Net financial results were a USD40.8 million loss in the first quarter 2013, compared with a USD14.0 million loss in the first quarter 2012.
During the first quarter 2013, Ternium's net interest results totaled a loss of USD29.7 million, compared with a USD28.1 million loss in the first quarter 2012.
Net foreign exchange result was a loss of USD5.7 million in the first quarter 2013 compared to a gain of USD1.2 million in the first quarter 2012.
Change in fair value of financial instruments included in net financial results in the first quarter 2013 was a USD2.4 million loss, compared with a USD16.8 million gain in the first quarter 2012. These gains in the first quarter 2012 were mainly related to certain derivative instruments entered into to compensate for the interest rate charges derived from Ternium's Argentine subsidiary Siderar's Argentine Peso denominated financial debt, and to results from changes in the fair value of financial assets.
Equity in results of non-consolidated companies was a loss of USD15.9 million in the first quarter 2013, compared to a loss of USD15.4 million in the first quarter 2012.
Income tax expense in the first quarter 2013 was USD63.7 million, or 30% of income before income tax, compared with an income tax expense of USD83.5 million in the same period in 2012, or 33% of income before income tax.
Cash Flow and Liquidity
Net cash provided by operating activities in the first quarter 2013 was USD347.7 million. Working capital decreased USD50.8 million in the first quarter 2013 as a result of an aggregate USD62.9 million increase in accounts payable and other liabilities and a USD53.4 million decrease in inventories, partially offset by an aggregate USD65.6 million net increase in trade and other receivables. Inventories decreased in the first quarter 2013 mainly reflecting lower volumes of purchased steel and lower costs and volumes of finished goods, partially offset by higher volumes and costs of raw materials and goods in transit, and higher volumes of goods in process.
Capital expenditures in the first quarter 2013 were USD218.1 million. Ternium's ongoing projects included, among others, in Mexico the construction of a greenfield facility for the manufacture of cold rolled and galvanized steel products (Pesquería Project) and, in Argentina, the expansion of specialty steel production capacity, repairs and enhancements at the coking and blast furnace areas, and the expansion and enhancements at the hot strip mill.
In the first quarter 2013, Ternium had a free cash flow of USD129.7 million(6). The company's net repayments of borrowings in the first quarter 2013 were USD274.1 million, mainly due to a USD200.0 million repayment of Ternium México's syndicated loan facility and net repayments of short-term debt. As of March 31, 2013, Ternium's net debt position was USD1.5(7) billion.
(6) Free cash flow in the first quarter 2013 equals net cash provided by operating activities of USD347.7 million less capital expenditures of USD218.1 million.
(7) Net debt position at March 31, 2013 equals borrowings of USD2.1 billion less cash and equivalents plus other investments of USD0.6 billion.
Forward Looking Statements
Some of the statements contained in this press release are "forward-looking statements". Forward-looking statements are based on management's current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to gross domestic product, related market demand, global production capacity, tariffs, cyclicality in the industries that purchase steel products and other factors beyond Ternium's control.
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