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Form 6-K Ternium S.A. For: Mar 31

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April 28, 2021 6:42 AM EDT

FORM 6 - K



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934

As of 4/27/2021

Ternium S.A.
(Translation of Registrant's name into English)

Ternium S.A.
26 Boulevard Royal – 4th floor
L-2449 Luxembourg
(352) 2668-3152
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F.

Form 20-F a Form 40-F __

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934.

Yes __ No a


If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
Not applicable


The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended.
This report contains Ternium S.A.’s consolidated financial statements as of March 31, 2021.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


TERNIUM S.A.

By: /s/ Pablo Brizzio
By:/s/ Máximo Vedoya
Name: Pablo BrizzioName: Máximo Vedoya
Title: Chief Financial OfficerTitle: Chief Executive Officer
            

Dated: April 27, 2021






txlogoa101.jpg
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements
as of March 31, 2021
and for the three-month periods
ended on March 31, 2021 and 2020

26 Boulevard Royal, 4th floor

L – 2449 Luxembourg

R.C.S. Luxembourg: B 98 668




INDEX
Page
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
1
General information and basis of presentation
2
Accounting policies
3
Segment information
4
Cost of sales
5
Selling, general and administrative expenses
6
Finance expense, Finance income and Other financial income (expenses), net
7
Property, plant and equipment, net
8
Intangible assets, net
9
Investments in non-consolidated companies
10
Contingencies, commitments and restrictions on the distribution of profits
11
Related party transactions
12
Financial instruments by category and fair value measurement
13The Covid-19 pandemic and its impact on Ternium
14Foreign exchange restrictions in Argentina

Page 1 of
    
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020
(All amounts in $ thousands)







Consolidated Condensed Interim Income Statements
Three-month period ended
March 31,
Notes20212020
(Unaudited)
Net sales33,249,296 2,271,355 
Cost of sales3 & 4(2,138,251)(1,920,477)
Gross profit 31,111,045 350,878 
Selling, general and administrative expenses3 & 5(210,367)(211,591)
Other operating income (expenses), net 35,095 (3,611)
Operating income 3905,773 135,676 
Finance expense6(7,228)(16,293)
Finance income616,313 7,948 
Other financial income (expenses), net 66,884 114,500 
Equity in earnings of non-consolidated companies946,519 6,086 
Profit before income tax expense968,261 247,917 
Income tax expense(261,593)(267,282)
Profit (loss) for the period706,668 (19,365)
Attributable to:
Owners of the parent602,928 (11,582)
Non-controlling interest103,740 (7,783)
Profit (loss) for the period706,668 (19,365)
Weighted average number of shares outstanding1,963,076,7761,963,076,776 
Basic and diluted earnings (losses) per share for profit (loss) attributable to the equity holders of the company (expressed in $ per share)0.31 (0.01)


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, 2020.
Page 2 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020
(All amounts in $ thousands)







Consolidated Condensed Interim Statements of Comprehensive Income
Three-month period ended
March 31,
20212020
(Unaudited)
Profit (loss) for the period706,668 (19,365)
Items that may be reclassified subsequently to profit or loss:
Currency translation adjustment(503)(3,152)
Currency translation adjustment from participation in non-consolidated companies(38,711)(110,161)
Changes in the fair value of financial instruments at fair value through other comprehensive income(20,725)69 
Income tax related to financial instruments at fair value4,934 — 
Changes in the fair value of derivatives classified as cash flow hedges84 (407)
Income tax related to cash flow hedges(25)122 
Other comprehensive income items from participation in non-consolidated companies33 — 
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of post employment benefit obligations(186)— 
Income tax relating to remeasurement of post employment benefit obligations17 — 
Remeasurement of post employment benefit obligations from participation in non-consolidated companies(1,446)(57)
Other comprehensive loss for the period, net of tax(56,528)(113,586)
Total comprehensive income (loss) for the period 650,140 (132,951)
Attributable to:
Owners of the parent555,185 (116,621)
Non-controlling interest94,955 (16,330)
Total comprehensive income (loss) for the period 650,140 (132,951)





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, 2020.
Page 3 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020
(All amounts in $ thousands)







Consolidated Condensed Interim Statements of Financial Position
Balances as of
NotesMarch 31, 2021December 31, 2020
(Unaudited)
ASSETS
Non-current assets
Property, plant and equipment, net76,488,527 6,504,681 
Intangible assets, net8893,157 908,583 
Investments in non-consolidated companies9477,702 471,306 
Other investments2,861 2,881 
Deferred tax assets151,600 158,703 
Receivables, net200,723 8,214,570 243,306 8,289,460 
Current assets
Receivables, net345,609 288,609 
Derivative financial instruments1,421 1,572 
Inventories, net2,345,038 2,001,781 
Trade receivables, net1,368,694 918,438 
Other investments637,524 813,527 
Cash and cash equivalents835,384 5,533,670 537,882 4,561,809 
Non-current assets classified as held for sale4,996 4,966 
5,538,666 4,566,775 
Total Assets  13,753,236   12,856,235 
    
EQUITY     
Capital and reserves attributable to the owners of the parent  7,841,311   7,286,115 
Non-controlling interest  1,251,225   1,157,038 
Total Equity 9,092,536 8,443,153 
LIABILITIES
Non-current liabilities    
Provisions78,999   80,570 
Deferred tax liabilities333,890   346,485 
Other liabilities537,913   551,856 
Trade payables 1,118 1,145 
Derivative financial instruments318 523 
Lease liabilities242,063 251,617 
Borrowings1,125,250 2,319,551 1,327,289 2,559,485 
Current liabilities
Current income tax liabilities225,538 110,499 
Other liabilities 316,482 249,836 
Trade payables 1,179,083 1,049,337 
Derivative financial instruments616 5,835 
Lease liabilities42,918 42,486 
Borrowings 576,512 2,341,149 395,604 1,853,597 
Total Liabilities 4,660,700   4,413,082 
  
Total Equity and Liabilities13,753,236   12,856,235 
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, 2020.

Page 4 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020
(All amounts in $ thousands)
Consolidated Condensed Interim Statements of Changes in Equity
Attributable to the owners of the parent (1)
Capital stock
(2)		Treasury shares
(2)		Initial public offering expensesReserves
(3) 		Capital stock issue discount
(4)		Currency translation adjustmentRetained earningsTotalNon-controlling interestTotal Equity
Balance as of January 1, 20212,004,743 (150,000)(23,295)1,329,945 (2,324,866)(2,861,029)9,310,617 7,286,115 1,157,038 8,443,153 
Profit for the period602,928 602,928 103,740 706,668 
Other comprehensive income (loss) for the period
Currency translation adjustment(36,363)(36,363)(2,851)(39,214)
Remeasurement of post employment benefit obligations(1,511)(1,511)(104)(1,615)
Cash flow hedges and others, net of tax30 30 29 59 
Others(9,899)(9,899)(5,859)(15,758)
Total comprehensive income for the period— — — (11,380)— (36,363)602,928 555,185 94,955 650,140 
Acquisition of non-controlling interest (5)11 11 (768)(757)
Balance as of March 31, 2021 (unaudited)2,004,743 (150,000)(23,295)1,318,576 (2,324,866)(2,897,392)9,913,545 7,841,311 1,251,225 9,092,536 

(1) Shareholders’ equity is determined in accordance with accounting principles generally accepted in Luxembourg.
(2) 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, 2021, there were 2,004,743,442 shares issued. All issued shares are fully paid. Also, as of March 31, 2021, the Company held 41,666,666 shares as treasury shares.
(3) Include 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 $ (72.2) million.
(4) Represents the difference between book value of non-monetary contributions received from shareholders under Luxembourg GAAP and IFRS.
(5) Corresponds to the acquisition of non-controlling interest participation of Ternium Argentina S.A..

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.
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, 2020.
Page 5 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020
(All amounts in $ thousands)
Consolidated Condensed Interim Statements of Changes in Equity
Attributable to the owners of the parent (1)
Capital stock
(2)		Treasury shares
(2)		Initial public offering expensesReserves
(3) 		Capital stock issue discount
(4)		Currency translation adjustmentRetained earningsTotalNon-controlling interestTotal Equity
Balance as of January 1, 20202,004,743 (150,000)(23,295)1,332,980 (2,324,866)(2,760,046)8,532,149 6,611,665 1,103,208 7,714,873 
Loss for the period(11,582)(11,582)(7,783)(19,365)
Other comprehensive income (loss) for the period
Currency translation adjustment(104,913)(104,913)(8,400)(113,313)
Remeasurement of post employment benefit obligations(51)(51)(6)(57)
Cash flow hedges, net of tax(145)(145)(140)(285)
Others70 70 (1)69 
Total comprehensive loss for the period— — — (126)— (104,913)(11,582)(116,621)(16,330)(132,951)
Acquisition of non-controlling interest (5)4,786 4,786 (9,258)(4,472)
Balance as of March 31, 2020 (unaudited)2,004,743 (150,000)(23,295)1,337,640 (2,324,866)(2,864,959)8,520,567 6,499,830 1,077,620 7,577,450 
(1) Shareholders’ equity is determined in accordance with accounting principles generally accepted in Luxembourg.
(2) 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, 2020 ,there were 2,004,743,442 shares issued. All issued shares are fully paid. Also, as of March 31, 2020, the Company held 41,666,666 shares as treasury shares.
(3) Include 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 $ (75.2) million.
(4) Represents the difference between book value of non-monetary contributions received from shareholders under Luxembourg GAAP and IFRS.
(5) Corresponds to the acquisition of non-controlling interest participation of Ternium Argentina S.A..
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.
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, 2020.
Page 6 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020
(All amounts in $ thousands)
Consolidated Condensed Interim Statements of Cash Flows
Three-month period ended
March 31,
Notes20212020
(Unaudited)
Cash flows from operating activities
Profit (loss) for the period706,668 (19,365)
Adjustments for:
Depreciation and amortization 7 & 8151,585 166,392 
Income tax accruals less payments 114,328 223,997 
Equity in earnings of non-consolidated companies9(46,519)(6,086)
Interest accruals less payments 1,697 1,303 
Changes in provisions4,400 (651)
Changes in working capital (1)(666,182)181,767 
Net foreign exchange results and others 61,860 (104,582)
Net cash provided by operating activities327,837 442,775 
Cash flows from investing activities
Capital expenditures 7 & 8(129,701)(257,582)
Decrease in other investments149,306 97,054 
Proceeds from the sale of property, plant and equipment 567 156 
Acquisition of non-controlling interest(757)(4,472)
Net cash provided by (used in) investing activities19,415 (164,844)
Cash flows from financing activities
Finance lease payments(10,964)(10,511)
Proceeds from borrowings18,137 190,615 
Repayments of borrowings(36,653)(60,709)
Net cash (used in) provided by financing activities(29,480)119,395 
Increase in cash and cash equivalents317,772 397,326 
Movement in cash and cash equivalents
At January 1, 537,882 519,965 
Effect of exchange rate changes(20,270)(10,900)
Increase in cash and cash equivalents317,772 397,326 
Cash and cash equivalents as of March 31, (2)835,384 906,391 
Non-cash transactions:
Acquisition of PP&E under lease contract agreements3,650 1,157 

(1) The working capital is impacted by non-cash movements of $ (10.6) million as of March 31, 2021 ($ (27.4) million as of March 31, 2020) due to the variations in the exchange rates used by subsidiaries.

(2) It includes restricted cash of $ 61 and $ 91 as of March 31, 2021 and 2020, respectively. In addition, the Company had other investments with a maturity of more than three months for $ 637,524 and $ 118,218 as of March 31, 2021 and 2020, respectively.

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, 2020.
Page 7 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020


Notes to the Consolidated Condensed Interim Financial Statements

1.GENERAL INFORMATION AND BASIS OF PRESENTATION

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, 2021, there were 2,004,743,442 shares issued. All issued shares are fully paid.

Ternium’s American Depositary Shares (“ADS”) 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, 2020.

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, 2020, without significant changes since its publication.


2.    ACCOUNTING POLICIES

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, 2020, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in conformity with International Financial Reporting 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, 2020.

None of the accounting pronouncements issued after December 31, 2020, 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.






Page 8 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

3.    SEGMENT INFORMATION

REPORTABLE OPERATING SEGMENTS

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

The Steel segment includes the sales of steel products, which comprises slabs, hot rolled coils and sheets, cold rolled coils and sheets, tin plate, welded pipes, hot dipped galvanized and electro-galvanized sheets, pre-painted sheets, billets (steel in its basic, semi-finished state), wire rod and bars and other tailor-made products to serve its customers’ requirements. It also includes the sales of energy.

The Steel segment comprises four operating segments: Mexico, Southern Region, Brazil and Other markets. These four segments have been aggregated considering the economic characteristics and financial effects of each business activity in which the entity engages; the related economic environment in which it operates; the type or class of customer for the products; the nature of the products; and the production processes. The Mexico operating segment comprises the Company’s businesses in Mexico. The Southern region operating segment manages the businesses in Argentina, Paraguay, Chile, Bolivia and Uruguay. The Brazil operating segment includes the business generated in Brazil. The Other markets operating segment includes businesses mainly in United States, Colombia, China and Guatemala.

The Mining segment includes the sales of mining products, mainly iron ore and pellets, and comprises the mining activities of Las Encinas, an iron ore mining company in which Ternium holds a 100% equity interest and 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. Both mining operations are located in Mexico. For Peña Colorada, the Company recognizes its assets, liabilities, revenue and expenses in relation to its interest in the joint operation.

Ternium’s Chief Operating Decision Maker (CEO) holds monthly meetings with senior management, in which operating and financial performance information is reviewed, including financial information that differs from IFRS principally as follows:
-The use of direct cost methodology to calculate the inventories, while under IFRS is 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 (with the FIFO method).
-Other timing and non-significant differences.

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




Page 9 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

3.SEGMENT INFORMATION (continued)

Three-month period ended March 31, 2021 (Unaudited)
SteelMiningInter-segment eliminationsTotal
IFRS
Net sales3,238,990 123,368 (113,062)3,249,296 
Cost of sales(2,170,770)(75,378)107,897 (2,138,251)
Gross profit1,068,220 47,990 (5,165)1,111,045 
Selling, general and administrative expenses (206,230)(4,137)— (210,367)
Other operating income, net 4,816 279 — 5,095 
Operating income - IFRS866,806 44,132 (5,165)905,773 
Management view
Net sales3,238,990 147,682 (137,376)3,249,296 
Operating income682,144 69,760 (10,643)741,261 
Reconciliation items:
Differences in Cost of sales164,512 
Operating income - IFRS905,773 
Financial income (expense), net15,969 
Equity in earnings of non-consolidated companies46,519 
Income before income tax expense - IFRS968,261 
Depreciation and amortization - IFRS(136,376)(15,209)— (151,585)

Three-month period ended March 31, 2020 (Unaudited)
SteelMiningInter-segment eliminationsTotal
IFRS
Net sales2,254,104 94,265 (77,014)2,271,355 
Cost of sales(1,913,761)(85,488)78,772 (1,920,477)
Gross profit340,343 8,776 1,758 350,878 
Selling, general and administrative expenses (207,786)(3,805)— (211,591)
Other operating income, net (3,766)155 — (3,611)
Operating income - IFRS128,792 5,126 1,758 135,676 
Management view
Net sales2,254,104 93,481 (76,230)2,271,355 
Operating income191,189 26,214 1,611 219,015 
Reconciliation items:
Differences in Cost of sales(83,339)
Operating income - IFRS135,676 
Financial income (expense), net106,155 
Equity in earnings of non-consolidated companies6,086 
Income before income tax expense - IFRS247,917 
Depreciation and amortization - IFRS(155,095)(11,297)— (166,392)


Page 10 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

3.    SEGMENT INFORMATION (continued)

GEOGRAPHICAL INFORMATION

The Company has revenues attributable to the Company’s country of incorporation (Luxembourg) related to a contract acquired as a part of the acquisition of the participation in Ternium Brasil Ltda.

For purposes of reporting geographical information, net sales are allocated based on the customer’s location. Allocation of non-current assets is based on the geographical location of the underlying assets.
    
Three-month period ended March 31, 2021 (Unaudited)
MexicoSouthern regionOther marketsTotal
Net sales 1,846,973 681,003 721,320 3,249,296 
Non-current assets (1)4,742,361 903,503 1,735,820 7,381,684 
Three-month period ended March 31, 2020 (Unaudited)
MexicoSouthern regionOther marketsTotal
Net sales 1,300,293 340,947 630,115 2,271,355 
Non-current assets (1)4,703,796 993,373 1,866,948 7,564,117 
(1) Includes Property, plant and equipment and Intangible assets.
    
4.COST OF SALES
Three-month period ended
March 31,
20212020
(Unaudited)
Inventories at the beginning of the year2,001,781 2,158,298 
Plus: Charges for the period
Raw materials and consumables used and
other movements		2,045,434 1,426,087 
Services and fees31,614 32,735 
Labor cost158,055 145,074 
Depreciation of property, plant and equipment128,227 132,345 
Amortization of intangible assets4,874 3,167 
Maintenance expenses112,514 106,058 
Office expenses1,540 1,677 
Insurance2,845 2,515 
Change of obsolescence allowance(145)(1,927)
Recovery from sales of scrap and by-products(7,507)(6,147)
Others4,057 4,179 
Less: Inventories at the end of the period(2,345,038)(2,083,584)
Cost of Sales2,138,251 1,920,477 

Page 11 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

5.SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Three-month period ended
March 31,
20212020
(Unaudited)
Services and fees12,75716,791
Labor cost54,80752,011
Depreciation of property, plant and equipment3,8264,057
Amortization of intangible assets14,65826,823
Maintenance and expenses1,4531,039
Taxes33,62822,008
Office expenses7,3257,786
Freight and transportation76,29077,423
Increase of allowance for doubtful accounts208204 
Others5,4153,449
Selling, general and administrative expenses  210,367 211,591 

6.FINANCE EXPENSE, FINANCE INCOME AND OTHER FINANCIAL INCOME (EXPENSES), NET
Three-month period ended
March 31,
20212020
(Unaudited)
Interest expense(7,228)(16,293)
Finance expense(7,228)(16,293)
Interest income16,313 7,948 
Finance income16,313 7,948 
Net foreign exchange (loss) gain(9,378)109,220 
Change in fair value of financial assets8,789 1,580 
Derivative contract results2,831 15,895 
Others4,642 (12,195)
Other financial income (expenses), net 6,884 114,500 

7.    PROPERTY, PLANT AND EQUIPMENT, NET
Three-month period ended
March 31,
20212020
(Unaudited)
At the beginning of the year6,504,681 6,539,581 
Currency translation differences(316)(2,047)
Additions119,231 245,036 
Value adjustments of lease contracts3,018 (6,978)
Disposals(6,646)(7,138)
Depreciation charge(132,053)(136,402)
Capitalized borrowing costs2,396 4,514 
Transfers and reclassifications(1,784)(227)
At the end of the period6,488,527 6,636,339 
Page 12 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

8.    INTANGIBLE ASSETS, NET
 Three-month period ended
March 31,
20212020
(Unaudited)
At the beginning of the year908,583 943,838 
Additions14,120 13,703 
Amortization charge(19,532)(29,990)
Transfers/Disposals(10,014)227 
At the end of the period893,157 927,778 


9.INVESTMENTS IN NON-CONSOLIDATED COMPANIES
CompanyCountry of incorporationMain activityVoting rights as ofValue as of
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Usinas Siderurgicas de Minas Gerais S.A. - USIMINASBrazilManufacturing and selling of steel products34.39%34.39%423,274422,948
Techgen S.A. de C.V.MexicoProvision of electric power48.00%48.00%48,76442,625
Other non-consolidated companies (1)5,6645,733
477,702471,306
(1) It includes the investments held in Finma S.A.I.F., Techinst S.A., Recrotek S.R.L. de C.V. and Gas Industrial de Monterrey S.A. de C.V.

Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS

As of March 31, 2021, Ternium, through its subsidiaries, owns a total of 242.6 million ordinary shares and 8.5 million preferred shares, representing 20.4% of the issued and outstanding share capital of Usinas Siderurgicas de Minas Gerais S.A. – USIMINAS (“Usiminas”), one of the main producers of flat steel products in Brazil for the energy, automotive and other industries.

Ternium, through its subsidiaries, together with Tenaris S.A.’s Brazilian subsidiary Confab Industrial S.A. (“TenarisConfab”), are part of Usiminas’ control group, comprising the so-called T/T Group. As at March 31, 2021, the Usiminas control group holds, 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 is bound by a long-term shareholders’ agreement that governs the rights and obligations of Usiminas’ control group members, is currently composed 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 holds 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 holds approximately 45.9% of the total shares held by the control group; and Previdência Usiminas holds the remaining 7%.

Page 13 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

9.INVESTMENTS IN NON-CONSOLIDATED COMPANIES (continued)

The corporate governance rules reflected in the Usiminas shareholders agreement provide, among other things, that Usiminas’ executive board will be 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 alternates between Ternium and NSC at every 4-year interval, with the party that does 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 provides 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.

As of March 31, 2021, the closing price of the Usiminas ordinary and preferred shares, as quoted on the BM&F Bovespa Stock Exchange, was BRL 17.89 (approximately $ 3.14; December 31, 2020: BRL 15.69 – $ 3.02) per ordinary share and BRL 17.10 (approximately $ 3.00; December 31, 2020: BRL 14.61 – $ 2.81) per preferred share, respectively. Accordingly, as of March 31, 2021, Ternium’s ownership stake had a market value of approximately $ 787.3 million and a carrying value of $ 423.3 million.

The Company reviews periodically the recoverability of its investment in Usiminas. To determine the recoverable value, the Company estimates the value in use of the investment by calculating the present value of the expected cash flows or its fair value less costs of disposal.

As of March 31, 2021, the value of the investment in Usiminas is comprised as follows:
Value of investmentUSIMINAS
As of January 1, 2021422,948 
Share of results (1)40,211 
Other comprehensive loss(39,885)
As of March 31, 2021423,274 
(1) It includes the adjustment of the values associated to the purchase price allocation.

The investment in Usiminas is based on the following calculation:
Usiminas' shareholders' equity2,767,168 
Percentage of interest of the Company over shareholders' equity20.41 %
Interest of the Company over shareholders' equity564,325 
Purchase price allocation44,391 
Goodwill182,443 
Impairment(367,885)
Total Investment in Usiminas423,274 

On April 23, 2021, Usiminas issued its consolidated interim accounts as of and for the three-month period ended March 31, 2021.


Page 14 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

9.     INVESTMENTS IN NON-CONSOLIDATED COMPANIES (continued)

Summarized balance sheet (in million $)As of March 31, 2021
Assets
Non-current3,192 
Current1,593 
Other current investments105 
Cash and cash equivalents703 
Total Assets5,593 
Liabilities
Non-current551 
Non-current borrowings1,090 
Current780 
Current borrowings11 
Total Liabilities2,432 
Non-controlling interest394 
Shareholders' equity2,767 
Summarized income statement (in million $)Three-month period ended
March 31, 2021
Net sales1,289 
Cost of sales(839)
Gross Profit450 
Selling, general and administrative expenses(39)
Other operating income (loss), net(23)
Operating income388 
Financial expenses, net(69)
Equity in earnings of associated companies7 
Profit before income tax326 
Income tax expense(106)
Net profit before non-controlling interest220 
Non-controlling interest in other subsidiaries(50)
Net profit for the period170 

Techgen S.A. de C.V.

Techgen stated as of and for the three-month period ended March 31, 2021, that revenues amounted to $ 83 million ($ 314 million for the year ended December 31, 2020), net profit from continuing operations to $ 13 million ($44 million for the year ended December 31, 2020), non-current assets to $ 823 million ($ 833 million as of December 31, 2020), current assets to $ 64 million ($ 59 million as of December 31, 2020), non-current liabilities to $ 691 million ($ 709 million as of December 31, 2020), current liabilities to $ 94 million ($ 95 million as of December 31, 2020) and shareholders’ equity to $ 102 million ($ 89 million as of December 31, 2020).


Page 15 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

10.    CONTINGENCIES, COMMITMENTS AND RESTRICTIONS ON THE DISTRIBUTION OF PROFITS

Contingencies, commitments and restrictions on the distributions of profits should be read in Note 24 to the Company’s audited Consolidated Financial Statements for the year ended December 31, 2020.

Companhia Siderúrgica Nacional (CSN) - Tender offer litigation
In 2013, the Company was notified of a lawsuit filed in Brazil by Companhia Siderúrgica Nacional, or CSN, and various entities affiliated with CSN against Ternium Investments, its subsidiary Ternium Argentina, and TenarisConfab. The entities named in the CSN lawsuit had acquired a participation 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 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 of São Paulo maintained the understanding of the first instance court. On March 6, 2017, CSN filed a motion for clarification against the decision of the court of appeals, which was rejected on July 19, 2017. On August 18, 2017, CSN filed with the court of appeals an appeal seeking the review and reversal of the decision issued by the court of appeals by the Superior Court of Justice. On March 5, 2018, the court of appeals ruled that CSN’s appeal did not meet the requirements for review by the Superior Court of Justice and rejected such appeal. On May 8, 2018, CSN appealed against such ruling and on January 22, 2019, the court of appeals rejected such appeal and ordered that the case be submitted to the Superior Court of Justice. On September 10, 2019, the Superior Court of Justice declared CSN’s appeal admissible. The Superior Court of Justice will review the case and will then render a decision on the merits. The Superior Court of Justice is restricted to the analysis of alleged violations to federal laws and cannot assess matters of fact.

Ternium continues to believe that all of CSN’s claims and allegations are groundless and without merit, as confirmed by several opinions of Brazilian legal counsel, two decisions issued by the Brazilian securities regulator (CVM) in February 2012 and December 2016, and the first and second instance court decisions referred to above. Accordingly, no provision has been recorded in these Consolidated Condensed Interim Financial Statements.

Shareholder claims relating to the October 2014 acquisition of Usiminas shares

On April 14, 2015, the staff of CVM, determined that an acquisition of additional ordinary shares of Usiminas by Ternium Investments made in October 2014, triggered a requirement under applicable Brazilian laws and regulations for Usiminas’ controlling shareholders to launch a tender offer to all non-controlling holders of Usiminas ordinary shares. The CVM staff’s determination was made further to a request by NSSMC and its affiliates, who alleged that Ternium’s 2014 acquisition had exceeded a threshold that triggers the tender offer requirement. In the CVM staff’s view, the 2014 acquisition exceeded the applicable threshold by 5.2 million shares. On April 29, 2015, Ternium filed an appeal to be submitted to the CVM’s Board of Commissioners. On May 5, 2015, the CVM staff confirmed that the appeal would be submitted to the Board of Commissioners and that the effects of the staff’s decision would be stayed until such Board rules on the matter.


Page 16 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

10.    CONTINGENCIES, COMMITMENTS AND RESTRICTIONS ON THE DISTRIBUTION OF PROFITS (continued)

On June 15, 2015, upon an appeal filed by NSSMC, the CVM staff changed its earlier decision and stated that the obligation to launch a tender offer would fall exclusively on Ternium. Ternium’s appeal has been submitted to the CVM’s Board of Commissioners and it is currently expected that such Board will rule on the appeal in 2021. In addition, on April 18, 2018, Ternium filed a petition with the CVM’s reporting Commissioner requesting that the applicable threshold for the tender offer requirement be recalculated taking into account the new ordinary shares issued by Usiminas in connection with its 2016 BRL 1 billion capital increase and that, in light of the replenishment of the threshold that would result from such recalculation, the CVM staff’s 2015 determination be set aside. In the event the appeal is not successful, under applicable CVM rules Ternium may elect to sell to third parties the 5.2 million shares allegedly acquired in excess of the threshold, in which case no tender offer would be required.
Page 17 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

11.    RELATED PARTY TRANSACTIONS

As of March 31, 2021, Techint Holdings S.à r.l. (“Techint”) owned 62.02% 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 Dutch private foundation (Stichting), held voting rights 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:
Three-month period ended
March 31,
20212020
(Unaudited)
(i) Transactions
(a) Sales of goods and services
Sales of goods to non-consolidated parties217,658 137,865 
Sales of goods to other related parties22,562 3,128 
Sales of services and others to non-consolidated parties44 44 
Sales of services and others to other related parties314 338 
240,578 141,375 
(b) Purchases of goods and services
Purchases of goods from non-consolidated parties110,261 87,632 
Purchases of goods from other related parties14,975 31,247 
Purchases of services and others from non-consolidated parties2,081 1,929 
Purchases of services and others from other related parties20,228 30,605 
147,545 151,413 
(c) Financial results
Income with non-consolidated parties1,559 2,088 
Expenses in connection with lease contracts from other related parties (256)(414)
1,303 1,674 
(d) Other income and expenses
Income (expenses), net with non-consolidated parties291 206 
Income (expenses), net with other related parties179 128 
470 334 
March 31, 2021December 31, 2020
(Unaudited)
(ii) Period-end balances
(a) Arising from sales/purchases of goods/services
Receivables from non-consolidated parties224,556 227,074 
Receivables from other related parties16,862 3,674 
Advances to non-consolidated parties8,354 6,647 
Advances to suppliers with other related parties6,570 7,732 
Payables to non-consolidated parties(40,567)(30,407)
Payables to other related parties(25,155)(29,095)
Lease Liabilities with other related parties(3,185)(3,550)
187,435 182,075 
Page 18 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

12.    FINANCIAL INSTRUMENTS BY CATEGORY AND FAIR VALUE MEASUREMENT

1)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, 2021 (in $ thousands)Amortized
cost		Assets at fair value through profit or lossAssets at fair value through OCITotal
(i) Assets as per statement of financial position
Receivables154,315 — — 154,315 
Derivative financial instruments— 1,421 — 1,421 
Trade receivables1,368,694 — — 1,368,694 
Other investments391,210 2,609 246,313 640,132 
Cash and cash equivalents453,823 381,561 — 835,384 
Total2,368,042 385,591 246,313 2,999,946 
As of March 31, 2021 (in $ thousands)Amortized
cost		Liabilities at fair value through profit or lossTotal
(ii) Liabilities as per statement of financial position
Other liabilities76,113 — 76,113 
Trade payables1,129,448 — 1,129,448 
Derivative financial instruments— 934 934 
Lease liabilities284,981 — 284,981 
Borrowings1,701,762 — 1,701,762 
Total3,192,304 934 3,193,238 

2)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 28 of the Consolidated Financial Statements as of December 31, 2020 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, 2021
(in $ thousands):
DescriptionTotalLevel 1Level 2Level 3
Financial assets at fair value through profit or loss / OCI
Cash and cash equivalents381,561 381,561 — — 
Other investments248,922 246,313 — 2,609 
Derivative financial instruments1,421 — 1,421 — 
Total assets631,904 627,874 1,421 2,609 
Financial liabilities at fair value through profit or loss / OCI
Derivative financial instruments934 — 934 — 
Total liabilities934 — 934 — 
Page 19 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

12.    FINANCIAL INSTRUMENTS BY CATEGORY AND FAIR VALUE MEASUREMENT (continued)
Fair value measurement as of December 31, 2020
(in $ thousands):
DescriptionTotalLevel 1Level 2Level 3 (*)
Financial assets at fair value through profit or loss / OCI
Cash and cash equivalents259,020 259,020 — — 
Other investments236,240 233,611 — 2,629 
Derivative financial instruments1,572 — 1,572 — 
Total assets496,832 492,631 1,572 2,629 
Financial liabilities at fair value through profit or loss / OCI
Derivative financial instruments6,358 — 6,358 — 
Total liabilities6,358 — 6,358 — 
(*) 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 year ended December 31, 2020, corresponds to the initial investment and to the changes in its fair value.

13.    THE COVID-19 PANDEMIC AND ITS IMPACT ON TERNIUM

A novel strain of coronavirus (SARS-CoV-2) was reported to have surfaced in China in December 2019, spreading to the rest of the world in the first quarter of 2020. In March 2020, the World Health Organization declared COVID-19, the disease caused by the SARS-CoV-2 virus, a global pandemic. The COVID-19 outbreak is impacting economic activity worldwide.

In order to safeguard the health and safety of its employees, customers and suppliers, Ternium continues to apply preventive measures, including remote working for a significant portion of white collar employees, implementing a special operations protocol to ensure social distancing and providing medical assistance and supplies to onsite employees. As of the date of these consolidated condensed interim financial statements, remote work and other work arrangements have not materially adversely affected Ternium's ability to conduct operations. In addition, these alternative working arrangements have not adversely affected our financial reporting systems, internal control over financial reporting or disclosure controls and procedures.

Even though the negative effects of the pandemic in steel demand are behind us, and as of the issue date of these consolidated condensed interim financial statements all of Ternium’s industrial facilities continued working at normal production levels, there remains considerable uncertainty about the future duration and extent of the pandemic with new and more contagious variants of the virus appearing and the vaccination programs yet in their early stages.

With total borrowings less cash and cash equivalents and other current and non-current investments of $ 229 million as of March 31, 2021 and a manageable debt amortization schedule, Ternium has in place non-committed credit facilities and management believes it has adequate access to the credit markets. Considering its financial position and the funds provided by operating activities, management believes that the Company has sufficient resources to satisfy its current working capital needs and service its debt. Management also believes that Ternium's liquidity and capital resources give adequate flexibility to manage the revised capital spending programs and address short-term changes in business conditions, and that it is unlikely that Ternium will not be able to meet its financial covenants. Similarly, management does not expect to incur any material COVID-19-related contingencies.




Page 20 of
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of March 31, 2021
and for the three-month periods ended March 31, 2021 and 2020

14.    FOREIGN EXCHANGE RESTRICTIONS IN ARGENTINA

Ternium’s Argentine subsidiary, Ternium Argentina S.A., is currently operating in a complex and volatile economic environment. The recession the Argentine economy was going through at the end of 2019 coupled with the effects of the COVID-19 outbreak in March 2020 significantly affected economic activity and macroeconomic variables in the country.

Starting in September 2019, the Argentine Central Bank has been imposing increasingly restrictive regulations on foreign exchange transactions, aimed at avoiding further deterioration of a low level of foreign currency reserves. These measures have not had a significant effect on Ternium Argentina’s ability to access the foreign exchange market for commercial payments. Access to the Argentine foreign exchange market to pay dividends and services to related parties requires prior central bank approval, which is granted on a very restricted basis. Current Argentine Central Bank regulations deter companies from converting its Argentine Pesos (ARS) holdings via alternate means due to consequent loss of access to the official foreign exchange market.

Ternium Argentina stated in its interim accounts as of and for the three-month period ended March 31, 2021, that revenues amounted to $ 681 million, net profit from continuing operations to $ 174 million, total assets to $ 3,509 million, total liabilities to $ 439 million and shareholders’ equity to $ 3,070 million.

Our Argentine subsidiary’s ARS denominated assets and liabilities are valued at the prevailing official exchange rate. Although most of Ternium Argentina’s cash holdings are either denominated or payable in ARS, our exposure to the ARS as of March 31, 2021 was diminished due to hedging strategies using derivative instruments as well as the investment in US dollar and inflation-linked securities.

As the context of volatility and uncertainty remains in place as of the issue date of these consolidated condensed interim financial statements, additional Argentine Central Bank regulations that could be imposed in the future could further restrict our Argentine subsidiary’s ability to access the official foreign exchange market.






Pablo Brizzio
Chief Financial Officer
Page 21 of

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