Altos Hornos Updates on Operating and Financial Normalization Process

MONCLOVA, Mexico, Sept. 20, 2019 (GLOBE NEWSWIRE) -- Altos Hornos de México, S.A.B. de C.V., the largest integrated steel producer in Mexico (“AHMSA” or the “Company”), announced the following:

In a working meeting with the business chamber heads for the central region of Coahuila, Mr. Jorge Ancira Elizondo, Co-Director of Administration and Finance of AHMSA, informed regarding the positive progress related to the Company’s normalization process, stating that, “the worst is behind us.”

He discussed that the negative situation that took place at AHMSA and its industrial network related to the freezing of accounts, obligated the Company to take a series of severe operating and financial measures, which has thus far yielded good results.

Mr. Ancira Elizondo stated, “The negative financial impact due to a measure that was taken without a valid reason was further aggravated by other unfavorable factors, such as the decline in domestic market demand and a strong reduction in global (steel) prices.”

In terms of the financial aspect, during the first months of the year there was a dearth of all external funding sources; however little by little the Company has recovered the trust of the credit institutions and of its clients, and the first wave of funding is coming in.

He mentioned that in that sense, the Company’s priority is to shorten payment timeframes with the providers, mainly with respect to the local ones, and maintain priority investments, such as the installation of the new coking plan in Steel Mill 2, with a capacity of 1.2 million annual tons and an investment of over US$250 million, with construction initiating in 2020 and that will generate an important number of jobs.

The same negative factors were the reason the Company initially reduced normal production levels, in order strictly adhere to the availability of the Company’s own raw materials, iron and carbon, as well as in response to market demand conditions.

In this regard, he stressed that volume has slowly been restored, in accordance with the current market situation and the Company expects higher progress beginning in January of 2020, due to the reactivation of public investment as well as improvements in the international market conditions.

“The important point is that AHMSA has never stopped operating and, if we were strong in the past, this crisis has further strengthened us,” he stressed and referred to the fact that the Company eliminated a number of non-priority expenses and has divested of, or plans to divest of, non-fundamental assets, which makes the Company more agile and effective.

In parallel with the internal effort that has allowed the financial and operating normalization, the Company is working on further financing possibilities, via the injection of new capital and/or associations with other companies. Mr. Ancira reiterated, “Our commitment and our efforts are focused on AHMSA’s permanence.”

Mr. Ancira, who was accompanied by Mr. Luis Zamudio, Chief Executive Officer; Mr. Gerardo García Castelán, Director of Acquisitions; and Mr. Carlos Mireles, Director of Treasury, recognized and thanked the continued support from the local companies, with who AHMSA is committed, “because we are all headed in the same direction and we all want what is best of our state and our regions.”

The representatives from the various chambers included Mr. Gerardo Bortoni, CANACAR delegate; Mr. Marco Antonio Ramón, President of COPARMEX; Mr. Rolando Rivero Ceballos, from CANACINTRA; Mr. Raúl Flores, of CMIC; and Mr. Ricardo Zertuche, President of CANACO.

About AHMSA

Altos Hornos de México S.A.B. de C.V., the largest integrated steel producer in Mexico (based on tons of liquid steel produced), has two steel plants located in Monclova, Coahuila, and operates its own iron ore and metallurgical coal mines.  Its current nominal production capacity is more than 5.5 million tons of liquid steel per year, which is then transformed into a variety of finished products.  Additionally, AHMSA operates steam coal mines in Mexico.  It employs over 19,000 workers in steel plants, mines and services.

Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause AHMSA’s actual results to differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include but are not limited to regional, national or global economic, business, market and regulatory conditions and the following: (i) AHMSA’s ability to service its debt; (ii) competition and loss of market shares; (iii) changes in AHMSA’s relationships with customers and suppliers; (iv) increases in raw material costs or interruptions in supply; (v) declines in, and volatility affecting, global prices of steel; (vi) the existence or termination of free trade agreements, such as the North American Free Trade Agreement and foreign import duties and tariffs; (vii) foreign currency exchange fluctuations; (viii) the inherently dangerous nature of mining; (ix) work stoppages, strikes or other labor disputes; (x) changes in Mexican economic policy, as well as currency instability; (xi) inaccuracies in AHMSA’s estimates of economically recoverable coal reserves; and (xii) AHMSA’s dependence on certain raw materials.