Investor Presentation June 2019 Ternium I June 2019 As of June 13, - PowerPoint PPT Presentation

Investor Presentation June 2019 Ternium I June 2019 As of June 13, 2019 1

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. Ternium I June 2019 2

Profile and Performance Ternium I June 2019 3

Ternium’s Profile A leading steel company in Latin America  Net sales of $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 Steel Shipments 1Q19  Focus on high value-added products Mexico  Participation in Usiminas 1 control group Other 49% Colombia Brazil Other Markets 37% USA Southern 1 Usiminas: a leading company in the Brazilian flat steel market Region 14% Ternium I June 2019 4

Sustainable Profitability A comprehensive management approach  Proactive approach to environment, health EBITDA Margin (% of net sales) 25% Ternium Peers range 1 and safety (EHS) management 20%  Focus on differentiation through 15% sophisticated products and services 10% 5%  Deep ties with our communities 0%  Commitment to integrity 2013 2014 2015 2016 2017 2018  Recruitment, training and retention of talent Profitability Profitability EHS  Quest for excellence in industrial Integrity management and technology Transparency Market leadership  Fostering of steel value chain Industrial Industrial excellence excellence Community Value Chain Talent 1 Long steel Americas, global player, U.S. minimill and U.S. integrated Value Chain Talent (Source: Bloomberg) Ternium I June 2019 5

Sustainable Profitability Strong commitment to the environment, health and safety Lost time injury frequency rate  Standardized Environment Health & Safety (EHS) (# of events / million hours worked) management systems  Extensive training and management performance accountability on EHS 1.1 1.1 1.0 0.8 0.7  Dupont program and certification of EHS systems 2014 2015 2016 2017 2018  Health and safety OHSAS 18001  Environment ISO 14001  Energy saving ISO 50001  Investment in best available technologies to reduce environmental footprint and safety risk Ternium I June 2019 6

Sustainable Profitability Commitment to integrity through strong corporate governance  Audit committee (three independent directors)  Internal Audit Department reporting to the Chairman and the Audit Committee  Business Conduct Compliance Officer reporting to the CEO  Compliance department that oversees SOX certifications and related party transactions Codes Policies Procedures  Employee accountability and training to ensure Conduct for all Transparency Relevant a transparent behavior employees information Business conduct  Confidential channels to report non-compliant Ethics for senior Antifraud Related party financial officers transactions behavior Securities trading Conduct for Human rights suppliers Ternium I June 2019 7

Sustainable Profitability Fostering the steel industry value chain in Mexico and Argentina  Supporting 1,600 SMEs (customers and suppliers) through:  Training programs  Industrial projects and business consultancy  Institutional assistance  Commercial support and financial aid  Playing an active role at:  Universities  Business schools “ ProPymes has helped create an industrial network  Government agencies that encourages the professionalization and quest for excellence of SMEs. ”  Industrial associations Ternium I June 2019 8

Sustainable Profitability Deep ties with our communities  Working together with local institutions to enhance the education and welfare of our communities  Scholarships, internships, teachers’ training, infrastructure funding, volunteering programs  Health prevention campaigns, infrastructure funding, sports sponsoring  Integration (social and arts events) New technical school in Pesquería Heritage Photo Archive Volunteer programs for school repair Ternium I June 2019 9

Performance Sustainable growth and resilient profitability Steel shipments (million tons) EBITDA ( $ million) 2,698 Mexico Southern Region Other Markets 13.0 11.6 1,931 9.8 9.6 4.1 9.4 1,549 2.5 1,471 1.1 1.1 1.2 1,073 2.5 2.3 2.2 2.6 2.5 6.6 6.5 6.4 5.9 5.6 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Free cash flow ($ million) Capital Expenditures ($ million) 1,219 520 467 443 435 409 857 664 62 (26) 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Ternium I June 2019 10

Performance Solid financial position Net Debt ( $ billion) 2.7  Strong balance sheet 1.7  Net debt to EBITDA ratio 1 of 0.6x at the end of 1.5 1.1 0.9 March 2019 1.1x 1.4x 0.6x 0.6x 1 0.6x  $0.3 billion reduction of net debt in first Dec-15 Dec-16 Dec-17 Dec-18 Mar-19 quarter 2019 1 Net Debt/EBITDA Ratio (last 12 months EBITDA)  Growing dividend payments Dividends Payments ( $ per ADS ) 1.20  $1.20 per ADS in 2018 1.10 1.00 0.90 0.90  33% increase since 2014  4% dividend yield in 2018 2 2014 2015 2016 2017 2018 1 Net Debt/EBITDA Ratio (last 12 months EBITDA) 2 Dividend yield: Dividend / Average stock price (Source: Bloomberg) Ternium I June 2019 11

Performance EBITDA and Net Income EBITDA ($ million) EBITDA Margin (% of net sales) 29% 856 725 24% 22% 603 19% 513 17% 470 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 Net Income and Earnings per ADS EBITDA per Ton 1 ( $) Net Income (Loss) (USD million) Earnings (Losses) per ADS 273 2.63 218 173 171 1.79 1.73 147 1.54 1.11 553 435 377 297 225 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 1 Consolidated EBITDA divided by steel shipments . Ternium I June 2019 12

Latin American Steel Markets Ternium I June 2019 13

Latin American Steel Markets Mexico became the largest steel market in the region  Mexico, Brazil, Argentina and Colombia account for approximately 81% of Latin America’s steel consumption  Mexico’s steel consumption CAGR of 5.8% in the last decade, among the highest in the region, driven by a dynamic manufacturing industry Apparent steel use ( million tons) Argentina Brasil 4.8 Colombia Mexico 25.4 21.1 3.4 2.7 9.7 6.6 1.1 2018 1990 2000 2010 1990 2000 2010 2018 Source: Alacero March 2019 Ternium I June 2019 14

Mexico Ternium I June 2019 15

Ternium’s Markets - Mexico Industrial market continues to gain participation in Mexico’s flat steel use An attractive steel market in Latin America Apparent flat steel use – Mexico (million tons) Local Imports  Flat steel consumption decreased slightly 16.5 15.9 15.4 15.0 14.2 compared to 2017 levels  Opportunity to substitute imports of high-end 55% products 53%  Stable industrial steel demand 2014 2015 2016 2017 2018  Weak commercial market Apparent flat steel use – Mexico (% share) Industrial Commercial  Expected ratification of USMCA agreement  Section 232 lifted for Mexico and Canada 36% 38% 40% 41% 40% 64% 62% 60% 60% 59% 2014 2015 2016 2017 2018 Source: Alacero / Ternium estimates Ternium I June 2019 16

Ternium’s Markets - Mexico Strong industrial steel demand growth over the last years  Stable industrial market Light vehicle production (million units) 3.9 3.9  Production of light vehicles in 2018 3.5 3.4 3.2 remained at high levels  New facilities starting-up in 2019 (BMW)  Weak construction environment 2014 2015 2016 2017 2018  Decreasing government spending over the last years Construction spending (billion of constant MXN) Private Government  Uncertainty related to USMCA’s 255 254 252 241 238 negotiation process and change of 205 202 administration in Mexico affected private 180 167 166 investment in 2018 2014 2015 2016 2017 2018 Source: AMIA / Global Insights / INEGI Ternium I June 2019 17