Ternium Maintains Shareholder Returns Amid Strategic Expansion

Despite navigating a turbulent steel market, Ternium has reaffirmed its commitment to shareholders by proposing a stable dividend for 2025. The company's latest annual results, released yesterday, reveal a strategic balancing act: funding multi-billion dollar capacity expansions while continuing to deliver attractive cash returns.

For the full year 2025, Ternium reported net sales of $15.6 billion, representing a 12% decrease compared to the prior year. Adjusted EBITDA stood at $1.5 billion, with a corresponding margin of 10%. Crucially, the firm's operations generated a robust $2.3 billion in cash flow, providing the necessary capital to fund its ongoing growth projects without compromising shareholder distributions.

The board has proposed an annual dividend of $2.70 per American Depositary Share (ADS). An interim payment of $0.90 was already distributed at the end of 2025. Subject to approval at the Annual General Meeting on May 12, 2026, a final dividend of $1.80 per ADS is scheduled for payment on May 15, 2026. Based on current market valuations, this distribution implies a dividend yield of approximately 6%.

Capital Expenditure Focus and Market Positioning

Strategic investments reached a peak in 2025, with capital expenditures (CapEx) hitting $2.5 billion. A significant portion was directed toward the company's industrial center in Pesquería, Mexico. Management confirmed that new facilities for cold-rolling and galvanizing processes are now operational. These additions are expected to bolster Ternium's competitive position once fully integrated into its production network.

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The company successfully gained market share in flat steel products within Mexico, even as the nation's overall steel consumption contracted by 10%. Concurrently, Ternium strengthened its foothold in Brazil. The acquisition of additional equity in steel producer Usiminas was finalized on February 10, 2026, for approximately $315.2 million.

2026 Outlook and Financial Strategy

Looking ahead, management anticipates a sequential increase in adjusted EBITDA for the first quarter of 2026. This forecast is underpinned by expectations of improved margins and higher shipment volumes, supported by a recovery in local demand, particularly in the Mexican market.

Capital spending is projected to decline to around $2 billion in 2026, as the current investment cycle moves past its peak. Although the company expects to transition from a net cash position to a moderate net debt level over the course of the year, its balance sheet is viewed as sufficiently strong. This financial robustness is seen as enabling the continued financing of both strategic growth initiatives and shareholder distributions.