Ternium SA (TX) 2017 Q2 法說會逐字稿

Good morning.

My name is Emily and I will be your conference operator today.

At this time, I would like to welcome everyone to the Ternium Second Quarter 2017 results call.

(Operator Instructions) Thank you.

Sebastian Marti, you may begin your conference.

Good morning, and thank you for joining us today.

My name is Sebastian Marti and I am Ternium's Investor Relations Director.

Ternium issued a press release yesterday detailing its result for the second quarter 2017.

This call is complementary to that presentation.

Joining me today is Mr. Pablo Brizzio, Ternium's Chief Financial Officer, who will discuss our performance.

At the conclusion of our prepared remarks, we will open up the call 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 2 in today's webcast presentation.

With that, I'll turn the call over to Mr. Brizzio.

Thanks, Sebastián.

Good morning, and thank you for participating in our conference call.

As usual, I will make some brief prepared remarks while we go through the webcast presentation.

After this, we will have a Q&A session.

Let me give first you an update on the acquisition of CSA.

As you know, there has been some news.

The Brazilian antitrust authority, CADE, gave the authorization for the transaction without any adaption.

We continue working in the necessary steps for the closing and it is important to note that there is a 15 days period that we have to wait to let any interested parties to present any objection on the deal.

As we said before, we expect to close the transaction during the third quarter of the year.

So we are working and going as expected in respect to this transaction.

Now, let me give you an overview of the business environment.

Steel market fundamentals in the North American region remains healthy, with steady end user demand, adequate steel inventory levels and higher than 75% capacity utilization rate.

We expect these factors to be supported for steel prices in the region.

Also, China's steel domestic demand and production level continue growing.

At the same time, finished steel imports into the U.S. market increased in the last month, taking the import share of the U.S. market to 30% in June.

The U.S. and Mexican government has been supportive of the steel industry's concern about unfair trade and we are confident this will continue in the future through antidumping, countervailing and other regulatory means to ensure a level playing field for competitors in the market.

In Argentina, financial recovery in many sectors of the economy posted a strong second half of the year, and as a result, GDP in the country could grow more than 2.5% in 2017.

Good operating conditions in the agribusiness industry, a pick up in the public infrastructure investment and the gradual deployment of resources for the development of shale oil and shale gas fields by local and international companies are posting an increase in steel demand.

We believe these developments could support a 10% growth in flat steel consumption in Argentina for this year.

Let's please turn now to Page 3 of today's webcast presentation.

As anticipated in last quarter's conference call, we continue having strong performance in the second quarter of the year, probably somewhat stronger than our estimation back then.

Healthy shipments and good steel prices together with our efforts to contain increases in production cost and our focus in differentiation allowed Ternium to show solid results with an EBITDA generation of $498 million in the second quarter and more than $1.8 billion during the last 12 months.

EBITDA margin continued to show good levels, with 22% in the second quarter.

Although we anticipated a sequential decrease in the third quarter of this year, we believe our margins should remain healthy and certainly higher than our competitor's margins.

In the second quarter 2017, we have net income of $282 million, equivalent to earnings per ADS of $1.27, a $0.06 sequential decrease even though we have a higher operating income, mainly due to higher net financial expenses and an increase in the effective tax rate, as I will see -- as I will show you further during this presentation.

In the following page, we can see that the second quarter Ternium net sales in Mexico continued increasing, with 3% higher shipments and 6% higher revenue per ton than in the first quarter of the year, getting us to 10% higher net sales.

Although spot steel prices in the U.S. and Mexico have been recently increasing during the second quarter, they decreased.

So the price reset of contract for industrial customers that have a lag of a little over 3 months will affect realized price in the third quarter, and as a result, we are guiding for some sequential decrease in revenue per ton.

Regarding volumes in Mexico, we expect a sequential decrease in this market, mainly due to seasonality in the automotive and the HVAC industries that usually affect volumes in this part of the year.

In the case of the construction market, we are not expecting big changes in demand, with private construction making up for some lower government investment.

Let's go now to Page 5 to review the performance of the Southern Region.

The Argentine market is finally beginning to show much better traction in the steel demand, as you can see from the 10% sequential increase in shipment in the second quarter.

As I mentioned at the beginning of these remarks, we expect the market in Argentina to continue improving, showing significant growth in the third quarter 2017.

The prices stabilized at good levels in the second quarter in this region and we expect just minor changes for the following quarter.

On the next Page, we see the combined effect of this development on our consolidated sales.

We have a quarterly shipment record in the second quarter of the year after a 7% sequential increase that took consolidated shipments to 2.6 million tons in the period.

Together with a 4% increase in revenue per ton, our consolidated sales grew 11% in the quarter.

Please turn to Page 7 now, so we can analyze in more detail the second quarter EBITDA increases.

Higher prices and shipments were behind the sequential increase in EBITDA, although this was partially offset by an increase in cost mainly related to higher raw material and purchased slab cost.

As I mentioned before, we expect EBITDA to decrease sequentially in the third quarter of the year due to lower shipments and operating margins.

The seasonality lower volumes in Mexico will be partially offset by the improvement we anticipate for Argentina.

We also expect a lower EBITDA margin with slightly lower revenue per ton in the third quarter and higher cost per ton from the earlier growth through inventories of higher cost purchased slabs and raw materials.

In the following page, Page 8, we can see the same graph, but for the first half of the year.

Here we can see that rising steel prices were only partially offset by higher cost.

These were reflected in our EBITDA margin, which increased from 20% in the first half of last year to 22% in the same period this year.

Shipments were marginally higher in all regions.

Let's review net income on Page 9 now.

There was a $29 million sequential decrease in net income, mainly due to higher net financial expenses and an increase in the effective tax rate, partially offset by higher operating income.

Although the effective tax rate increased sequentially in the second quarter, it remained at the low 17% level.

Effective tax rate in the first and second quarter of 2017 was significantly reduced by the non-cash effect of deferred taxes of the appreciation of the Mexican peso against the U.S. dollar that represented 10% in the first quarter and 5% in the second.

Exchange rate in Mexico and Argentina have been quite volatile in the last month.

In addition to the significant appreciation of the Mexican peso, I have just mentioned, the Argentine peso depreciated 7% against the U.S. dollar in the second quarter, following a 3% appreciation in the first quarter of the year.

The sequentially higher net financial expenses reflected the impact of this exchange rate fluctuation in our financial position in Argentina and in Mexico.

Turning to the next page, we can see that this substantial year-over-year increases in net income in the first half of the year was related mainly to higher operating income.

There was lower income tax positive effect related to the pretty lower effective tax rate I mentioned before, which in the first half of the year was 14% compared to 38% in the first half of last year, and offsetting this, there was an increase in net financial expenses, which can be mostly explained by the impact of the fluctuation of the Mexican peso in the period.

On Page 11, we can see the free cash flow in the second quarter.

As we anticipated in last quarter conference call, there was significant use of funds to pay for income taxes in the second quarter, mainly Mexico, and working capital continued increasing, although at a slower pace than in the first quarter, due to higher value of steel inventories with slightly lower volumes.

The second quarter is where the balance of the previous year income tax has to be paid.

In 2017, the cash effect of the payment of the balance of 2016 income tax was very significant, mainly as a result of the substantial increase of net income during the year in Mexico compared to the prior year 2015.

This led to a negative free cash flow of $78 million in the second quarter.

In the following page, we can see the same chart, but for the first half of the year.

Here we can see the same effect in income tax I have just commented about and also a significant increase in working capital -- again, that in the majority happened during the first quarter of the year.

As you can see in the numbers, we included it explaining the changes in working capital.

A significant portion of this increase was related to higher price of steel in inventories, which reflect the increase in cost of purchased slab and other raw material flowing through inventories.

There were also higher inventory volumes of steel and raw material, reflecting the increase in shipments in the period.

This represented $318 million of the total increase of working capital.

In addition, the net impact of trade and other receivable and payables was the use of cash of $141 million, mainly reflecting higher volume and prices of steel sales.

Going now to Page 13, you can see the evolution of Ternium's quarterly cash flow from operations.

CapEx and free cash flow; cash from operation was impacted in the last 2 quarter by the increase in working capital, as we have just commented, and by the increase in tax payment in the second quarter of 2107.

Important to mention that tax payment should naturally come back to normal in the third quarter.

However, we're not expecting to see higher working capital needs after the one we saw in the first half of this year.

Consequently, free cash flow generation should be back to normal level in the third quarter of 2017.

On the upper right corner, CapEx remained relatively stable.

The company net debt increased to $1.2 billion and the net debt to last 12 months EBITDA ratio continued healthy at 0.7x at the end of June 2017.

Of note, in the second quarter of 2000 -- or this year were dividend payment of $227 million.

Okay.

These were the main points I wanted to touch today.

Please, Operator, we can proceed now with the Q&A session.

Thanks.

(Operator Instructions) And your first question comes from the line of Carlos De Alba from Morgan Stanley.

Very good results.

First question has to do with CSA.

Is there -- are there any further approvals that are required for the transaction to be closed?

And also, after the 15 day period that you mentioned earlier, Pablo, is there anything else that CADE would need to do in order to reaffirm the decision that it was published overnight or this morning?

Second question, if I may, is regarding the price decline in Mexico or the realized prices decline in Mexico that you expect for the third quarter as well as the lower volumes on seasonality.

Can you quantify or at least give us some sort of magnitude -- a range of the magnitude of these 2 moves?

And then finally, when you mention that starting in the third quarter and during the second half of the year you expect cash from operations to go back to normal levels, do you think -- are you thinking something around the level that we saw in the second quarter of 2015 or during the -- the average for 2016?

Okay, let me try to go through your questions.

Starting with CSA, we have a very clean authorization from CADE and we only need to wait for the normal process for this to be effective.

The first period that I mentioned, which is 15 days, is for any party that already participated in the process to show if they have any further claim or any further comment.

If not, the transaction will be ready to be closed.

If there is any further comment, the process should follow the normal procedures of CADE.

But as we said, we believe and with this piece of news we're confirming that that the closing of this transaction should be as expected.

In relationship to prices, what we're trying to convey to you is -- to all of you is that what we're seeing is a very healthy level of prices in the North American Region and this is reflected on our expectation for the following quarter.

But you also need to take into consideration that during the second quarter you have seen big movements of prices.

In some cases, you have seen a reduction of prices of around $100 per ton, moving up and down during the quarter.

So this will be impacting us in the contracts that we have, which are significant, that, as you know, have quarterly reset mechanism.

So in total what we're expecting is taking into consideration both aspects of this, a sequential -- a small decrease on prices for the next quarter.

In relationship to volumes, we are still very confident of the market, and as we said, we believe that the environment continues to be positive, but -- and this traditionally happened because of seasonality effect.

We are seeing several of the sectors where we are selling our products some small reductions due to this effect.

So in total, the level of shipments will continue to be important, but with a small reduction in relationship to that effect.

We are expecting also to compensate this reduction in Mexico with more increases of shipments in Argentina.

So all in all, we are also guiding for a small reduction in volumes in the coming quarter.

It's important also to remember that we have record shipments during the second quarter.

Your third question was in relationship to free cash flow.

And it's important for us to clarify this point because we saw a sequential quarter in which we have a reduction of free cash flow.

So very clearly during this second quarter we have the payment of taxes.

As I explained during the opening remarks, the effect in Mexico was quite significant because the net income result in 2016 was much better than the result on prior year, so the advances that we have been paying to the tax authorities in Mexico did not compensate fully for the total tax payment for the fiscal year 2016.

So this is a very clear effect that will not happen in the coming quarter and will happen again most probably not at that significant level in the second quarter next year.

So we are expecting to go back to normal in relationship to tax payment during the coming quarter, of course reflecting the higher level of net income, and we are not expecting to further increase the working capital needs.

Why we're saying that?

Because first of all during this second quarter though we have a slightly lower tonnage of inventories the price or the cost of producing that increased, similarly to the level of account receivables, where we increase our shipment and the value of that increased -- and of course we were reflecting the need for further working capital.

So all in all, our estimate is that free cash flow in the third quarter and most probably of course depending on prices on the fourth quarter to go back to normal level, which were the levels that you saw basically last year.

And our next question comes from the line of Marcos Assumpção from Itaú.

Congratulations on the strong results.

First question on EBITDA per ton.

In the last 12 months you obtained an EBITDA per ton of $485, which is a little bit above the historical average of the company.

So if you could comment on the main reasons explaining that higher profitability besides prices and if you think that that level is sustainable?

And the second question is regarding the Section 232 investigation in the U.S, if you have any views on that, any updates on the potential tariff increase coming from that?

Okay, Marcos, first, on the EBITDA per ton.

As we always comment, it's a figure that is dependent also on the price of the steel that we're selling and also the important impacts of the first-in, first-out methodology of accounting for the cost of our products.

We have been able to sustain a very good level of EBITDA per ton based on the effort that the company always make in controlling cost and the healthy level of gap that we see between the cost -- input cost and the total cost and the price of the product we sell.

So we -- you know that we do not like to predict or project or utilize that figure that much, because, as we said at the very beginning, it's very dependent on the price of the final product.

But you know clearly that the effort of the company will be put on on sustaining the highest level of EBITDA margin possible for this company.

It's important to take into consideration for your future numbers that if everything goes planned, CSA will be included in our numbers and we will consolidate CSA following the closing of the transaction on the final and formal authorization for closing this transaction.

So let's say if it happened at the end of September, we will fully consolidate the fourth quarter.

If it happened before that date, we will marginally consolidate the number during the third quarter and then fully during the fourth quarter.

So things for you to take into consideration, we're analyzing the numbers of [tons] in the coming quarter.

But we are positive that we will be able to sustain a good level of margins, a good level of EBITDA generation even though, as we already anticipated, we are expecting lower or somewhat lower prices, our price for Ternium, and volumes in the coming quarter clearly in any case at good levels.

In respect to your second question, which is the -- two on other things, we prefer not to comment specifically on this one because we don't know how this will evolve.

You know that has been mentioned and analyzed by the U.S. government.

But what we are able to comment and we feel confident of that is that the government, not only the U.S. government, but also the Mexican government, are very cautious on these issues and they have been working to -- against unfair trade practices and to set a level playing field for competition in the region.

And we believe they are very cautious of that and they will continue performing this in a similar way.

So there are different ways to go against unfair trade practices and they have different ways to do that and they have been utilizing the different mechanism that they have in hand.

So we are expecting this to continue.

Your next question comes from the line of Ivano Westin from Credit Suisse.

Congrats on the results and also on the approval of CADE.

The first one on CSA, just a follow-up on previous questions.

I would like if you could comment on the normalized production levels, do you expect to reach between 4.5 and 5 million tons, the overall sales strategy in terms of breakdown of sales in domestic and exports and also what sort of CapEx you may need for CSA specifically in the next 18 or 24 months?

The following question would be on Argentina.

You mentioned that you expect about 10% growth in flat steel consumption in the country in 2017.

Having said this, what's your outlook for 2018 and how do you expect your sales to evolve in the region?

Going to your first question on CSA, we prefer not to make further comments on the specific issues of CSA until we have the formal and final approval from the antitrust authority and we are able to close this transaction.

In any case, the company, as you said, is performing well.

The level of production is at a very healthy level.

So we are confident that we will be able to take the company at very good production levels and make an effort to even improve that.

But we prefer not to further comment on the specific figures on the company until this transaction is closed.

In respect to your second question, which is Argentina, as we said, we are very positive on the development -- of economic development in Argentina and we are also positive on the GDP growth of this year.

Similarly is our estimation for next year, in which we can say that we are expecting to have not only GDP growth in the second -- in 2018 similarly a higher number that we are expecting to see during this year and we are expecting also to see steel consumptions on -- for the next year similarly to this year, which is an additional 10% increase in demand of steel in the coming year.

So putting both numbers together, very positive outlook for Argentina in the coming quarters or in the coming year.

Your next question comes from the line of Karel Luketic from Bank of America Merrill Lynch.

I have a question on the Usiminas situation in general.

Can you provide us an update in terms of how the situation with Nippon has evolved, and also if you can, what are your views on Usiminas for the remaining of 2017 and 2018?

We've seen better than expected results and would love to hear your comments on what the outlook is and your view?

Okay, Karel, let me tell you what we can tell you on that respect.

First of all, let me say that we are very happy with the number that Usiminas is providing.

Clearly, there is a positive tone on the effort that the company has been doing lately to show better numbers, as you said.

Probably that are numbers that you had been expecting.

So this is something very positive and it is very clear that the company is working well in trying to achieve these goals.

So we're expecting for the company to continue working in this line.

As we have mentioned for other markets, also we expect to see the same trend in Brazil in respect to pricing and in respect to volumes.

What we're seeing is that Brazil is starting to show positive numbers, of course with a lower pace than we have mentioning for other market.

But I believe there is no doubt that this year GDP growth will be totally different from what we saw last year.

And I don't know your numbers, but different numbers could even speak of GDP growth of up to 0.5%, which is of course not a very significant number, but in comparison to last year is showing that the situation have changed and from now on the expectation is positive for Brazil.

And Usiminas should take advantage of all these changes.

In respect to the situation at the shareholder level, meaning what we need to discuss with Nippon, as we always said, we are always trying to find a way to solve our differences.

And difficult to comment on the output, but we are always positive in trying to find a final solution for these differences just to put this behind and to keep working for the future of the company together with the partner that we have.

So we are continuing trying to find a solution on that situation.

Your next question comes from the line of Leonardo Correa from BTG Pactual.

So starting out with a question on profitability levels in Mexico and Argentina, guys, can you just give us some clarity on just the differences now that you're seeing in your operations in terms of EBITDA per ton Argentina versus Mexico and the room for improvement that you're seeing in Argentina especially with this very positive outlook that you're coming out with?

And the second question -- and sorry, Pablo, to revert to a theme that you spoke about during the New York Investor Day, but moving back to the theme of how the company is looking to rerate the current multiple, which is still quite depressed, versus the global steel industry and also LATAM peers.

Has anything moved in that direction of looking for opportunities to rerate the multiple from this very depressed level?

Those would be my questions.

Okay, Leonardo, let me start by the question on the difference between Argentina and Mexico.

We have different ways of producing steel in these 2 different markets.

So the impact on the numbers of that, meaning that Mexico what we have is purchased slabs and directed facilities with DRI technology differently from what we -- on what we are having in Argentina with blast furnaces.

And as you know, the margins in Mexico taking into consideration these 2 ways of producing our product is higher than we have in Argentina.

And this is also due to the issue that the raw material cost has been increasing lately, as we said during the opening remark, especially the iron ore and coal, which has a direct impact on the profitability of our Argentine operation and is not clearly the case in Mexico, where we have our own iron ore mines.

And the main raw material besides that one is the natural gas that continues to have a low price and the slabs that continues to have great -- beneficial prices for us to continue having the margins that we have.

So one of the reason why we are guiding for a lower EBITDA generation in the third quarter is basically the impact of this prices movements in our raw material through the inventories and of course through our cost during the third quarter.

So we're expecting somewhat high cost during this quarter.

So this is the main difference between the 2 market.

But we are -- as we mentioned, though we are expecting some reduction, to continue showing very positive numbers and very good margins and are outperforming our peers in the region.

Going to your -- the second part of your questions, it's an important issue what you're raising.

Of course we have not had much time from the Investor Day up to today, but I think and probably it's obvious, but the most important thing that we can do as a company is continue to show very clear and very good positive numbers, positive margins and growth in our business.

So we continue to do that.

In respect to the other issues that we are analyzing, clearly we are in the process.

I'm not -- don't think that we can bounce from day to the other.

You know very well which are the different ways that we can try do that.

They will require time.

But it's something that we at Ternium we always knew these issues.

There were things that were working again at Ternium in the past like issues of the economic environment in Argentina and I think that now are evolving positively that will help.

And we will continue analyzing which are the best way for us to obtain a rerating in our multiple.

We clearly agree with you that we continue to have -- though we have increased our multiple, we have a discount against our peers.

If I can just return to a point on Section 232.

I know that you don't want to give any straightforward opinion on that just given all the uncertainty of that topic.

But just in terms of a very quick point which I think has been raising some doubts and some discussion in the market on the correlation of steel prices in Mexico and in the U.S., do you think for any reason we should see a breakup in that historical correlation of pricing in Mexico and the U.S. going forward or there is no basis for that conclusion?

That will be my last question.

Okay.

We continue to believe that this should be the case because the trade between the 2 countries continues to be very important.

And specifically in this case, where you are discussing trade deficit and different things, in the case of steel, Mexico is the one having the deficit, meaning that the U.S. is exporting more steel to Mexico than the other way around.

So that is the big correlation and why you have a big correlation between prices into market.

And we are not seeing specific reasons at the moment to believe that this could change in the near future.

Thiago Lofiego, Bradesco BBI.

Pablo, I have 2 questions; one, back to the Mexican market -- Mexican operations' profitability.

Just thinking about your realized prices in the next quarter, you are mentioning you expect lower realized prices.

I understand you do have a lag on your industrial contract pricing in Mexico, but I just want to understand the dynamics for the remaining clients and also -- especially considering the fact that steel prices have been increasing at the spot -- on the spot market.

So just want to understand what the upside risks are in terms of your realized prices for the next quarter in Mexico?

If there is any chance that your realized prices come in maybe flattish Q-on-Q considering those two different dynamics, the industrial clients with the lag and the remaining clients?

And the second question on Argentina.

Could you comment on steel price risks in Argentina?

We've been hearing the government is pressuring steel makers to adjust prices down.

Could you comment a little bit about that?

You are right that there are 2 dynamics in Mexico that works differently.

The one that I mentioned before, which is the lag in the contract prices, that needs to put into considering together with the increase in prices that we are seeing these days in the spot market.

So putting both things together -- of course what we are saying is that we are expecting to continue seeing prices at the level we are seeing today.

If there are further increases, this of course should affect our analysis.

But what we are seeing right now putting all these things into consideration is that there should be low reduction in prices, the low single-digit reduction in prices in the combination of those effects in Mexico.

As I said, if then there is a higher increase on prices for the spot market, this could offset the expected decrease on the contracts that we have.

So that's our view at the moment, that's our expectation, and is the better number that we can provide to you in order for us to predict our results in the coming quarter.

In relationship to Argentina, we have seen no impact in our pricing scenario.

Our prices in Argentina remain -- remember that we only -- I can only talk about flat steel products, is very similar to the price today in the U.S., in Mexico or in Brazil.

So I see no reason for any change on that.

And as we have historically discussed, clearly there is less volatility in prices in Argentina as in the case in Brazil, but we are expecting to see prices to withstand at international levels in our region.

So I do not see anything that could come up in relationship to our pricing strategy that has been very, very consistent.

Your next question comes from the line of Charlie Clark from Berenberg.

I had a couple of questions on CSA, if that's okay.

I know -- firstly, I know you don't want to speculate too much, but assuming that CSA closes by September, might we expect accretive EBITDA from CSA on the Q4 P&L assuming that current market condition stay as they are?

Secondly, in your Q3 outlook, you've anticipated sequentially lower operating profit due to the lag effect of scraps purchase.

Assuming that in case CSA is already consolidated in your assets at current steel and raw material prices, would you be able to quantify the contribution to the Ternium operating profit that CSA would have in Q3 versus your guidance of currently sequentially lower results?

And thirdly, there's significant amount of sales tax assets and tax loss carry forwards, a legacy of CSA assets.

Do you have a forecast of how much they might be contributing to your net results in 2018?

(Operator Instructions) Your last question comes from the line of Alfonso Salazar from Scotiabank.

There is a question still unanswered, but my question is regarding smaller markets, Colombia and other small markets that -- I want to know if you can give us some color on what's going on there?

What -- if you see imports [at this rate]?

What is the current level of profitability and what do you expect looking forward for Colombia?

That's my question.

(Operator Instructions)

We got disconnected.

We are back in the call.

Could you hear us?

I can hear you, Sebastian.

Okay, sorry for that.

I got a question for Charlie.

Let me try to answer them.

It's fine for me to do that?

I am online?

Go right ahead.

Okay.

So the first part of your question was in relationship to CSA.

Clearly, as soon as we close this transaction we will be consolidating the numbers from CSA.

If we close prior to the end of the quarter, meaning September 30, we will be just consolidating the days that the company is our -- goodwill and our under management.

If we close specifically that day, we will only consolidate numbers for the fourth quarter of the year.

So it shouldn't be a significant impact for the third quarter because in any case if we close to the expected day in which we are working right now, it shouldn't be that significant.

The impact should be in the fourth quarter fully if we close as expected.

Excuse me, Pablo.

I think we missed a question from Alfonso because you were actually answering Charlie for numbers, but we -- our line got cut and we couldn't hear the rest of the questions.

So the question I have is regarding Colombia and other smaller markets.

I was wondering if you can give us some color, some update on what is the situation in those markets?

What's the current level of profitability?

What do you expect going forward?

And how much you've seen imports, if they continue to be a threat?

Anything you can mention on this so that we can see what's going on there.

Okay.

What we are seeing is -- and I believe that we mentioned that -- is that we are seeing positive number on shipment in all our markets and this includes our market which are the U.S., Colombia and Central America.

So we see positive numbers on this market.

In the case of the U.S. and in relationship to your question on competition, clearly it is something that we have mentioned before.

In the case of Colombia, it's more open than other markets, and same thing to the Central American countries.

The profitability of our operation there is good, is positive.

In the case of -- and it's important to mention this -- in the case of Colombia, we are selling not only flat products, but also long products which we produce in Colombia.

So the margin needs to be adjusted to that reality.

But all our other markets are working well, with Colombia having -- comparing this situation from imports, which is different and higher on other markets where we are.

And there are no further questions at this time.

I will turn the call back over to Pablo Brizzio for closing remarks.

Okay.

Thank you very much for your participation today in this conference call.

As usual, we are available for any further clarification you may have.

Thank you.

Bye-bye.

This concludes today's conference call.

You may now disconnect.