Vaca Muerta guarded the accounts of local steel company Grupo Techint

Local steel company Ternium Argentina, owned by Grupo Techint, nearly tripled its consolidated total revenue, despite the fact that construction, the main activity requiring the inputs of Paolo Rocca’s company, slowed down sharply. Neither the auto industry nor farm machinery managed to drag down the steel company’s sales. The company’s balance sheet sent to stock market authorities shows a real improvement of 186.4% in total profits in the first half of the year (500,983 million pesos) compared to the same period in 2022 (174,874 million).

“In the construction sector, the general decline in activity has been moderated by the dynamism of mining and investment in the development of Vaca Muerta“, analyzes in its “Prospects” the balance presented by Ternium. Taking only the quarter’s profit, in the second it reached a net 60.509 million pesos, with an operating result of 46.772 million and an operating margin that stood at 23 percent of net sales.

The demand created by the Vaca Muerta project, both in terms of economic investment and inflows and employment, is colossal. Neuquén has had 30 months of uninterrupted job growth, with a boost attributed in particular to the development of the energy sector linked to both oil and gas production and projects related to this infrastructure. Projections call for a total of 91,000 jobs directly linked to Vaca Muerta by 2026.

In Ternium’s case, Vaca Muerta has allowed it to maintain a quarterly rate of between 560,000 and 625,000 tonnes of plate shipped over the past year. During the first half of the year, shipments amounted to 1.1 million tons, with a decrease of 72.3 thousand tons compared to the first half of the previous year.

“Ternium Argentina’s steel shipments in the second quarter of 2023 were 561 thousand tons, similar to the volume achieved in the first quarter of the year. Demand for steel in the local market remained essentially unchangedwhile exports continued at reduced levels once the company adjusted to restrictions on factor imports,” the company’s balance sheet says.

Compared to the same period last year, in the second quarter of 2023 the company’s steel shipments fell by 10%, reflecting lower demand in the local market and a decline in exports. Sales in the Argentine market accounted for 97% of total sales in the second quarter, similar to the level recorded in the first quarter of the year.

The company expects the volume of steel shipments in the third quarter of 2023 “to remain at a level similar to the volume achieved in the second quarter of the year, with disparate behavior of the consumer sectors in the country.” According to the details presented by the company, demand for the production of agricultural machinery “has been affected by the lower level of activity after the drought, while the automotive sector is consolidating its recovery in production levels“. In the construction sector, a general regression is expected, but, as previously mentioned, it will remain tempered by the performance of the Vaca Muerta development.

In any case, the company points to the alleged “uncertainty” created by the government’s latest exchange measures. Rocca’s holding subsidiary points out that “the list of goods covered by the PAIS tax has been expanded, resulting in the application of a rate of 7.5 percent to inputs imported by the company, including its main raw materials, and the freight associated with international trade, resulting in an increase in costs”. In this way, it begins to justify an additional jolt to the prices of rolled steel.

“Ternium Argentina continues to advance its investment plan with an emphasis on the environment, climate change, maintenance, technology applied to operations and customer service, highlighting the construction of the new wind farm in Olavarría and a new distribution center in Rosario “, says the Company.

Investments in associated companies resulted in a profit of 44,623 million pesos in the first half of the year, with a profit on the investment in Ternium México of 42,782 million and a profit on the investment in Usiminas (the main Brazilian steel company) of 1,841 million.. In the first half of 2022, the result of investments in associated companies was a profit of 30,976 million pesos.

The net financial result was a profit of 1,393 million pesos in the first half of 2023, compared to a profit of 188 million in the same period of 2022. In the first half, the net interest result was a profit of 3,630 million pesos, compared to a profit of 2,767 million in the same period period of 2022, details the balance checked by Price Waterhouse.