Market Overview

AHMSA Announces First Quarter 2018 Results


Altos Hornos de México, S.A.B. de C.V. and Subsidiaries ("AHMSA" or "the
Company") (BMV: AHMSA) reported financial results for the period ended
March 31, 2018 (1Q 2018). Financial and operating figures included in
this report are unaudited and are based on AHMSA's operating figures and
financial statements; they are prepared in accordance with International
Financial Reporting Standards (IFRS) and are expressed in U.S. dollars
(US$) and metric tons (MT).

1Q 2018 Highlights

  • Adjusted EBITDA reached US$ 64 million, a 109% increase
    compared to US$ 30 million in 1Q 2017.
  • Steel Segment Adjusted EBITDA increased 101% to US$ 81 million
    from US$ 40 million in 1Q 2017.
    • Steel volume was 1,012k MT, an 18.2% increase, compared to the
      same period in 2017.
    • Average realized prices increased by 14.8%, due to stronger
      international steel market conditions.
    • Net Sales grew 36%, compared to 1Q 2017, driven by
      higher volume and better price conditions.
    • During March, the Company reached a new monthly record
      in terms of shipments, reaching 364 thousand TM.
    • Cost of sales increased by 35% compared to 1Q 2017, mainly due
      to higher raw material costs and usage.
  • Coal Segment adjusted EBITDA reached a loss of US$ 12 million
    compared to a loss of US$ 5 million in 1Q 2017. This was mainly
    explained by the following factors:
    • Adverse economic environment that negatively affected the price
      calculation according to the formula established in the contracts,
      which considers a 35% price adjustment due to the exchange rate
      fluctuation, and that was insufficient to offset the higher costs
      incurred for the operation of the Dos Republicas mine.
    • Reduction in the monthly shipment volume requested by CFE1
      in order to lower its inventory.

Corporate Update

  • Currently, AHMSA continues to advance in a number of strategic
    • During the month of March 2018, the Company began the testing
      process for the vacuum degassing system, which has proven
      to be satisfactory. The production phase is estimated to begin
      towards the end of 2Q 2018.
    • The Company is in the middle of the implementation of
      Proyecto Artemisa;
      the SAG mill is expected to be installed by
      mid-2018, which will improve the recovery of our iron mineral
      reserves and optimize iron ore concentrate production.
    • AHMSA continues to report advances in the repair project of
      35 coke ovens at our #1 Coking Battery. The project is expected to
      increase annual coke capacity by approximately 177 thousand MT.
  • The Company is expecting the bidding process announcement for renewal
    of the steam coal contracts. The current contracts expire in December.
  • Plans are underway for the re-instatement of AHMSA's shares on the
    Mexican Stock Exchange (BMV).

For the full version of this release, in English:

In Spanish:


AHMSA is the largest steel producer in Mexico. The Company was founded
in 1942 and began operations in 1944. In December 1991, the Company was
privatized and Grupo Acerero del Norte, S.A. de C.V. (GAN) assumed
control. In December 1995, GAN incorporated into AHMSA the iron ore and
coal mines to convert AHMSA into an integrated steel producer in Mexico
with a nominal capacity of 3.8 million MT of liquid steel per year.
Since 2007, it has managed the Fénix Project, the most ambitious
investment program in the Company's history aimed at increasing
installed capacity by at least 40% and enabling AHMSA to surpass 5
million MT of liquid steel per year following the incorporation of its
new electric arc furnace. With this new equipment, AHMSA also expanded
its ranges of steel and increased specifications, which allows the
Company to enter new market niches.

In 2017, AHMSA held 12% share of the domestic steel market, 22% of the
domestic market for flat products and 12% of exports from Mexico of
finished steel products. The corporate headquarters and steel mills have
an area of approximately 1,200 hectares and is located in Monclova,
Coahuila de Zaragoza, 248 km from the U.S. border.


CFE. Comisión Federal de Electricidad (Federal Electricity

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