Ternium cuts 2025 dividend to $2.20 on Usiminas write-down
Ternium lowered its 2025 dividend to $2.20 per ADS due to a major tax write-down at its Brazilian unit, but analysts expect a more sustainable payout ratio in 2026 as Mexican and Brazilian operations improve.
Ternium has closed its 2025 dividend cycle at $2.20 per American Depositary Share, down from an initial $2.70 proposal. The Luxembourg-based steelmaker, which trades on the New York Stock Exchange under the ticker TX, finalized the net payment of $1.30 per ADS on May 15 after its board revised the distribution downward in April.
The reduction stems directly from a $405 million write-down of deferred tax assets at Usiminas, the company's Brazilian steelmaking affiliate. That non-cash accounting charge dragged full-year 2025 net income down to $303 million. In the fourth quarter alone, Ternium posted net income of $171 million—buoyed by a separate $94 million deferred tax gain—on revenue of $3.78 billion, which represented a 2.6% year-over-year decline.
When the revised dividend was announced, Ternium shares traded around $43.27, pricing the distribution at a 5.1% yield. While lower than the roughly 6% yield initially projected under the $2.70 figure, the return remains notable for income-focused investors. However, the cut underscores the volatility inherent in commodity-linked equities tied to the construction, automotive, and infrastructure cycles of Latin America.
Looking ahead, management has guided for higher first-quarter 2026 adjusted EBITDA compared to the fourth quarter of 2025. This anticipated improvement is expected to come from increased shipment volumes in Mexico and better margins in both the Mexican and Brazilian markets. The company attributes the margin recovery to higher revenue per ton, though management cautions this will be partially offset by rising costs per ton.
Analysts currently forecast full-year 2026 earnings of $6.05 per ADS. Against an expected annual dividend of $1.80 per ADS, this implies a conservative payout ratio of roughly 29.8%. This ratio suggests Ternium has ample room to fund its distributions from core profits, provided the operational recovery materializes as projected.
Market participants will be closely watching whether the steelmaker can convert its guided margin improvements into actual earnings growth. Key variables moving forward include the trajectory of Chinese steel import pressure across the Americas, broader trade policy shifts, and any potential recovery of the impaired tax assets at Usiminas.
