternium, through its subsidiaries Ternium Investments, Ternium Argentina and Prosid, owned as of June 30, 2023, 242.6 million ordinary shares of Usiminas (representing 34.4% of Usiminas' ordinary shares) and 8.5 million of Usiminas' preferred shares (representing 1.6% of Usiminas' preferred shares), representing, in the aggregate, 20.4% of Usiminas' share capital.

As of June 30, 2023, the Usiminas control group held, in the aggregate, 483.6 million ordinary shares bound to the Usiminas shareholders' agreement, representing approximately 68.6% of Usiminas' voting capital. The Usiminas control group, which was bound by a long-term shareholders' agreement that governs the rights and obligations of Usiminas' control group members, was composed as of such date of three sub-groups: the T/T Group; the NSC Group, comprising Nippon Steel Corporation ("NSC"), Metal One Corporation and Mitsubishi Corporation; and Usiminas' pension fund Previdência Usiminas. The T/T Group held approximately 47.1% of the total shares held by the control group (39.5% corresponding to the Ternium entities and the other 7.6% corresponding to TenarisConfab); the NSC Group held approximately 45.9% of the total shares held by the control group; and Previdência Usiminas held the remaining 7%. The corporate governance rules reflected in the Usiminas shareholders agreement provided, among other things, that Usiminas' executive board was composed of six members, including the chief executive officer and five vice-presidents, with Ternium and NSC nominating three members each. The right to nominate Usiminas' chief executive officer alternated between Ternium and NSC at every 4-year interval, with the party that did not nominate the chief executive officer having the right to nominate the chairman of Usiminas' board of directors for the same 4-year period. The Usiminas shareholders agreement also provided for an exit mechanism consisting of a buy-and-sell procedure-exercisable at any time after November 16, 2022, and applicable with respect to shares held by NSC and the T/T Group-, which would allow either Ternium or NSC to purchase all or a majority of the Usiminas shares held by the other shareholder.

The acquisition of the additional participation

On March 30, 2023, Ternium S.A. announced that its subsidiaries Ternium Investments and Ternium Argentina, together with Confab, a subsidiary of its affiliate Tenaris S.A., all of which compose the T/T group within Usiminas control group, entered into a share purchase agreement to acquire from Nippon Steel Corporation, Mitsubishi and MetalOne (the "NSC group"), pro rata to their current participations in the T/T group, 68.7 million ordinary shares of Usinas Siderúrgicas de Minas Gerais

S.A. - USIMINAS ("Usiminas") at a price of BRL10 per ordinary share.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

On July 3, 2023, the Company announced the completion of the acquisition of this additional participation. Pursuant to the transaction, Ternium paid $ 118.7 million in cash for 57.7 million ordinary shares, increasing its participation in the Usiminas control group to 51.5%.

The Usiminas control group holds the majority of Usiminas' voting rights. Following the completion of the transaction, the T/T group holds an aggregate participation of 61.3% in the control group, with the NSC group and Previdência Usiminas (Usiminas employees' pension fund) holding 31.7% and 7.1%, respectively. The Usiminas control group members also agreed a new governance structure, as a result of which the T/T group nominated a majority of the Usiminas board of directors, the CEO and four other members of Usiminas board of officers, and ordinary decisions are approved with a 55% majority of the control group shares.

Pursuant to the Usiminas shareholders agreement, as supplemented by the T/T Group shareholders' agreement, Ternium started fully consolidating Usiminas balance sheet and results of operations in its consolidated financial statements beginning in July 2023.

Remeasurement of the previously held interest

As of July 3, 2023, Ternium remeasured its former participation (20.4%) at its fair value as of such date and recognized in its Consolidated Condensed Interim Financial Statements as of and for the nine-month period ended September 30, 2023, the effects described below.

Consequently, Ternium valued its previously held interest by means of the market quotation of Usiminas share in the Brazilian stock market. Such value as of July 3, 2023, was of 7.36 BRL per share, amounting to a total of $ 385.9 million. This valuation results in the recognition of a loss of $ 441.4 million, which is included along with the gain related to the bargain purchase amounting to $ 270.4 million (see note 3 (d)) in the "Effect related to the increase of the participation in Usiminas" in the income statement for a total of $ 171.0 million.

In addition, IFRS 3, paragraph 42, establishes that the previous interest must be remeasured, and necessary adjustments made as if it were a disposal of the investment. In this case, items previously recognized in other comprehensive income, mainly the CTA (currency translation adjustment) should be recycled to results of the period. The accumulated loss in "Other comprehensive income" as of the acquisition date was $ 934.9 million.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Fair value of net assets acquired

The fair values determined for the assets acquired and liabilities assumed arising from the acquisition and as of the acquisition date are as follows:

in $ thousands

Fair value of acquired assets and assumed liabilities:

Property, plant and equipment

904,780

Investments in non-consolidated companies

400,037

Inventories

1,707,311

Cash and cash equivalents

781,072

Other investments

247,005

Trade receivables

764,257

Allowance for doubtful accounts

(44,626)

Other receivables

854,917

Deferred tax assets

1,327,232

Borrowings

(1,224,399)

Provisions

(856,153)

Trade payables

(758,687)

Other assets and liabilities, net

(509,486)

Net assets acquired

3,593,260

Non-controlling interest

(2,818,358)

Remeasurement of previously held interest in Usiminas

(385,851)

Total Purchase consideration

(118,686)

Bargain purchase gain

270,365

Loss on the remeasurement of previously held interest in Usiminas

(441,410)

Net loss effect related to the increase of the participation in Usiminas

(171,045)

The purchase price allocation disclosed above was prepared with the assistance of a third-party expert. Management applied significant judgment in estimating the fair value of assets acquired and liabilities assumed, which involved the use of significant estimates and assumptions in particular with respect to the estimation of the loss probability for the contingencies, including revenue forecasts, EBITDA margins, capital expenditures and discount rate for the cash flow projections. According to the purchase price allocation, the transaction led to the recognition of a bargain purchase of $ 270.4 million, recognized in the Consolidated Condensed Interim Financial Statements as of and for the nine-month period ended September 30, 2023.

Put and call option

In addition to the share purchase and the new governance structure, a "put" and "call" mechanism was

established according to the following scheme:

- NSC group will have the right, at any time after the closing of the transaction, to withdraw its remaining shares from the control group and sell them in the open market after giving the T/T group the opportunity to buy them at the equivalent in U.S. dollars of the 40-trading day average price per share immediately prior to the NSC group's notice of withdrawal, as well as the right, at any time after the second anniversary of the closing, to sell such shares to the T/T group at $ 2.0584 per share.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

At any time after the second anniversary of the closing of the transaction, the T/T group will have the right to buy the NSC group's remaining interest in the Usiminas control group (153.1 million ordinary shares) at the higher of $ 2.0584 per share and the equivalent in U.S. dollars of the 40-trading day average price per share immediately prior to the date of exercising the option.

In the case of the T/T Group, Ternium will decide at its own discretion the execution of the call option, having Confab and Ternium Argentina the option to acquire the shares owned by NSC pro rata to their participation.

IAS 32 requires a liability to be recognized for written puts over non-controlling interests. The liability reflects the entity's obligation to deliver cash or a financial asset. The financial liability is recognized at present value of the redemption amount and accreted through finance charges in the income statement over the contract period up to the final redemption amount. Ternium has recognized a liability associated with the put option of $ 242.5 million ($ 266.7 million as of March 31, 2025), accounted for in the statement of financial position under Other liabilities, with the corresponding debit in the statement of changes in equity under Non-controlling interest.

Recognition of non-controlling interest

Ternium recognizes non-controlling interests in an acquired entity either at fair value or at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets. This decision is made on an acquisition-by-acquisition basis. For the non-controlling interests in Usiminas, the Company elected to recognize the non-controlling interests at its proportionate share of the acquired net identifiable assets, which led to a non-controlling interest of $ 2,575.9 million, recognized in the Consolidated Condensed Interim Financial Statements as of and for the nine-month period ended September 30, 2023.

Main contingencies associated with the acquired business

Contrary to the recognition principles in IAS 37 Provisions, Contingent Liabilities and Contingent Assets, IFRS 3 Business Combinations requires an acquirer of a business to recognize contingent liabilities assumed in a business acquisition at the acquisition date even if it is not probable that an outflow of resources will be required to settle the obligation.

in $ thousands

Provisions for contingencies recognized by Usiminas before business combination

(199,677)

Provisions for contingencies recognized as part of the business combination:

Tax related contingencies

(432,488)

Civil and other related contingencies

(174,333)

Labour related contingencies

(49,655)

Total Provision for contingencies

(856,153)

Contingencies estimated by Management were related to possible losses arising from administrative proceedings and litigation related to tax, civil and labor matters and based on the advice and assessment of internal and external legal advisors.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

The main contingencies recognized in the consolidated condensed interim financial statements pursuant to IFRS 3 Business Combinations in connection with the acquisition of the additional participation in Usiminas and the full consolidation of Usiminas include the following:

Description

Status

As of the acquisition date (in $ thousands)

As of March 31, 2025

(in $ thousands)

Labor lawsuits filed by employees, former employees and outsourced personnel of Pending judgment by the Labor Court

the Cubatão Plant, claiming severance pay and social security rights. and administrative bodies, at different

levels.

57,343

34,459

Tax proceeding in which the tax authorities seek the reversal of ICMS/SP credits on The Tax Debt was included in the

materials considered as consumables (refractory items and others). Amnesty Program instituted by São

Paulo State Law n. 17.843/23.

29,772

Labor lawsuits filed by employees, former employees and outsourced personnel of Pending judgment by the Labor Court

the Ipatinga Plant, claiming severance pay and social security rights. and administrative bodies, at different

levels.

15,112

11,618

Labor lawsuits filed by former employees challenging the amount of compensation Pending judgment.

paid on dismissals.

10,837

6,032

Other contingencies

86,613

52,157

Provisions for contingencies recognized by Usiminas before business combination

199,677

104,266

Description

Status

As of the acquisition date

(in $ thousands)

As of March 31, 2025

(in $ thousands)

Objection filed against the decision that recognized only partially the credit rights Pending judgment at administrative level.

established in a final and unappealable court decision that determined the exclusion

of ICMS amounts from the calculation basis of PIS/COFINS-Imports.

94,792

79,555

Tax collection proceedings related to the collection of ICMS/SP on goods shipped Pending judgment by the trial court.

to other countries without effective proof of export.

51,546

43,260

Tax proceedings seeking the reversal of ICMS/SP credits on materials considered Several case records, declaratory actions

as consumables (refractory items and others). and tax collection proceedings,

suspended or pending decision by higher

courts.

38,640

30,161

ICMS - Action for annulment of the tax debt claimed by the State of Rio Grande do Pending judgment by the trial court.

Sul due to failure to make the advance payment of the tax at the entry of goods

coming from other States (rate differential ).

28,789

24,162

Tax assessment notice issued by the State of Minas Gerais concerning alleged Pending judgment at administrative level.

reversal of ICMS credits on sale of electrical energy.

12,386

10,395

Other tax contingencies

206,335

141,608

Provisions for tax contingencies recognized as part of the business combination

432,488

329,141

Public Civil Action seeking the reimbursement of the amounts increased by means As of July 3, 2023, the claim was deemed of a term of amendment to the Contractor's Agreement, due to alleged overbilling in groundless and was pending judgment of the construction of a bridge in Brasília/DF. appeal. As of December 31, 2023, the

action was dismissed as unfounded and the case was archived.

64,315

Public Civil Action seeking compensation for alleged damages caused to the State Pending conclusion of the expert of Santa Catarina's Treasury related to improper expenditures incurred in the evidence

construction of a bridge.

Other civil and other contingencies (1)

21,113

88,905

17,719

38,871

Provisions for civil and other contingencies recognized as part of the business combination

174,333

56,590

Labor lawsuits filed by employees, former employees and outsourced personnel of

Pending judgment by the Labor Court

the Cubatão Plant, claiming severance pay and social security rights.

and administrative bodies, at different

levels.

27,123

16,124

Other labour contingencies (1)

22,532

12,145

Provisions for labour contingencies recognized as part of the business combination

49,655

28,269

(1) Composed of individually non-significative contingencies

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

OPERATING SEGMENTS

The Company is organized in two operating segments: Steel and Mining.

The Steel segment includes the sales of steel products done by the Company's subsidiaries, which comprises mainly slabs, heavy plates, hot and cold rolled products, coated products, stamped steel parts for the automotive industry, roll-formed and tubular products, billets, bars and other products, including sales of energy.

The Mining segment includes the sales of mining products done by the Company's subsidiaries, mainly iron ore and iron ore pellets, and comprises the mining activities of Las Encinas, an iron ore mining company in which Ternium holds a 100% equity interest, the 50% of the operations and results performed by Peña Colorada, another iron ore mining company in which Ternium maintains that same percentage over its equity interest, and the mining activities of Mineraçao Usiminas, an iron ore mining company in which Usiminas holds a 70% equity interest.

Ternium's Chief Executive Officer ("CEO") functions as the CODM. The various geographic regions operate as an integrated steel producer. The CEO allocates resources and assesses performance of the Steel Segment as an integrated business and does the same with the Mining Segment. The CEO uses "Operating income - Management view" as per the below table as the key performance measure, which differs from operating income determined in accordance with IFRS principally as follows:

The use of direct cost methodology to value inventories, while under IFRS they are valued at full cost, including absorption of production overheads and depreciation.

The use of costs based on previously internally defined cost estimates, while, under IFRS, costs are calculated at historical cost (using the FIFO methodology).

In the case of Usiminas, the use of costs based on the weighted average cost, while, under IFRS, costs are calculated under the FIFO methodology.

Other differences related to other operating income and expenses.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Three-month period ended March 31, 2025 (Unaudited)

Steel

Mining

Inter-

segment eliminations

Total

Operating income - Management view

243,546

(2,267)

(4,004)

237,275

Reconciliation:

Differences in Cost of sales

(105,449)

Operating income - Under IFRS

131,826

Financial income (expense), net

62,661

Equity in earnings (losses) of non-consolidated companies

15,871

Provision for ongoing litigation related to the acquisition of a participation in

Usiminas

(45,300)

Income before income tax expense - IFRS

165,058

Net sales from external customers

3,801,118

131,690

3,932,808

Net sales from transactions with other operating segments of the same entity

148,458

(148,458)

Depreciation and amortization

(141,762)

(42,337)

(184,099)

Three-month period ended March 31, 2024 (Unaudited)

Inter-

Steel

Mining

segment

Total

eliminations

Operating income - Management view

593,211

(21,504)

6,966

578,673

Reconciliation:

Differences in Cost of sales

96,183

Operating income - Under IFRS

674,856

Financial income (expense), net

(162,550)

Equity in earnings (losses) of non-consolidated companies

19,560

Income before income tax expense - IFRS

531,866

Net sales from external customers

4,690,004

88,293

4,778,297

Net sales from transactions with other operating segments of the same entity

186,082

(186,082)

Depreciation and amortization

(137,070)

(33,788)

(170,858)

Information on segment assets is not disclosed as it is not reviewed by the CEO.

GEOGRAPHICAL INFORMATION

The Company had no revenues attributable to the Company's country of incorporation (Luxembourg) in 2025.

For purposes of reporting geographical information, net sales are allocated based on the customer's location. Allocation of depreciation and amortization is based on the geographical location of the underlying assets.

Three-month period ended March 31, 2025 (Unaudited)

Mexico

Southern region

Brazil

Other markets

Total

Net sales

1,812,996

544,597

1,013,989

561,226

3,932,808

Non-current assets (1)

5,625,883

1,085,913

2,382,168

728,026

9,821,990

Three-month period ended March 31, 2024 (Unaudited)

Mexico

Southern region

Brazil

Other markets

Total

2,437,472

566,054

1,097,906

676,865

4,778,297

5,095,354

957,249

2,515,443

312,803

8,880,849

d Intangible assets.

Net sales

Non-current assets (1)

(1) Includes Property, plant and equipment an

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

2024

Three-month period ended March 31,

2025

(Unaudited)

Inventories at the beginning of the year

4,750,511

4,948,376

Translation differences

89,410

(42,909)

Plus: Charges for the period

Raw materials and consumables used and

other movements (1)

2,426,975

3,087,130

Services and fees

69,236

75,104

Labor cost

260,755

269,985

Depreciation of property, plant and equipment

143,390

143,830

Amortization of intangible assets

21,263

12,295

Maintenance expenses

209,129

218,369

Office expenses

4,416

3,428

Insurance

9,238

8,367

Change of obsolescence allowance

4,699

3,730

Recovery from sales of scrap and by-products

(8,646)

(5,756)

Others

12,773

12,271

Less: Inventories at the end of the period

(4,591,291)

(5,059,476)

Cost of Sales

3,401,858

3,674,744

For the three-month period ended March 31, 2024, it included $ 56 million, related to the readjustment of electricity transmission charges in Mexico.

2024

Three-month period ended March 31,

2025

(Unaudited)

Services and fees

28,096

24,317

Labor cost

97,635

107,212

Depreciation of property, plant and equipment

6,391

5,853

Amortization of intangible assets

13,055

8,880

Maintenance and expenses

2,500

2,887

Taxes

36,334

36,539

Office expenses

20,950

21,001

Freight and transportation

184,169

214,920

(Decrease) Increase of allowance for doubtful accounts

(616)

1,211

Others

7,686

8,346

Selling, general and administrative expenses

396,200

431,166

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Three-month period ended March 31,

2025 2024

(Unaudited)

Interest expense

(54,342)

(44,879)

Finance expense

(54,342)

(44,879)

Interest income

68,491

82,554

Finance income

68,491

82,554

Net foreign exchange loss

30,695

(41,008)

Change in fair value of financial assets (1)

32,951

(133,792)

Derivative contract results

(3,913)

(3,094)

Others

(11,221)

(22,331)

Other financial (expenses) income, net

48,512

(200,225)

For the three-month period ended March 31, 2024, mainly related to the recycling of other comprehensive income from the sale of investments previously recognized at fair value through other comprehensive income.

2024

Three-month period ended March 31,

2025

(Unaudited)

At the beginning of the year

8,381,155

7,637,687

Currency translation differences

64,066

(36,718)

Additions

501,870

407,502

Value adjustments of lease contracts

2,862

2,154

Disposals

(7,131)

(2,817)

Depreciation charge

(149,781)

(149,683)

Transfers and reclassifications

10,030

(2,195)

At the end of the period

8,803,071

7,855,930

2024

Three-month period ended March 31,

2025

(Unaudited)

At the beginning of the year

1,022,111

996,048

Currency translation differences

2,862

(1,166)

Additions

37,765

54,999

Amortization charge

(34,318)

(21,175)

Transfers/Disposals

(9,501)

(3,787)

At the end of the period

1,018,919

1,024,919

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Company

Country of incorporation

Main activity

Voting rights as of

Value as of

March 31,

2025

December

31, 2024

March 31,

2025

December

31, 2024

Techgen S.A. de C.V.

Mexico

Provision of electric power

48.00%

136,363

130,433

Unigal Usiminas Ltda.

Brazil

Manufacturing and selling of

steel products

70.00%

109,320

98,280

MRS Logística S.A

Brazil

Logistical services

11.48%

225,246

203,778

Other non-consolidated companies (1)

38,547

36,025

509,476

468,516

It includes the investments held in Finma S.A.I.F., Recrotek S.R.L. de C.V., Gas Industrial de Monterrey S.A. de C.V., Modal Terminal de Graneis Ltda., Usiroll - Usiminas Court Tecnologia em Acabamento Superficial Ltda, Codeme Engenharia S.A, Terminal de Cargas Paraopeba Ltda., Terminal de Cargas Sarzedo Ltda., and Metalcentro Ltda.

Techgen S.A. de C.V.

Techgen stated as of and for the three-month period ended March 31, 2025, that revenues amounted to $ 106 million ($ 29 million as of March 31, 2024), net profit from continuing operations to $ 12 million ($ 14 million as of March 31, 2024), non-current assets to $ 678 million ($ 692 million as of December 31, 2024), current assets to $ 117 million ($ 104 million as of December 31, 2024), non-current liabilities to $ 313 million ($ 415 million as of December 31, 2024), current liabilities to $ 198 million ($ 109 million as of December 31, 2024) and shareholders' equity to $ 284 million ($ 272 million as of December 31, 2024).

Unigal Usiminas Ltda.

Unigal stated as of and for the three-month period ended March 31, 2025, that revenues amounted to $ 15 million ($18 million for the three-month period ended March 31, 2024), net profit from continuing operations to $ 4 million ($ 6 million for the three-month period ended March 31, 2024), non-current assets to $ 134 million ($ 126 million as of December 31, 2024), current assets to $ 43 million ($ 35 million as of December 31, 2024), non-current liabilities to $ 41 million ($ 38 million as of December 31, 2024), current liabilities to $ 10 million ($ 9 million as of December 31, 2024) and shareholders' equity to $ 127 million ($114 million as of December 31, 2024).

MRS Logística S.A.

MRS Logística stated as of and for the three-month period ended March 31, 2025, that revenues amounted to $ 181 million ($ 332 million for the three-month period ended March 31, 2024), net profit from continuing operations to $ 32 million ($ 63 million for the three-month period ended March 31, 2024), non-current assets to $ 2,670 million ($ 2,461 million as of December 31, 2024), current assets to $ 863 million ($ 868 million as of December 31, 2024), non-current liabilities to $ 1,721 million ($ 1,576 million as of December 31, 2024), current liabilities to $ 481 million ($ 547 million as of December 31, 2024) and shareholders' equity to $ 1,332 million ($ 1,206 million as of December 31, 2024).

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Upon approval of the Company´s 2024 annual accounts, the Board of Directors proposed, for the approval of the Annual General Shareholders' meeting to be held on May 6, 2025, the payment of an annual dividend of $ 0.27 per share ($ 2.70 per ADS), or approximately $ 530 million, which includes the interim dividend of $0.09 per outstanding share ($0.90 per ADS) or approximately $ 177 million, paid on November 21, 2024. If the annual dividend is approved by the shareholders, a dividend of $

0.18 per share ($ 1.80 per ADS), or approximately $ 353 million will be paid on May 14, 2025, with an ex-dividend date of May 9, 2025. These Consolidated Condensed Interim Financial Statements do not reflect this dividend payable.

The Company is within the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted in Luxemburg, the jurisdiction in which the company is incorporated, and came into effect from 1 January 2024. The Company applies the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.

The Company estimates as current tax expense related to Pillar Two the amount of $ 3.8 million for the three-month period ended March 31, 2025. The total provision related to Pillar Two as of March 31, 2025, amounts to $ 25.3 million.

Contingencies, commitments and restrictions on the distributions of profits should be read in Note 25

to the Company's audited Consolidated Financial Statements for the year ended December 31, 2024.

Tax claims and other contingencies

Provision for ongoing litigation related to the acquisition of a participation in Usiminas

The Company is party to a longstanding lawsuit filed in Brazil by Companhia Siderúrgica Nacional, or CSN, and various entities affiliated with CSN against Ternium Investments, its subsidiary Ternium Argentina, and Tenaris's subsidiary Confab, all of which compose the T/T Group under the Usiminas shareholders agreement. The entities named in the CSN lawsuit had acquired participations in Usiminas in January 2012. The CSN lawsuit alleges that, under applicable Brazilian laws and rules, the acquirers were required to launch a tag-along tender offer to all non-controlling holders of Usiminas ordinary shares for a price per share equal to 80% of the price per share paid in such acquisition, or BRL 28.8, and seeks an order to compel the acquirers to launch an offer at that price plus interest. If so ordered, the offer would need to be made to 182,609,851 ordinary shares of Usiminas not belonging to the Usiminas control group. Ternium Investments and Ternium Argentina's respective shares in the offer would be 60.6% and 21.5%.

On September 23, 2013, the first instance court dismissed the CSN lawsuit, and on February 8, 2017, the court of appeals maintained the understanding of the first instance court. CSN filed an appeal to the Superior Court of Justice (SCJ), seeking the review and reversal of the decision issued by the Court of Appeals, and on March 7, 2023, the SCJ, by majority vote, rejected CSN's appeal.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

CSN made several submissions in connection with the SCJ decision, including a motion for clarification that challenged the merits of the SCJ decision. Decisions at the SCJ are adopted by majority vote. At an October 17, 2023 session, two justices of the SCJ voted in favor of remanding the case to the first instance for it to be retried following production and assessment of the new evidence, and two justices of the SCJ voted, without requiring any further evidence, in favor of granting CSN's motion for clarification and reversing the March 7, 2023 decision that rejected CSN's appeal; because the fifth member of SCJ excused himself from voting, a justice from another panel at the SCJ was summoned to produce the tie-breaking vote. On June 18, 2024, the SCJ completed its voting on CSN's motion for clarification and reversed, by majority vote, its March 7, 2023 decision, and resolved that Ternium Investments, its subsidiary Ternium Argentina and Tenaris's subsidiary Confab should pay CSN an indemnification in connection with the acquisition by the T/T Group of the participations in Usiminas in January 2012, with CSN being allowed to retain ownership of the Usiminas ordinary shares it currently owns.

On August 1, 2024, Ternium Investments, Ternium Argentina and the other T/T Group entities filed a motion for clarification against the SCJ decision and, subsequently, CSN filed its reply. On December 6, 2024, the SCJ rejected this motion for clarification, confirming the obligation of the T/T Group entities to pay indemnification in connection with the 2012 acquisition of the participations in Usiminas. Notwithstanding the foregoing, the SCJ unanimously resolved to modify the applicable monetary adjustment mechanism and to cap the applicable attorney's fees, thereby lowering the aggregate amount that would be payable if CSN ultimately prevails in this claim. Based on such SCJ decision, assuming monetary adjustment through March 31, 2025, and attorney's fees in the amount of BRL 5 million, the revised aggregate amount potentially payable by Ternium Investments and Ternium Argentina if CSN finally prevails on its claims would be of approximately BRL 1,931.8 million (approximately $ 336.4 million at the BRL/$ rate as of March 31, 2025; BRL 1,875.9 million or approximately $ 302.9 million at the BRL/$ rate as of December 31, 2024) and BRL 683.9 million (approximately $ 119.1 million at the BRL/$ rate as of March 31, 2025; BRL 664.1 million or approximately $ 107.3 million at the BRL/$ rate as of December 31, 2024), respectively.

The Company continues to believe that all of CSN's claims and allegations are unsupported and without merit, as confirmed by several opinions of Brazilian legal counsel, two decisions issued by the Brazilian securities regulator in February 2012 and December 2016, the first and second instance court decisions and the March 7, 2023 SCJ decision referred to above, and that in connection with the Usiminas acquisition the T/T Group was not required either to launch a tender offer or to pay indemnification to CSN. Accordingly, on February 10, 2025, Ternium filed an extraordinary appeal against the SCJ decisions that ordered an indemnification payment, seeking their review and reversal by the Supreme Federal Tribunal. The Company, however, cannot predict the ultimate resolution on the matter.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

PIS and COFINS credits defense action - Usiminas

In August 2024, the Federal Government had filed two new tax claims for a total of approximately BRL 503 million ($ 92 million; BRL 527 million or $ 92 million as of March 31, 2025). The contingencies are related to tax assessments that partially approved offset statements through which Usiminas claimed PIS and COFINS credits arising from a final court decision, which discussed the exclusion of ICMS from the calculation basis of said contributions. The tax authority disagreed with the calculation methodology adopted by Usiminas. Usiminas filed a defense action in the aforementioned proceedings, arguing that the calculations are correct and the credit rights should be recognized.

Commitments

Ternium Brasil entered into an agreement with Petrobras S.A. for the supply of petcoke. The contract has minimum required volumes and is due to terminate in February 2026. As of March 31, 2025, the outstanding amount of the agreement was approximately $ 106.2 million.

Ternium Brasil entered into an agreement with LSI Logística S.A. for the rental of mobile equipment for maintenance and operations. The contract is due to terminate in March 2028 and has a penalty for early termination. As of March 31, 2025, the outstanding amount was $ 39.5 million.

Usiminas S.A. entered into an agreement with Seday Transportes Ltda. for transportation services. The contract is due to terminate in until November 2027 and has a penalty for early termination. As of March 31, 2025, the outstanding amount was approximately $ 15.3 million.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

As of March 31, 2025, Techint Holdings S.à r.l. ("Techint") indirectly owned 65.03% of the Company's share capital and Tenaris Investments S.à r.l. ("Tenaris") held 11.46% of the Company's share capital. Each of Techint and Tenaris were controlled by San Faustin S.A., a Luxembourg company ("San Faustin"). Rocca & Partners Stichting Administratiekantoor Aandelen San Faustin ("RP STAK"), a private foundation (Stichting) located in the Netherlands, held voting shares in San Faustin sufficient in number to control San Faustin. No person or group of persons controls RP STAK.

The following transactions were carried out with related parties:

2024

Three-month period ended March 31,

2025

(Unaudited)

Transactions

Sales of goods and services

Sales of goods to non-consolidated parties

34,688

39,530

Sales of goods to other related parties

45,432

22,516

Sales of services and others to non-consolidated parties

Sales of services and others to other related parties

575

919

80,747

63,009

(b) Purchases of goods and services

Purchases of goods from non-consolidated parties

117,673

65,075

Purchases of goods from other related parties

25,094

20,690

Purchases of services and others from non-consolidated parties

48,065

9,500

Purchases of services and others from other related parties

83,606

27,585

274,438

122,850

Income with non-consolidated parties

3,218

3,303

Expenses in connection with lease contracts from other related parties

(226)

(74)

2,992

3,229

(d) Dividends

Dividends from non-consolidated parties

1,222

1,042

1,222

1,042

(e) Other income and expenses

Income (expenses), net with non-consolidated parties

230

593

Income (expenses), net with other related parties

180

201

410

794

March 31,

2025

December 31,

2024

(ii) Period-end balances

(Unaudited)

(a) Arising from sales/purchases of goods/services

Receivables from non-consolidated parties

160,726

156,937

Receivables from other related parties

35,056

26,988

Advances to non-consolidated parties

1,264

2,524

Advances to suppliers with other related parties

123,947

131,685

Payables to non-consolidated parties

(34,271)

(57,230)

Payables to other related parties

(49,007)

(39,721)

Lease Liabilities with other related parties

(1,068)

(1,861)

236,647

219,322

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below. According to the scope and definitions set out in IFRS 7 and IAS 32, employers' rights and obligations under employee benefit plans, and non-financial assets and liabilities such as advanced payments and income tax payables, are not included.

As of March 31, 2025 (in $ thousands)

Amortized cost

Assets at fair

Assets at fair value through

OCI

Total

value through

profit or loss

(i) Assets as per statement of financial position

Receivables

Derivative financial instruments Trade receivables

Other investments

Cash and cash equivalents

457,365

-1,812,062

396,129

1,507,687

-7,619

-145,780

323,496

-1,382,484

457,365

7,619

1,812,062

1,924,393

1,831,183

Total

4,173,243

476,895

1,382,484

6,032,622

As of March 31, 2025 (in $ thousands)

Amortized cost

Liabilities at

fair value through profit or loss

Total

(ii) Liabilities as per statement of financial position

Other liabilities Trade payables

Derivative financial instruments Lease liabilities

Borrowings

447,481

1,752,008

-218,814

2,469,579

- 447,481

- 1,752,008

563 563

- 218,814

- 2,469,579

Total

4,887,882

563

4,888,445

Fair Value by Hierarchy

IFRS 13 requires for financial instruments that are measured at fair value, a disclosure of fair value measurements by level. See note 29 of the Consolidated Financial Statements as of December 31, 2024 for definitions of levels of fair values and figures at that date.

The following table presents the assets and liabilities that are measured at fair value:

Fair value measurement as of March 31, 2025

(in $ thousands):

Description

Total

Level 1

Level 2

Level 3 (*)

Financial assets at fair value through profit or loss / OCI

Cash and cash equivalents Other investments

Derivative financial instruments

323,496

1,528,264

7,619

323,496

1,382,485

-145,401

7,619

-378

Total assets

1,859,379

1,705,981

153,020

378

Financial liabilities at fair value through profit or loss / OCI

Derivative financial instruments

563

Total liabilities

563

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Fair value measurement as of December 31, 2024

(in $ thousands):

Description

Total

Level 1

Level 2

Level 3 (*)

Financial assets at fair value through profit or loss / OCI

Cash and cash equivalents Other investments

Derivative financial instruments

423,927

1,633,797

4,483

423,927

1,501,389

-131,866

4,483

-542

Total assets

2,062,207

1,925,316

136,349

542

Financial liabilities at fair value through profit or loss / OCI

Derivative financial instruments

50,342

Total liabilities

50,342

(*) The fair value of financial instruments classified as level 3 is not obtained from observable market information, but from measurements of the asset portfolio at market value provided by the fund manager. The evolution of such instruments during the three-month period ended March 31, 2025, and the year ended December 31, 2024, corresponds to the initial investment and to the changes in its fair value.

Ternium's Argentine subsidiary, Ternium Argentina S.A., is currently operating in a complex and volatile economic environment.

Between September 2019 and December 13, 2023, the Argentine government imposed significant restrictions on foreign exchange transactions. Since the new administration took office in Argentina in December 2023 certain restrictions have been gradually eased. On April 14, 2025, the Argentine government introduced flexibility to foreign exchange restrictions on certain transactions by individuals and companies. At the date of these Consolidated Condensed Interim Financial Statements, foreign exchange restrictions remain and the scope and timing of additional flexibility or other upcoming changes, if any, remain unknown. The main currently applicable measures are described below:

Access to the Argentine foreign exchange market ("MLC") to pay for imports of services rendered by related and non-related parties (including royalties) on or before December 12, 2023, is subject to Argentine Central Bank approval. Currently, these approvals are rarely, if ever, granted. Access to the MLC to pay for imports of services that were rendered or accrued as from December 13, 2023, does not require government approval, but in the case of services rendered or accrued before April 14, 2025, payment is deferred 30 calendar days as from the date of supply or accrual of the service if rendered by a non-related party, or 180 calendar days if rendered by a related party; whereas for services rendered or accrued as from April 14, 2025, no deferral shall apply for the payment of services rendered by a non-related party, and a reduced 90-calendar day deferral shall apply for the payment of services rendered by a related party.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

In the context of high, but decelerating, inflation during 2024, restrictions of access to the MLC to pay for imports of goods remain, but have been gradually made more flexible. The price for imports with customs clearance on or after October 21, 2024, may be paid in full as from the 30th day from the date of customs clearance. In addition, the price for imports with customs clearance between August 1 and October 20, 2024, may be paid in two equal installments on the 30th and 60th day from the date of customs clearance, and the price for imports with customs clearance between December 13, 2023, and July 31, 2024, may be paid in four equal installments payable on the 30th, 60th, 90th and 120th day from the date of customs clearance. Payment of imports of goods with customs clearance on or after April 14, 2025, is not subject to deferral. Access to the MLC to pay for imports that obtained customs clearance on or before December 12, 2023, continues to require Argentine Central Bank approval. Beginning on April 14, 2025, access to the MLC to pay for imports of capital goods prior to its customs entry is permitted to the extent that: (a) the aggregate amount of advanced import payments do not exceed 30% of the FOB value of the goods to be imported; (b) the aggregate amount of import payments made prior to the customs entry of the goods (including advance payments, payments at sight and commercial debt) do not exceed 80% of the FOB value of the goods to be imported, and (c) goods are not classified in certain Mercosur tariff codes specified in Argentine Central Bank's foreign exchange regulations.

Foreign currency proceeds derived from exports of goods must be sold into the MLC and converted into Argentine pesos within 60 days (if made to related parties) or 180 days (if made to unrelated parties) from shipment date, or, if collected earlier, within five days of collection. Foreign currency proceeds from exports of services must be sold into the MLC and converted into Argentine pesos within five business days of collection. As from December 13, 2023, up to 20% of export of goods or services proceeds can be sold for Argentine pesos through securities transactions resulting in a higher implicit exchange rate, as described further below. This percentage has changed over time.

Access to the MLC to make dividend payments corresponding to profits for any fiscal year ended on or before December 31, 2024, requires prior Argentine Central Bank approval. When required, Argentine Central Bank approvals are rarely, if ever, granted. Following the flexibilization of foreign exchange restrictions introduced on April 14, 2025, companies will be allowed access to the MLC to pay dividends to non-resident shareholders to distribute profits for fiscal years beginning on or after January 1, 2025, to the extent shown in regular and audited annual financial statements for the relevant fiscal year.

Ternium Argentina carries out all of its import and export transactions through the MLC. Therefore, assets and liabilities in foreign currency as of March 31, 2025, have been valued considering the official exchange rates at the end of the period.

Under Ternium Argentina's annual accounts as of March 31, 2025, and for the three-month period then ended, revenues amounted to $ 462 million (three-month period ended March 31, 2024: $ 524 million), net profit from continuing operations to $ 36 million (three-month period ended March 31, 2024: $ 263 million), total assets to $ 5,668 million (December 31, 2024: $ 5,726 million), total liabilities to $ 689 million (December 31, 2024: $ 790 million) and shareholders' equity to $ 4,979 million (December 31, 2024: $ 4,936 million).

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

Ternium Argentina's cash and cash equivalents and other investments amounted to $ 1,183 million as of March 31, 2025, broken down as follows:

$ 1,052 million in U.S. dollars-denominated instruments in sovereign bonds issued by the Argentine Government and payable in U.S. dollars, and Argentine Treasury bonds related to the official exchange rate. The U.S. dollar value of these instruments recorded in Ternium's consolidated financial statements is based on their Argentine peso local market price, converted to the U.S. dollar at the ARS/$ official exchange rate. Therefore, the valuation of such investments is subject to the volatility of the Argentine financial market and currency exchange rates, leading to a potential significant reduction of such value in the consolidated financial statements.

$ 129 million in Argentine pesos-denominated instruments.

$ 3 million in negotiable obligations and promissory notes issued by Argentine export driven companies in U.S. dollars and mainly payable in Argentine pesos.

Ternium Argentina's financial position in ARS as of March 31, 2025, amounted to $ 341 million in monetary assets and $ 202 million in monetary liabilities. All of Ternium Argentina's ARS-denominated assets and liabilities are valued at the prevailing official exchange rate. In the event of a devaluation, Ternium Argentina may be adversely affected, and will also suffer a loss on deferred tax charge as a result of a deterioration on the tax value of their fixed assets. At this time, the Company is unable to estimate all impacts of a new devaluation of the Argentine peso against the U.S. dollar.

This context of volatility and uncertainty remains in place as of the issue date of these Consolidated Condensed Interim Financial Statements. Management continues to monitor closely the evolution of the main variables affecting its business, identifying the potential impact thereof on its financial and economic situation and determining the appropriate course of action in each case. The Company's Consolidated Condensed Interim Financial Statements should be read taking into account these circumstances.

Consolidated Condensed Interim Financial Statements as of March 31, 2025 and for the three-month periods ended March 31, 2025 and 2024

On February 1, 2025, the U.S. government announced the imposition, through the International Emergency Economic Powers Act (IEEPA), of tariffs applicable to all products imported from Mexico, Canada and China. As of the date of these financial statements, Mexican and Canadian products that comply with USMCA preferential rules of origin, are exempt from this tariff. In addition, on March 12, 2025, the U.S. government imposed a 25% tariff on virtually all imports of steel and on certain steel derivatives, revoking previously negotiated country-specific exemptions and quota arrangements. Further, on April 2, 2025, the Trump administration announced that the U.S. would implement reciprocal tariffs with trading partners, with a minimum tariff of 10% and an extra tariff specific to each country, which was later postponed for 90 days. Reciprocal tariffs do not add up to Section 232 tariffs. Mexico and Canada were not subject to these reciprocal tariffs. Also in April 2, 2025, the US government confirmed a previously announced 25% tariff under Section 232 on all imported automobiles produced outside the U.S. However, vehicles and parts that comply with the USMCA are only subject to this tariff on their non-U.S. specific content, and, in the case of auto parts, only when the government establishes a process to exempt U.S. content from tariffs.

Other countries have announced retaliatory tariffs against U.S. exports. It is also anticipated that parties may bring litigation regarding the timeliness and appropriateness of the Trump administration's actions. In light of the foregoing uncertainties, Ternium is unable at this time to predict the evolution or ultimate outcome of these developments or to quantify the impact that the new tariffs and measures would have on its business or financial condition.

Pablo Brizzio Chief Financial Officer

Disclaimer

Ternium SA published this content on April 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 29, 2025 at 23:24 UTC.