Ternium S.A. (NYSE: TX) the Luxembourg-based steelmaker completes acquisition of additional Usiminas stake as it concludes a record $2.5 billion capital investment cycle. Full-year results reflect lower realized steel prices partially offset by operational efficiency gains and a recovery in Argentine demand.
The company reports net income of $303 million for the full year 2025, an increase from $174 million in 2024, despite a 12% decline in annual net sales to $15.6 billion. The fiscal year results include a $405 million non-cash write-down of deferred tax assets at its Brazilian subsidiary, Usiminas, and $117 million in provisions related to ongoing litigation. For the fourth quarter of 2025, the company records net income of $171 million on sales of $3.8 billion.
Key Development: Consolidation of Usiminas Control
On February 10, 2026, Ternium completes the acquisition of the remainder of Nippon Steel Corporation and Mitsubishi Corporation’s participations in the Usiminas control group. The $315.2 million cash transaction increases the aggregate participation of the Ternium-led T/T Group to 92.9% of the Usiminas control group. Additionally, Usiminas’ Board of Directors approves a shift in its functional currency from the Brazilian Real to the U.S. dollar, effective January 1, 2026, to align reporting with the economic substance of its international steel activities.
Product Highlights: Expansion of Pesquería Industrial Center
The company maintains its focus on the expansion of its industrial center in Pesquería, Mexico, which includes the construction of a new direct reduced iron (DRI) plant and an electric arc furnace (EAF). Capital expenditures for 2025 total $2.5 billion, representing the peak of the current investment cycle aimed at low-carbon emission steelmaking technologies. In July 2025, Ternium Mexico enters into a $1.25 billion “green” syndicated loan to finance these developments.
Financial Performance
Net sales for the full year 2025 reach $15.6 billion, down from $17.6 billion in the prior year. Operating income for the year totals $705 million, a 44% decrease compared to 2024. Adjusted EBITDA for the full year is $1.5 billion, with an adjusted EBITDA margin of 9.9%. Earnings per ADS for the full year 2025 are $2.17, compared to a loss of $0.27 per ADS in 2024.
The consolidated balance sheet as of December 31, 2025, shows total assets of $23.6 billion and total equity of $16.1 billion. Total financial debt stands at $2.4 billion. The company’s net cash position is $712 million at year-end, down from $1.6 billion at the end of 2024. Cost of sales for 2025 is $13.3 billion, while selling, general, and administrative expenses are $1.6 billion.
Investment Thesis: (Bull vs. Bear)
Bull Thesis:
- The company maintains a strong operating cash flow of $2.3 billion and a stable net cash position despite record capital spending.
- Strategic expansion in Mexico positions the company to benefit from manufacturing reshoring trends.
- Management proposes a total annual dividend of $2.70 per ADS, representing an approximate 6% yield.
Bear Thesis:
- Realized steel prices declined by 10% year-over-year in 2025, impacting margins.
- The company faces ongoing legal risks in Brazil, with a provision for litigation exceeding $527 million.
- Economic volatility in Argentina and uncertainty regarding U.S. trade tariffs continue to present operational headwinds.
Shipment Decline
Steel shipments for the full year 2025 are 15.1 million tons, a 4% decrease from the 15.6 million tons shipped in 2024. Revenue per ton in the steel segment fell 10% to $978. Conversely, the mining segment saw a 14% increase in shipments to 13.0 million tons. The company’s debt-to-equity ratio remains low at 0.13 as of December 31, 2025.
Brazil Litigation
In June 2024, Brazil’s Superior Court of Justice reversed a prior favorable ruling and ordered indemnification, with subsequent clarification motions rejected in December 2024. An extraordinary appeal filed in February 2025 remains pending before the Supreme Federal Tribunal, and the company continues to contest the claims.
Additional contingencies linked to Usiminas totaled $856.2 million in provisions at acquisition and remain material. These include tax disputes related to PIS/COFINS credit calculations, ICMS credit usage and export documentation, labor claims from current and former workers at the Cubatão and Ipatinga plants, and a public civil action tied to infrastructure expenditures. Total loss-contingency provisions rose to $1.11 billion at year-end 2025 from $962.8 million a year earlier. Management states that existing provisions are considered adequate, but notes that adverse rulings or misestimation of liabilities could result in additional charges affecting earnings and cash flow.
Business Outlook & Strategy
Management anticipates an increase in Adjusted EBITDA and shipments for the first quarter of 2026, primarily driven by Mexico. The corporate strategy emphasizes the integration of Usiminas and the completion of the Pesquería project to enhance regional competitiveness. Capital allocation priorities include maintaining a robust dividend policy alongside the ongoing investment program.
Trade Pressures
The operating environment for Ternium remains influenced by shifting trade policies across key markets. In Brazil, rising imports from China have pressured domestic pricing, prompting the government to impose new anti-dumping duties on cold-rolled and galvanized steel to support local producers. In Mexico, authorities have increased import tariffs on most steel products originating from countries without free trade agreements, tightening protections for regional manufacturers.
The broader landscape continues to be shaped by U.S. Section 232 tariffs and evolving rules-of-origin requirements under the United States–Mexico–Canada Agreement. These measures contribute to a complex and dynamic trade framework, requiring the company to adjust sourcing, production, and commercial strategies across its Americas footprint.