Investor Presentation. March 2019

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Priscilla Cross
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1 Investor Presentation March 2019 As Ternium of March I 11,

2 Forward-Looking Statements This presentation contains certain forward-looking statements and information relating to Ternium S.A. and its subsidiaries (collectively, Ternium ) that are based on the current beliefs of its management as well as assumptions made by and information currently available to Ternium. Such statements reflect the current views of Ternium with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of Ternium to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political conditions in the countries in which Ternium does business or other countries which have an impact on Ternium s business activities and investments, changes in interest rates, changes in inflation rates, changes in exchange rates, the degree of growth and the number of consumers in the markets in which Ternium operates and sells its products, changes in steel demand and prices, changes in raw material and energy prices or difficulties in acquiring raw materials or energy supply cut-offs, changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or targeted. Ternium does not intend, and does not assume any obligation, to update these forward-looking statements. 2

3 Profile and Performance 3

4 Ternium s Profile A comprehensive management approach Net sales of USD 11.5 billion in 2018 Steel shipments in 2018 of 13.0 million tons Industrial facilities in Mexico, Argentina, Brazil, Colombia, USA and Central America Vertically integrated, from iron ore mines to service centers Focus on high value-added products Participation in Usiminas 1 control group Steel Shipments 2018 Argentina, 16% USA, 15% Mexico, 51% Brazil, 9% 1 Usiminas: a leading company in the Brazilian flat steel market Colombia, 4% Other, 5% 4

5 Ternium s Profile Consistently superior results Focus on high margin value-added products Flexible production configuration Diversified cost structure Upstream and downstream integration Best practices Broad distribution network Recruitment and retention of talent EBITDA Margin (% of net sales) 21% 20% 17% 17% 14% 24% 16% 12% Innovative culture, industrial expertise and longterm view Ternium Peers range 1 1 Long steel Americas, global player, U.S. minimill and U.S. integrated (Source: Bloomberg) 5

6 Performance Sustainable growth and resilient profitability Steel shipments (million tons) Mexico Southern Region Other Markets ,471 EBITDA (USD million) 1,931 1,549 1,073 2, Free cash flow (USD million) ,219 Capital Expenditures (USD million) (26)

7 Performance Solid financial position Strong balance sheet Net debt to EBITDA ratio 1 of 0.6x at the end of December 2018 USD 1.0 billion reduction of net debt in last twelve months Growing dividend payments: USD1.20 per ADS for , 33% increase since % dividend yield in Net Debt (USD billion) x 1.1x 0.6x 1.4x 0.6x Annual dividends (USD per ADS) Net Debt/EBITDA Ratio (last 12 months EBITDA) 2 Proposed by the Board of Directors on February 19th, Dividend yield: Dividend / Average stock price (Source: Bloomberg)

8 Performance Quarterly EBITDA and net income EBITDA (USD million) EBITDA Margin (% of net sales) % % 22% 24% 19% 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 EBITDA per Ton 1 (USD) 273 Net Income and Earnings per ADS Net Income (Loss) (USD million) Earnings (Losses) per ADS Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 8

9 Latin American Steel Markets 9

10 Latin American Steel Markets Mexico became the largest steel market in the region Mexico, Brazil, Argentina and Colombia account for approximately 80% of Latin America s steel consumption Mexico s steel consumption CAGR of 6.0% in the last decade, among the highest in the region, driven by a dynamic manufacturing industry Apparent steel use (million tons) Brasil Mexico 25.9 Argentina Colombia e e Source: Wordlsteel SRO Oct 18 - Canacero, Aço Brasil, Cámara Argentina del Acero, ANDI 10

11 Mexico 11

12 Ternium s Markets - Mexico Industrial market continues to gain participation in Mexico s flat steel use An attractive steel market in Latin America Flat steel consumption decreased slightly compared to 2017 levels Opportunity to substitute imports of high-end products Stable industrial steel demand Weak commercial market Expected ratification of USMCA agreement Resolution on section 232 still pending Safeguard duties in Mexico renewed Apparent flat steel use Mexico (million tons) Local Imports % 55% Apparent flat steel use Mexico (% share) Industrial Commercial 40% 41% 40% 38% 36% 60% 59% 60% 62% 64% Source: Alacero / Ternium estimates

13 Ternium s Markets - Mexico Strong industrial steel demand growth over the last years Stable industrial market Production of light vehicles in 2018 remained at high levels New facilities starting-up in 2019 (BMW) Weak construction environment 3.2 Light vehicle production (million units) Decreasing government spending over the last years Uncertainty related to USMCA s negotiation process and change of administration in Mexico affected private investment in Construction spending (billion of constant MXN) Private Government Source: AMIA / Global Insights / INEGI

14 Ternium s Markets - Mexico Strong growth of Ternium s shipments over the last five years Ternium shipments in Mexico stabilized in 2018 New Pesquería Industrial Center Upgrade of re-rolling facility resulting in a broader product range Pesquería expansion project under development Differentiation in the commercial market through value-added products and services Increasing customer digital connectivity Nationwide coverage through distribution centers and regional distributors Ternium steel shipments in Mexico (million tons) Industrial Commercial % 54% 56% 46% Ternium s steel shipments by industry (2018) Automotive, 28% Other industries, 11% Home appliances, 9% Commercial, 44% HVAC / lighting, 8% 14

15 Southern Region Argentina 15

16 Ternium s Markets - Argentina Flat steel use in Argentina down in 2018 Strong activity levels in the first half of 2018, steep decline from Sep 18 Construction: -21% y-o-y in Dec Vehicles: -39% y-o-y in Dec Grain production down 18% y-o-y in 2017/18 (adverse weather) Restrictive monetary policy with an aim at taming inflation Apparent flat steel use Argentina (million tons) 3.1-9% e Ternium s steel shipments by industry (2017) Automotive, 15% High interest rates Public infrastructure investments decelerated Weaker local demand for vehicles and home appliances Commercial, 48% Agribusiness, 6% Home appliance, 5% Cans, 4% Oil & gas, 5% Source: Alacero / Ternium estimates Other industrial, 16% 16

17 Ternium s Markets - Argentina Gradual recovery expected from second quarter 2019 Better agribusiness sector performance Record acreage sown for the 18/ 19 season Projected grain production +22% y-o-y Gradual decrease in interest rates Destocking process eventually finishing and gradually reverting Expected recovery of Brazilian economy Consumer Confidence at its highest level since Jan 14 Industrial Confidence increasing since Nov 18 indicating higher expectations for economic growth in the business community Grain production Argentina (million tons) 137 Source: Ministerio de Agroindustria /15 15/16 16/17 17/18 18/19f Source: IPEA +22% Consumer Confidence Index - Brazil [2001=100] 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 4Q17 2Q18 4Q18 17

18 Steel Market Trends 18

19 Steel Market Trends US steel market 1, Steel price (hot rolled coils) Europe domestic (USD/ton) US domestic (USD/ton) 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Feb USD/long ton Scrap price (shredded USA Midwest) 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Feb US steel imports (Million tons) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q'18 3Q'18 4Q'18 Feb US service center inventory Million tons Months of supply 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Jan Source: Platts / AMM / MSCI / US Census Bureau 19

20 Steel Market Trends Input costs 105 USD/ton Iron ore price (IODEX CFR China) 600 USD/ton Slab price (FOB Black Sea) Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Feb Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Feb-19 Hard met coal price (FOB Australia) Natural gas price (Henry Hub) 350 USD/ton USD/MMBtu Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Feb Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Feb-19 Source: Metal Bulletin / Bloomberg 20

21 Developing Ternium s industrial system 21

service supported by higher operational flexibility Customized steel products Coordinated product development Enhanced logistics

22 Ternium Brasil Strong foundation to continue growing New 5 mtpy high-end slab facility in Brazil Further integrate Ternium Brasil to take it to its full potential Increase competitiveness in the high-end Mexican steel market visà-vis imports Improve customer service supported by higher operational flexibility Customized steel products Coordinated product development Enhanced logistics Realize cost reduction opportunities Coordinated procurement effort (Exiros) IT integration Inventory optimization Benchmarking 22

Targeting the automotive industry, as well as the home appliance, machinery, energy and construction sectors Annual production

23 New Hot Rolling Mill at Pesquería Industrial Center A logical step after the addition of Ternium Brasil Significant technological upgrade to expand TX s product range in Mexico Aimed at replacing high value-added steel imports and improving customer service Targeting the automotive industry, as well as the home appliance, machinery, energy and construction sectors Annual production capacity of 4.1 million tons (option to increase capacity to 4.8 million tons) Expected start up: end of 2020 Total investment of USD1.1 billion 23

(HVAC) and automotive industries Most advanced painting technology in Mexico Annual production capacity: Galvanizing: 350,000

24 New Coating Lines at Pesquería Industrial Center Opportunity to grow in the high-end Mexican market New hot-dipped galvanizing and painting lines High-end value-added products for the home-appliance, heating-ventilation-air conditioning (HVAC) and automotive industries Most advanced painting technology in Mexico Annual production capacity: Galvanizing: 350,000 tons Painting: 120,000 tons Expected start up: Galvanizing: second half 2019 Painting: first half 2019 Total investment of USD280 million 24

Colombia Growth opportunity in the long steel market Colombian steel market is the

consumption Ternium to expand its participation in the construction sector in the

production Expensive logistics from the mills in central Colombia Greenfield rebar

25 Colombia Growth opportunity in the long steel market Colombian steel market is the fourth largest in Latin America Imports account for a significant share of long steel consumption Ternium to expand its participation in the construction sector in the north/northwest of Colombia Approximately 50% of steel rebar consumption No local production Expensive logistics from the mills in central Colombia Greenfield rebar facility under construction Annual capacity of 520,000 tons Start up in 2019 Total investment of $90 million 25

26 Conclusion 26

Conclusion Consistently superior results in attractive steel markets in Latin America Solid financial position and strong dividend payments Successful implementation of business strategy geared

27 Conclusion Consistently superior results in attractive steel markets in Latin America Solid financial position and strong dividend payments Successful implementation of business strategy geared toward sustainable profitable growth TX Brasil integration and new investment program provide opportunity to grow and strengthen business in the region Continued focus on generating long-term shareholder value 27

28 28

29 Appendix Corporate Structure Production Capacity CSA Acquisition Shipments and Net Sales Income Statement Cash Flow Statement Balance Sheet Webcast Presentation Fourth Quarter and Full Year

30 Corporate Structure Techint Group: 62% Tenaris: 11% Ternium (treasury shares): 2% Public: 24% Subsidiaries Joint operations Non-consolidated companies 71% 61% Ternium México 29% Ternium Argentina 4 39% Other 100% Las Encinas 50% Peña Colorada 50% 28% 1 100% 100% 50% Usiminas Ternium Colombia Exiros 6% 1 50% CEU: 5% 1 Nippon Steel & Sumitomo Metal: 32% 1 TenarisConfab: 5% 1 Other (ordinary shares): 23% 1 51% 49% Nippon Steel & Tenigal Sumitomo Metal 100% 100% 48% Ternium Brasil 5 Ternium USA Ternium Int. Guatemala Techgen 30% 22% Tecpetrol Tenaris Economic participation 1 Participation based on ordinary shares distributed 2 Participation based on total shares distributed 3 Net of non-controlling interest in TX Argentina 4 Formerly known as Siderar 5 Formerly known as CSA ArcelorMittal Direct Indirect 3 Total Ternium Mexico 71% 17% 89% Ternium Argentina 4 61% 61% Ternium Brasil 5 100% 100% Usiminas 2 17% 2% 19% Tenigal 51% 51% Ternium Colombia 100% 100% TX Int. Guatemala 100% 100% TX USA 100% 100% Las Encinas 71% 17% 89% Peña Colorada 36% 9% 45% 30

31 Production Capacity Production Capacity as of year-end 2017 (million metric tons per year) Mexico Argentina Other (1) Total Slabs Billets Crude steel Hot rolled coils Rebars & wire rods Cold rolled coils Tinplated products Galvanized products Pre-painted products Service center (2) (1) Brazil, Southern US, Colombia and Central America (2) Corresponds to Ternium Brasil 31

32 CSA Acquisition The Transaction On Sep 7, 2017 Ternium acquired thyssenkrupp Slab International B.V. (tksi) and its wholly-owned subsidiary CSA Siderúrgica do Atlântico Ltda. from thyssenkrupp AG (tkag) In addition, tkag assigned to Ternium an agreement to supply slabs to thyssenkrupp s former Calvert rerolling facility in the U.S. (amended in Dec17) Ternium disbursed EUR1.4 billion on a cash-free, debt-free basis, for the acquisition of both the tksi shares and the slab supply agreement The transaction was financed with a five-year syndicated term loan facility in a principal amount of USD1.5 billion Ternium began consolidating tksi s balance sheet and results of operations in its consolidated financial statements in Sep17 Upon closing, CSA name was changed to Ternium Brasil 32

33 CSA Acquisition The Assets CSA is a Brazilian state-of-the-art steel slab producer 5 mtpy capacity of high-grade steel slabs 490 MW combined cycle power plant Deep-water harbor Compact, efficient and environmentally friendly facility Just-in-time iron ore supply (railroad) Daniel Novegil, Ternium s CEO at the time said: This acquisition brings another state-of-the-art facility into Ternium s industrial system, along with CSA s highly-skilled personnel and know-how, thereby enhancing our differentiation and value-added capabilities in the steel production supply chain. Upon integration, Ternium customers will not only benefit from our expanded high-end steel slabs capacity, but also see the results of an enhanced product development and supply chain management effort that will increase our high-end steel specialization in Mexico and Argentina. We move forward as a strengthened organization across our strategic industrial sectors in Latin America. 33

34 Shipments and Net Sales Fourth Quarter 2018 and Full Year 2018 Net Sales (USD million) Shipments (thousand tons) Revenue / ton (USD / ton) 4Q Q 2017 Dif. 4Q Q 2017 Dif. 3Q 4Q Q 2017 Dif. Mexico 1, , % 1, , % % Southern Region % % % Other Markets % , % % Total steel products 2, , % 2, , % % Other products % Total steel segment 2, , % Total mining segment % % % Intersegment eliminations (71.5) (69.0) 4% Total net sales 2, , % 1 The item Other products primarily includes Ternium Brasil s and Ternium México s electricity sales. Net Sales (USD million) Shipments (thousand tons) Revenue / ton (USD / ton) Dif Dif. 3Q Dif. Mexico 6, , % 6, , % % Southern Region 1, , % 2, , % % Other Markets 3, , % 4, , % % Total steel products 11, , % 12, , % % Other products % Total steel segment 11, , % Total mining segment % 3, , % % Intersegment eliminations (280.6) (271.4) 3% Total net sales 11, , % 1 The item Other products primarily includes Ternium Brasil s and Ternium México s electricity sales. 34

35 Income Statement USD million 4Q Q (Unaudited) Net sales 2, , , , ,224.0 Cost of sales (2,059.9) (2,170.9) (8,483.3) (7,403.0) (5,384.4) Gross profit , , ,839.6 Selling, general and administrative expenses (202.0) (251.7) (876.8) (824.2) (687.9) Other operating income (expenses), net (16.2) (9.9) Operating income , , ,141.7 Finance expense (29.6) (39.9) (131.2) (114.6) (90.0) Finance income Other financial expenses, net (69.6) (69.9) 38.0 Equity in earnings of non-consolidated companies Profit before income tax expense , , ,118.5 Income tax expense (55.8) (138.7) (369.4) (336.9) (411.5) Profit for the period , , Attributable to: Owners of the parent , Non-controlling interest Profit for the period , ,

36 Cash Flow Statement USD million 4Q Q (Unaudited) Profit for the period , , Adjustments for: Depreciation and amortization Equity in earnings of non-consolidated companies (47.8) (16.0) (102.8) (68.1) (14.6) Changes in provisions (9.0) 0.9 (7.7) Net foreign exchange results and others (96.4) (48.6) (5.8) 70.9 (33.9) Interest accruals less payments (0.1) 11.6 (13.0) Income tax accruals less payments (77.7) 43.6 (154.4) (273.4) Changes in working capital (309.7) (228.6) (865.0) (162.4) Net cash provided by operating activities , ,099.6 Capital expenditures (164.6) (126.5) (520.3) (409.4) (435.5) Proceeds from the sale of property, plant & equipment Investment in consolidated companies Purchase consideration (1,891.0) Cash acquired Investment in non-consolidated companies (114.4) Dividends received from non-consolidated companies Loans to non-consolidated companies (24.5) (23.9) (92.5) Decrease in Other Investments Net cash (used in) provided by in investing activities (136.1) (101.7) (457.0) (2,030.0) (554.7) Dividends paid in cash to company's shareholders (215.9) (196.3) (176.7) Dividends paid in cash to non-controlling interest (3.8) (20.9) (30.6) (50.8) Financial Lease Payments (2.6) (3.1) (7.6) (4.2) Proceeds from borrowings , , Repayments of borrowings (614.5) (399.6) (2,266.6) (1,205.8) (1,191.8) Net cash (used in) provided by financing activities (537.3) 24.3 (1,322.3) 1,802.3 (508.7) Increase in cash and cash equivalents (148.5) (45.3) (40.0)

37 Balance Sheet USD million December 31, December 31, (Audited) (Audited) Property, plant and equipment, net 5, ,349.8 Intangible assets, net 1, ,092.6 Investments in non-consolidated companies Deferred tax assets Receivables, net Trade receivables, net Derivative financial instruments 0.8 Other investments Total non-current assets 8, ,727.3 Receivables Derivative financial instruments Inventories, net 2, ,550.9 Trade receivables, net 1, ,006.6 Other investments Cash and cash equivalents Total current assets 4, ,392.5 Non-current assets classified as held for sale Total assets 12, ,122.6 USD million December 31, December 31, Capital and reserves attributable to the owners of the parent 6, ,010.4 Non-controlling interest 1, Total Equity 7, ,852.8 Provisions Deferred tax liabilities Other liabilities Trade payables Financial Lease Liabilities Borrowings 1, ,716.3 Total non-current liabilities 3, ,442.5 Current income tax liabilities Other liabilities Trade payables Derivative financial instruments Financial Lease Liabilities Borrowings ,505.6 Total current liabilities 1, ,827.3 Total liabilities 5, ,269.8 Total equity and liabilities 12, ,

38 Webcast Presentation - Full Year 2018 Results EBITDA and Net Results Record EBITDA in 2018, with higher margin and shipments Strong steel prices in North America Full effect of Ternium Brasil integration Improved results from Ternium s participation in Usiminas Low effective tax rate in 2018 due to revaluation of assets for tax purposes in Argentina (million USD) (million USD) 1,931 EBITDA , ,698 Ebitda per ton Shipments EBITDA (14) (33) 1,662 Net Income 2017 Operating Income Net Financial Results Equity in Earnings of Income Tax Net Income 2018 non-consolidated Companies 38

39 Webcast Presentation - Fourth Quarter 2018 Results EBITDA and Net Results Healthy EBITDA levels, yet down compared to a record third quarter Lower realized prices in the Mexican market and in slab sales Higher cost per ton reflecting higher raw material, energy and labor costs Lower prices for the sale of electricity in Mexico Better financial results, mainly reflecting the ARP appreciation on a USD net debt position in our Argentine subsidiary (million USD) (million USD) (58 ) (163 ) 856 (90 ) (32 ) 513 EBITDA Shipments Price/Mix Cost Other EBITDA 3Q18 4Q (326) 435 Net Income 3Q18 Operating Income Net Financial Equity in Income Tax Net Income Results Earnings of 4Q18 non-consolidated Companies 39

40 Webcast Presentation - Fourth Quarter 2018 Results Steel Shipments Total Shipments (thousand tons) Mexico 3,411 3,523 3,322 3,143-6% 2,964 1,614 1,775 1,722 0% 1,525 1,523 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q Southern Region % 505 Slabs 1,151 1,103 Other Markets 996 1,071-13% 935 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 40

41 Webcast Presentation - Fourth Quarter 2018 Results Consolidated Net Sales and Steel Shipments Net Sales (USD million) 2,767 2,797 3,022 2,999-12% 2,636 Mexico 51% Steel Shipments 4Q18 Other 4Q17 1Q18 2Q18 3Q18 4Q18 Colombia Revenue per Ton (USD/ton) % 866 4Q17 1Q18 2Q18 3Q18 4Q18 Southern Region 17% USA Brazil Other Markets 32% 41

42 42

Investor Presentation. January 2019

Investor Presentation. January 2019 Investor Presentation January 2019 As Ternium of January I 2019 25, 2019 1 Forward-Looking Statements This presentation contains certain forward-looking statements and information relating to Ternium S.A.