MONCLOVA, Mexico--(BUSINESS WIRE)--Altos Hornos de México, S.A.B. de C.V. and Subsidiaries (“AHMSA” or “the Company”) (BMV:AHMSA) reported financial results for the second quarter period ended June 30, 2018 (2Q 2018). Financial and operating figures included in this report are unaudited and are based on AHMSA’s operating figures and financial statements; they are prepared in accordance with International Financial Reporting Standards (IFRS) and are expressed in U.S. dollars (US$) and metric tons (MT).
2Q 2018 Highlights
- Adjusted EBITDA reached US$ 126 million, a 130% increase compared to US$ 55 million in 2Q 2017.
Steel Segment Adjusted EBITDA increased 146% to US$ 143 million
from US$ 58 million in 2Q 2017.
- Steel shipments were 985 thousand MT, a 6% increase compared to the same period in 2017.
- Average realized prices increased by 24%, due to stronger steel market conditions.
- Net Sales grew 31%, compared to 2Q 2017, driven by higher volume and better price conditions.
- Cost of sales increased by 24% compared to 2Q 2017, mainly due to higher raw material costs and higher raw material usage.
Steam Coal Segment adjusted EBITDA resulted in a loss of US$ 13
million compared to a US$ 2 million gain in 2Q 2017. This was mainly
explained by the following factors:
- Adverse exchange rate conditions negatively impacted the pricing formula of the CFE1 contracts, specifically a 35% price adjustment due to the exchange rate fluctuation.
- Reduction in the monthly shipment volume requested by CFE.
AHMSA continues to move forward on a number of strategic investments:
- During the current month, the Company initiated the operating phase for its vacuum degassing system. This new line will allow the Company to access markets that require higher value-added products.
- The progress rate for the Proyecto Artemisa iron ore recovery program is advancing at a solid pace. The system, through which the Company aims to increase iron ore recovery rates and the optimization of concentrate production is expected to be operational year-end.
- AHMSA continues to report progress in the repair project of 35 coke ovens at our #1 Coking Battery. As a result, we expect to increase annual coke capacity at this plant by approximately 177 thousand MT.
- During the month of June, AHMSA concluded new steam coal supply contracts with the CFE, which include a new formula that corrects the former price distortions caused by foreign exchange imbalances. The new contract terms will become effective in January 2019.
- Plans are underway for the re-instatement of AHMSA’s shares on the Mexican Stock Exchange (BMV).
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AHMSA is the largest steel producer in Mexico. The Company was founded in 1942 and began operations in 1944. In December 1991, the Company was privatized and Grupo Acerero del Norte, S.A. de C.V. (GAN) assumed control. In December 1995, GAN incorporated into AHMSA the iron ore and coal mines to convert AHMSA into an integrated steel producer in Mexico with a nominal capacity of 3.8 million MT of liquid steel per year. Since 2007, it has managed the Fénix Project, the most ambitious investment program in the Company’s history aimed at increasing installed capacity by at least 40% and enabling AHMSA to surpass 5 million MT of liquid steel per year following the incorporation of its new electric arc furnace. With this new equipment, AHMSA also expanded its ranges of steel and increased specifications, which allows the Company to enter new market niches.
In 2017, AHMSA held 12% share of the domestic steel market, 22% of the domestic market for flat products and 12% of exports from Mexico of finished steel products. The corporate headquarters and steel mills have an area of approximately 1,200 hectares and is located in Monclova, Coahuila de Zaragoza, 248 km from the U.S. border.
1. CFE. Comisión Federal de Electricidad (Federal Electricity Commission).