Ternium Q2 2025 Earnings Report

Ternium EPS Results

• Actual EPS: $1.28
• Consensus EPS: $0.66
• Beat/Miss: Beat by +$0.62
• One Year Ago EPS: -$0.11

Ternium Revenue Results

• Actual Revenue: $3.95 billion
• Expected Revenue: $4.19 billion
• Beat/Miss: Missed by -$247.45 million
• YoY Revenue Growth: -12.60%

Ternium Announcement Details

• Quarter: Q2 2025
• Date: 7/29/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 8:30AM ET

Ternium (NYSE:TX), together with its subsidiaries, manufactures and distributes steel products in Mexico, Southern Region, Brazil, and internationally. It operates through three segments: Steel, Mining, and Usiminas. The Steel segment offers slabs, hot and cold rolled products, coated products, roll formed and tubular products, bars, billets, and other products. Its Mining segment sells iron ore and pellets. The Usiminas segment offers iron ore extraction, steel transformation, and production of capital goods and logistics; and manufactures and sells various products and raw materials, such as flat steel, iron ore, and stamped steel parts for the automotive industry and products for the civil construction and capital goods industry. It also provides medical and social; scrap; renewable energy; and engineering and other services, as well as operates as a distribution company. In addition, the company engages in the exploration, exploitation, and pelletizing of iron ore. Ternium S.A. was founded in 1961 and is based in Luxembourg City, Luxembourg. Ternium S.A. is a subsidiary of Techint Holdings S.à r.l.

Ternium Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: We delivered a 25% increase in Q2 adjusted EBITDA, driven by higher steel prices in Mexico, partly offset by stable per-ton costs.
• Positive Sentiment: Third-quarter shipments are expected to increase sequentially, led by Mexico’s market gains from recent trade policy measures and stable volumes in Argentina.
• Positive Sentiment: Our $300 million cost-reduction plan for 2025 is on track, leveraging procurement, logistics optimization, process efficiencies, and technology to strengthen margins.
• Negative Sentiment: The Brazilian steel market remains under strain from unfair imports, pressuring local manufacturers and necessitating urgent government defensive measures.
• Neutral Sentiment: The Pesquería expansion project remains on schedule, with Q2 marking peak capital expenditure in our multi-year growth plan.

Presentation

[Operator]

Hello, and welcome to Ternium Second Quarter twenty twenty five Results Conference Call. Please note that this call is being recorded. I would now like to hand the call over to Sebastien Marquis. Please go ahead, sir.

[Sebastián Martí, Global IR and Compliance Senior Director at Ternium]

Good morning, and thank you for joining us. My name is Sebastian Markey and I'm Ternium's Global IR and Compliance Senior Director. Yesterday, we announced our financial results for the second quarter and the 2025. This call is meant to provide additional context to that presentation. I'm joined today by Maximo Vedoya, Ternium's Chief Executive Officer and Paulo Britsio, the company's Chief Financial Officer, who will discuss Ternium's business environment and performance.

[Máximo Vedoya, CEO at Ternium]

After our prepared remarks, we

[Sebastián Martí, Global IR and Compliance Senior Director at Ternium]

will open up the floor to your questions. Before we begin, I would like to remind you that this conference call contains forward looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on Page two in today's webcast presentation. You will also find any reference to non IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday. With that, I'll turn the call over to Mr. Buenos.

[Máximo Vedoya, CEO at Ternium]

Good morning, and welcome to Ternium's conference call. In the second quarter of the year, we delivered an improved EBITDA relative to the first quarter. This better performance was mainly driven by higher realized prices in Mexico and a relatively stable cost per ton, despite a slight dip in shipments. The operating environment remains uncertain and volatile, and our main markets are no strangers to these developments. In this context, our focus is on reducing cost to strengthen the competitiveness of our company.

[Máximo Vedoya, CEO at Ternium]

We are positive on the outcome of these initiatives and on the future of Ternium. In line with this, we are already anticipating a sequential improvement In the third quarter, we expect a slightly increase in shipments, led primarily by Mexico with the possibility of some additional support from Argentina and relatively stable volumes in Brazil. In Mexico, the business environment is currently marked by cautious, pending clearer information regarding U. S.

[Máximo Vedoya, CEO at Ternium]

Trade policy and the conclusion of ongoing tariff negotiations with The United States. In response to this volatile environment, the Mexican government has taken some measures to increase domestic production defense against unfair trade practices, especially from Asian countries. These actions have recently contributed to some decrease in steel imports in Mexico, creating a more level playing field in local markets. This supports our expectations of higher sequential shipments in Mexico in the third quarter. I remain confident that ongoing negotiations between The U.

[Máximo Vedoya, CEO at Ternium]

S. And Mexico will eventually yield a reasonable and mutually beneficial agreement. This conviction strengthens our commitment to the steady progress of our expansion project in Pesqueria, which continues as planned and serve as a cornerstone of our growth strategy. Unlike the recent developments in Mexico, the Brazilian steel market is facing significant challenges due to a surge of unfair imported steel. Imports continue to flow this market, undermining the competitiveness of local manufacturers and rising their margins.

[Máximo Vedoya, CEO at Ternium]

It is crucial in our view that the Brazilian government responds precisely to this unfair trade practice. The impact expands well beyond the steel industry, affecting the wider manufacturing sector and putting at risk investments, jobs and the long term stability of these industries. Concrete measures are urgently needed to defend Brazil industrial base, ensure a level playing field and foster a sustainable market environment. In this challenging context, Usiminas is actively working on its cost structure in order to improve its competitiveness. Moving to Argentina, the country has experienced a significant increase in shipments during the second quarter, by seasonal factors as well as a gradually recovering macroeconomic environment.

[Máximo Vedoya, CEO at Ternium]

The automotive industry continues to operate at a healthy level of activities and the agricultural machine sector is experiencing good demand. By contrast, the construction sector is not improving significantly and certain market segments such as home appliances and packaging are being affected by an increase in imports of finishing goods. In face of ongoing uncertainty and volatility in global trade, we continue to focus on strengthening the operation efficiency and improving margins. Throughout 2025, we have concentrated our strategy approach to cost management, seeking opportunities to optimize Ternium's production process and supply chain and eliminate inefficiencies. Our competitive improvement plan centered on optimizing our logistic network to streamline transportation and reduce cost, improving our procurement for better supplier negotiation and cost control, enhancing production facility process for a greater efficiency and boosting labor productivity by incorporating technology and innovation across our three production lines.

[Máximo Vedoya, CEO at Ternium]

These measures support our goal of strengthening profitability and fortifying our competitive position in a dynamic market environment. Before I wrap up my remarks, I would like to take a moment to highlight the release of our sustainable report, reaffirming our commitment to the creation of a long term value throughout sustainable industrial development. The report details our efforts to advance environmental performance, foster social responsibility and promote transparency across our operations. I encourage you to review it for a comprehensive overview of Ternium's strategies supporting long term sustainability. In conclusion, trade policy continued to evolve rapidly.

[Máximo Vedoya, CEO at Ternium]

We are seeing The United States adopt a more assertive approach in negotiating bilateral agreements and implementing targeted trade action. While this ship has introduced a high degree of volatility, we recognize the U. S. Government's intention to address predatory trade practices by many Asian countries, most notably China, and to work towards restoring fair competition across the region. Mexico shares this perspective and is following a similar path.

[Máximo Vedoya, CEO at Ternium]

Even in this uncertain environment, Cernerion's strong position in the region help us face this challenge. I expect that our ongoing project and focus on improving operations will enable Cernerion to adjust to market changes and reach our goals. All right. This concludes my prepared remarks. Pablo, please go ahead with your comments about our performance last quarter.

[Pablo Brizzio, CFO at Ternium]

Thanks, Maximo, and thanks everybody for being here today with us in this call. So let's start looking at the webcast presentation for a closer look at the operational and financial performance of the company. Beginning on Page three, we note that Permian's adjusted EBITDA increased by 25% in the second quarter, mainly driven by stronger realized steel prices in Mexico, partially offset by a slight increase in cost per ton. We expect this positive trend to continue into the third quarter, mainly supported by ongoing cost efficiency measures and operational improvements. Turning to the next page.

[Pablo Brizzio, CFO at Ternium]

Net income for the 2025 amounted to $259,000,000 These figures include a $40,000,000 provision adjustment related to the ongoing litigation associated with the acquisition of a participation in Xvinas back in 2020. The adjustment reflects both a decrease in pay and the appreciation of the Brazilian real against the U. S. Dollar during the quarter. Adjusted net income excluding this provision amounted to $299,000,000 This was mainly supported by a better operational performance and favorable deferred tax result due to a 7.5% revaluation of the Mexican peso during the period.

[Pablo Brizzio, CFO at Ternium]

On the other hand, we have a decline in net financial result, primarily driven by the same Mexican foreign exchange fluctuation. Now turning to Page five, let's review the performance of our steel segment. During the quarter, shipments declined primarily in Mexico and The U. S. This was partially mitigated by higher volumes in our southern region.

[Pablo Brizzio, CFO at Ternium]

For the third quarter, we anticipate a mixed performance across our key markets. In Mexico, we expect some sequential growth in shipments supported by recent government measures aiming at curbing unfair trade practices. In contract, Usiminas in Brazil continues to face headwinds. The Brazilian market remains under pressure due to a sharp increase in unfair trade steel imports primarily from China, which is undermining local competitiveness and impacted demand. Meanwhile, in Argentina, following strong increase in the second quarter driven by seasonal demand and gradual macroeconomic improvement, we are expecting somewhat shipments to hold steady on the positive side.

[Pablo Brizzio, CFO at Ternium]

Let's now turn to Page six of the presentation. In the second quarter, there was an increase in average selling price, especially in Mexico, although this was offset by lower shipments. Margins improved supported by the higher price with the most impact from increased cost per ton. Turning to Slide seven, we will now review the performance of our Mining segment. Iron ore shipments rose quarter over quarter driven by increased production levels.

[Pablo Brizzio, CFO at Ternium]

Despite these higher volumes, net sales remained broadly unchanged in the second quarter as lower realized iron ore prices offset volume gains. The segment margin slightly declined, reflecting the impact of weaker prices, although this was partially offset by lower operating cost per ton. Let's proceed to the final slide of the presentation to review our cash flow performance and balance sheet position. Cash from operations in the second quarter totaled $1,000,000,000 aided by a significant reduction in working capital. This reflects our work on adjusting inventory volume as well a decrease in trade receivables.

[Pablo Brizzio, CFO at Ternium]

In addition, high level of CapEx contributed to an increase in commercial debt. CapEx increased this quarter as a result of ongoing expansion at the Pesqueria Industrial Center in Mexico. This trend is consistent with the project expenditure forecast, which we identified 2025 as the peak year for divestments. Finally, TAG net cash position decreased in the second quarter, primarily as a result of the elevated CapEx level and the distribution of the $353,000,000 dividend during the period. This was partially offset by the robust operational cash flow generation.

[Pablo Brizzio, CFO at Ternium]

Nevertheless, this the cash position of the company continues to be very, very solid, totaling $1,000,000,000 at the June. Okay. This also concludes my prepared remarks. We are ready now to take your questions. Please, operator, go ahead with the Q and A session. Thanks.

[Operator]

And our first question comes from the line of Kyle Griner from UBS. Please go ahead.

[Caio Greiner, Equity Research Director at UBS Group]

Hello. Good morning, everyone. Thank you. So my first question on the state of supply, steel supply in Mexico. Can you guys elaborate a bit better on the supply picture in the country, touching on two points?

[Caio Greiner, Equity Research Director at UBS Group]

The first one, as you mentioned, Mexico's recent implementation of trade measures, which eventually led to lower imports. And the second one, ArcelorMittal reported an incident over these last few days at the steelworks, which is supposed to impact 30% of their production. So touching on those two points, do you think that these are enough to rebalance steel markets in Mexico? To what extent are they actually going to help the supply demand picture, help to raise prices back to normalized levels? And is Ternium well positioned to capture a higher market share from these two events?

[Caio Greiner, Equity Research Director at UBS Group]

The second question on the cost outlook that you provided. You mentioned that you expected cost reduction to drive higher margins for the third quarter. Can you elaborate a bit more on those operational enhancement and cost reduction initiatives that you discussed? How much of the cost decline that you anticipate is coming from these bottom up initiatives versus lower raw material costs? We're seeing coal prices declining.

[Caio Greiner, Equity Research Director at UBS Group]

We're seeing slab prices declining. So maybe break that down would be really helpful. And maybe if you could also quantify the level of cost reduction that we should expect into the third quarter. Thank you very much.

[Máximo Vedoya, CEO at Ternium]

Okay. Thank you, Cairo. Let's start with the first one, Mexico. As you know, Mexico let me split it in two. One is the flat products.

[Máximo Vedoya, CEO at Ternium]

Flat product has an import around 40% of market share in Mexico is from imported steel. And as you know, apparent consumption in Mexico decreased a little bit this year. And in the third part, with all the investment we have been doing and the increasing productivity, today, we have capacity to start gaining market share, and it's what we are doing. And I think we are going to improve this in the following quarters. That because of the lower imports and the effort for one side, the government is doing in this fighting unfair trade.

[Máximo Vedoya, CEO at Ternium]

And on the other side, our own job in trying to be a good alternative for all these customers. So I think from the flat side products, I think you are going to see an increase in market share. This is you're not going to see a huge increase in shipments because, as I said, compared to last year, the consumption in Mexico, because all the things we discussed, is a little bit low. Regarding AlcilarMittal, well, we just find out yesterday or Monday about the problem in ethanol and nickel. I don't know exactly what the problem is yet.

[Máximo Vedoya, CEO at Ternium]

But that is in the long products. So yes, we are probably going to gain a little bit share while this problem arouse in the long product market. But as you know, long products, there are not a lot of imports in long products and there are several players in the long product market in Mexico. So that gain is going to be only marginal, I guess. But the gain is going to be in the flat products, which is our main market.

[Máximo Vedoya, CEO at Ternium]

So that's for the first question. The second question, cost reduction. So additionally, to the decrease in as you said, in iron ore, in flask, we anticipate, I think, our Analyst Day in June that we are seeking an additional $300,000,000 decrease in cost efficiency during the whole year. Part of that, we already have realized in the first quarter, almost onethree of that. And this twothree of that volume is going to be realized in these next two quarters.

[Máximo Vedoya, CEO at Ternium]

And this is several initiatives from our procurement front, but expecting renegotiations and new suppliers and enhanced control, it's almost $70,000,000 improving through different initiatives. The stability in several of our process is also $50,000,000 A change in the supplier of metallic in the EIFs rebalancing, as you said in Mexico, we are rebalancing the production and we are shutting some of the lines and improving productivity. In other words, we've decreased in cost. So there are several the wind farm in Argentina, which of course is giving energy much at a much lower cost than we used to. So all these in total are the 300,000,000 we said besides the decrease in raw materials that you mentioned.

[Máximo Vedoya, CEO at Ternium]

I hope with this Cairo, it is clear the numbers.

[Caio Greiner, Equity Research Director at UBS Group]

Yes, Maximo. Thank you very much. Maybe if I can just a quick follow-up on the import on the trade import measures that Mexico took. Just wanted to understand if you think these are sufficient to balance local steel markets in Mexico. Thank

[Máximo Vedoya, CEO at Ternium]

Thank you, Caio. Very good question. I think it's a good start, a very good start. But clearly, Mexico is analyzing more measures. I think in the sense as The U.

[Máximo Vedoya, CEO at Ternium]

S. Is doing and Canada also doing. So at the end, I'm expecting that the whole North American market will have a defense mechanism similar in each country. So if you compare Mexico's measures to The U. S.

[Máximo Vedoya, CEO at Ternium]

Measures, I think there's still a gap, but I understand that the Mexican government is analyzing to reduce that gap.

[Caio Greiner, Equity Research Director at UBS Group]

Thank you very much, Marco. That was really helpful.

[Máximo Vedoya, CEO at Ternium]

You're welcome, Caio.

[Operator]

Thank you. Our next question comes from the line of Carlos Dialba from Morgan Stanley. Your line is open.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Yes. Hello. Good morning, gentlemen. Just a couple of questions, if I may. First on EBITDA, one short term and one long term.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Can you maybe give us a better sense of the magnitude of the potential improvement sequentially given that you already seems to have bottomed out and start improvement? The step up in that recovery that you see ahead will be important. And a little bit more longer term, can you maybe quantify, give us a range of the expected boost in EBITDA in millions of dollars that you see coming from the ongoing and recent investments in Mexico?

[Pablo Brizzio, CFO at Ternium]

Okay. Hi, Carlos. So let me take at least the first part of your question. Clearly, as we have described in recent calls, we have borne out from the lowest levels of our EBITDA generation. Clearly, that was important increase during this quarter.

[Pablo Brizzio, CFO at Ternium]

Our expectation is for this to continue. There are a lot of variables, of course, moving around, but the expectation is something that we already mentioned in the past to reach by the fourth quarter an amount of an average EBITDA margin closer to around 15%. As you know, has been our goal for the company in the short run. So we believe that with all the measures that Maximo described on our plans to reduce cost and be more efficient, we will be able to achieve that in a normal market environment. And we are working for that.

[Pablo Brizzio, CFO at Ternium]

And the third quarter should be the case and the following should be an additional increase in order to achieve these levels. In the longer term view, I think, Maximo, you can take it.

[Máximo Vedoya, CEO at Ternium]

Yes. Carlos, hello. How are you? Longer term view of the project, remember, the project at the end of this year, we are going to start the galvanized line and the new cold rolling mill, the PLTCM2. This is going to increase it's going to give 1,500,000 tons a year of new capacity.

[Máximo Vedoya, CEO at Ternium]

But remember that all these equipment has a very long ramp up period. So you're not going to see in the 2026 a huge increase. But it's $1,500,000 of that, probably 500,000 tons we are going to close very old capacity. Remember, the Guerrero cold rolling mills or the Universidad cold rolling mills are very old capacity with one single stand, so very inefficient. So part of that is going to have an increased margin or EBITDA of $30.40 dollars because of the cost efficiency.

[Máximo Vedoya, CEO at Ternium]

And the other part, probably we have an EBITDA per ton of around $150 to $200 a ton. So you can make the math. But again, they have a long ramp up period.

[Pablo Brizzio, CFO at Ternium]

Yes. I'm sorry. Let me have Maximo. This is just the part that we are

[Máximo Vedoya, CEO at Ternium]

Yes, you're right.

[Pablo Brizzio, CFO at Ternium]

By the end. Then we have the second part of the expansion plan. That end will be 2027. 2027, exactly.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Okay. All right. So okay, got it. On 2027, it will be the EAF.

[Máximo Vedoya, CEO at Ternium]

Yes. And again, a long ramp up period, even longer.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Okay. All right. That's helpful. Thank you. Then the two short ones, well, hopefully, one is not that short, but we'll see.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

On the CSN litigation or the Usiminas alleged share under control changing in control, where do we stand and what would be the next steps in that litigation? And then one small one, the Schiphol facility in The U. S, you typically import material from I think Mexico into that plant to for the processing. With a 50% tariff, what is the strategy there?

[Máximo Vedoya, CEO at Ternium]

Yes. Let me start with the second one, which is very simple. I mean, today, we are buying most of our supply from local suppliers. Clearly, the 50% tariff, it's make us buy more locally. Brazil and CSN, I mean, the litigation with CSN, to be honest, there haven't been significant develop later.

[Máximo Vedoya, CEO at Ternium]

The last develop we reported in the fourth quarter of last year. So there hasn't been we in that quarter, I think was that we changed we adjust the provision we had because of that development. But since then, there hasn't been much update to that.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

I And going forward, what are the next steps in the legal process for eventually get a final resolution on this?

[Máximo Vedoya, CEO at Ternium]

To be honest, no, no. We already appealed and the Supreme Court of Justice has to decide if the our appeal is going to the Supreme Federal Tribunal, the SPF, as you call it in Brazil. This is still pending.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Right. Got it. Thank you. Thank you very much.

[Máximo Vedoya, CEO at Ternium]

So to be clear, I mean, we filed an extraordinary a plan against the SIT quota decision and we are waiting for that appeal. That was I think in February.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Okay. Excellent. Thank you very much, Maximo and Pablo.

[Máximo Vedoya, CEO at Ternium]

You're welcome.

[Operator]

Thank you. Our next question comes from the line of Emerson Vieira from GS. Your line is open.

[Emerson Vieira, Equity Analyst at Goldman Sachs]

Hey guys, good morning and thank you for the opportunity. So I have two follow ups. The first one is on the cost reduction target of $300,000,000 I just wanted to understand if that's compared to 2024 figures or to a run rate figure from the 4Q twenty twenty four. So just understand what is the comparison base for this cost reduction and if that includes Usiminas? And second question is just on the impact that this lower imports into Mexico is having on steel prices.

[Emerson Vieira, Equity Analyst at Goldman Sachs]

And so you guys believe that this should support further increases going into the third Q? That's it. Thank you.

[Máximo Vedoya, CEO at Ternium]

Thank you, Amr. So the first question, this $300,000,000 are compared to 2024 without the effect of the change of raw material prices, of course. So to see it in the sheet balance, it's a little bit difficult, but we are continuous following that and making this improvement compared to 2024. Usiminas is not included on this number. Usiminas, we are making Usiminas a very aggressive competitive plant, but it's not included in this number.

[Máximo Vedoya, CEO at Ternium]

The second part of prices in Mexico, prices in Mexico will probably increase a little bit. But as I said, we are probably going to gain market share, but the change in prices, are not going to improve radically. It's going to be a mild improvement.

[Emerson Vieira, Equity Analyst at Goldman Sachs]

Okay. And just a follow-up on the Mexican measures as well. Can you just elaborate a little bit on it? I mean, we talking about quota systems into them being? And if you can provide us some insights into the next measures that the government is analyzing as you mentioned that would be helpful. Thank you.

[Máximo Vedoya, CEO at Ternium]

Well, what they are doing is revising all the several abuses that were in the system in the imports in Mexico, not only from steel. And the tax authority and the economy minister or the Secretary of Economy are doing different schemes to shut down all the loops that were for dumping cases and the tariffs that Mexico today is, for example, all temporary imports. Well, they are revising because a lot of that was clearly a loophole that people were using. And so they are closing all those loopholes. And also they are taking we are seeing a more analyzing a new dumping cases.

[Máximo Vedoya, CEO at Ternium]

So they are enhancing the capability of analyzing all different dumping cases. And I hope soon we will have good news about that.

[Emerson Vieira, Equity Analyst at Goldman Sachs]

Super clear. Thank you very much.

[Máximo Vedoya, CEO at Ternium]

Thank you, Emerson.

[Operator]

Thank you. And our next question comes from the line of Rafael Barcelos from Bradesco BBI. Your line is open.

[Rafael Barcellos, Head of LatAm Metals & Mining, Pulp & Paper and Cement - Senior Equity Research Analyst at Bradesco BBI]

Hey, good morning. Thanks for taking my questions. I have two questions related to capital allocation. So the first one, if you could please elaborate further on your CapEx cycle. I mean, we should see the peak of the CapEx level closer to the end of this year or more to the beginning of next year?

[Rafael Barcellos, Head of LatAm Metals & Mining, Pulp & Paper and Cement - Senior Equity Research Analyst at Bradesco BBI]

If you could give us a sense of when you're planning to post the peak of this CapEx level? And on this point also if you could provide more color on the execution of the Pesqueria project could be interesting as well. Then the second question, it's a broader question in the sense of I wanted to hear from you what are your thoughts on the overall capital allocation strategy going forward. I mean whether you believe you could increase dividends in the coming years. And given the ongoing difficulties in Brazil following the recent increase in imports, I mean, is your appetite to keep in investing in the country? Thank you.

[Máximo Vedoya, CEO at Ternium]

Thank you, Rafael. CapEx, probably this quarter, the $800,000,000 of CapEx of this quarter will probably be or definitely will be the top quarter of this cycle. I mean, for the remaining of the year, our projection is to be between the 2,500,000,000.0 and the $2,600,000,000 of CapEx that we said last conference call. With that, the next two quarters are going to be very high on the order of $700,000,000 but lower than this quarter. Next year 2025 will probably be around $1,900,000,000 and 2027 will probably be around 1,100,000,000.0 €1,200,000,000 So as you see, this year is the peak and this quarter particularly will be probably the peak of all this CapEx investment.

[Máximo Vedoya, CEO at Ternium]

The execution in Pesqueria, to be honest, doing very good. As I said, the PLTCM or the galvanized are going to start the ramp up in December. That was the original date for the galvanized and we are moving forward two months, the one in PLTCM. So I mean, very comfortable with that. The steel shop and the direct reduction unit, well, they're going well.

[Máximo Vedoya, CEO at Ternium]

If you like, there are some videos in our web pages or in the media, which you realize the how the investment is going through, the size of the investment and the challenge. But as you would see from the videos, it's going very, very well and on time. So with that, we are very comfortable today. Of course, looking I mean, making a lot of effort to deliver that in time and in budget. The third one, Brazil, you are very correct.

[Máximo Vedoya, CEO at Ternium]

I mean, Brazil has to I mean, as a country, they have to take some measures because it's not clearly not only steel industry, but a lot of industries cannot compete with unfair from China, not the steel, not the automotive anybody. I know the automotive industry in Brazil just released a very tough memo about all this. So this is something that probably Brazil has to figure out before investments are going there. But the long term dividends, Pablo?

[Pablo Brizzio, CFO at Ternium]

Yes. The question, of course, was including dividends and also the capital allocation of the company. As you know, we are in the middle of a very, very significant CapEx plan for Ternium $4,000,000,000 We are in the middle of that. As mentioned Maximo mentioned, this year, total CapEx $2,500,000,000 next year close to $2,000,000,000 So we are in the middle of significant capital allocation that we need to cover. With this level of CapEx, we also mentioned and we also confirmed that we will sustain our level of dividend payment and we have been doing that lately. So we have a significant outflows of capital to be allocated within the project and within the dividend that we are planning to have. Of course, as usually happened with our big CapEx plan, then we take a year or a little more to digest all the investment that we have been doing. As Maximo mentioned before, the ramp up period of these CapEx plans are significant, especially these ones that are very, very sophisticated. So we think that we have a very clear view of what we will be doing in near future.

[Pablo Brizzio, CFO at Ternium]

We have, as you know, our plans is they are feasible for the future. But the main focus of the company, at least for the next couple of years, is to, of course, get a better level of EBITDA, level better level of margins for the company to sustain our dividend payment and to sustain all the CapEx plan that we are performing right now.

[Rafael Barcellos, Head of LatAm Metals & Mining, Pulp & Paper and Cement - Senior Equity Research Analyst at Bradesco BBI]

Okay. Thank you. Just a quick follow-up. So just to confirm, so you mentioned that the peak of the CapEx was the second Q, right? So in the coming quarters, your CapEx level should go down slightly, right?

[Máximo Vedoya, CEO at Ternium]

Exactly. We are putting the number at $1,400,000,000 for the next semester, around 700,000,000 each quarter, a little bit more or less, but it's that is a number approximately compared to the 800 of this quarter. Okay.

[Rafael Barcellos, Head of LatAm Metals & Mining, Pulp & Paper and Cement - Senior Equity Research Analyst at Bradesco BBI]

Thank you.

[Máximo Vedoya, CEO at Ternium]

You're welcome.

[Operator]

Thank you. There are no further questions. I will turn the call back over to our CEO for closing remarks.

[Máximo Vedoya, CEO at Ternium]

Okay. Thank you very much all for joining us in today's call. As usual, we value very much your feedback. And so call us with any doubt, and have a great day. Thank you very much.

[Operator]

The meeting has now concluded. Thank you all for joining. You may now disconnect.

Participants

Executives

• Sebastián Martí, Global IR and Compliance Senior Director
• Máximo Vedoya, CEO
• Pablo Brizzio, CFO

Analysts

• Caio Greiner, Equity Research Director at UBS Group
• Carlos de Alba, Equity Research Analyst at Morgan Stanley
• Emerson Vieira, Equity Analyst at Goldman Sachs
• Rafael Barcellos, Head of LatAm Metals & Mining, Pulp & Paper and Cement - Senior Equity Research Analyst at Bradesco BBI