UPDATE 2-Steelmaker Ternium posts tenfold profit leap on boost from Usiminas volumes

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By Kylie Madry

MEXICO CITY, Feb 20 (Reuters) - Steelmaker Ternium reported fourth-quarter net income of $414 million, a more than tenfold leap compared with the same period in 2022, as volumes jumped thanks to the inclusion of shipments from Brazil's Usiminas, the company said on Tuesday.

Steel shipments grew 34% year-over-year to 4.04 million metric tons, Ternium said, backed by the consolidation of Brazilian steelmaker Usiminas, which added an additional 1.0 million tons to the total.

Ternium and a subsidiary of affiliate Tenaris boosted their stake in Usiminas to 51.5% last year.

Shipments in Mexico also remained strong "in a seasonally weaker period," Ternium said, backed by growing commercial customer demand.

However, steel volumes were dinged by import restrictions in Argentina, the firm said. Its operations in Argentina were also affected by the sharp depreciation of the peso in December as the new government of President Javier Milei slashed the currency's value over 50% compared with the dollar.

The depreciation caused the value of Ternium's Argentine holdings to slide $537 million, the firm said, though it also recorded a $171 million foreign-exchange bump on the Argentine unit's net short currency position.

Ternium produces flat steel products for a range of industrial uses and is controlled by Argentina's Techint Group, with operations also in Mexico, Brazil, Colombia, the United States and Central America.

Revenue for the firm rose 39% to $4.93 billion during the October-to-December period, in line with estimates.

Adjusted core earnings, or earnings before interest, taxes, depreciation and amortization (EBITDA), more than doubled to $651 million, topping the LSEG-compiled estimate of $498 million. Next quarter, EBITDA should continue to grow sequentially, Ternium said. Shipments in Mexico and the U.S. should also continue to climb, while they are expected to drop in Argentina.

Usiminas is also focused on improving the profitability of its steel segment in the first quarter of 2024, Ternium said. (Reporting by Kylie Madry in Mexico City Editing by Brendan O'Boyle and Matthew Lewis)