AHMSA Announces Fourth Quarter 2017 Results

MONCLOVA, Mexico–(BUSINESS WIRE)–Altos Hornos de México, S.A.B. de C.V. and Subsidiaries (“AHMSA” or “the
Company”) (BMV: AHMSA) reported financial results for the fourth quarter
and twelve months ended December 31, 2017. Financial and operating
figures included in this report are unaudited and are based on AHMSA
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).

4Q 2017 Highlights

• Adjusted EBITDA reached US$ 47 million a 96% increase versus 4Q
  2016 Adjusted EBITDA of US$ 24 million.
• Steel Segment Adjusted EBITDA was US$ 62 million, a 104.1%
  increase versus US$ 31 million in 4Q 2016.
  • Steel volumes were 989k MT, a 1.6% decline from the same period in
    2016.
  • Average realized prices increased by 21% due to improved steel
    markets, while costs of sales increased by 17% mainly due to
    higher raw material costs and energy prices.
• Coal Segment adjusted EBITDA declined to a loss of US$ 6
  million compared to a loss of US$ 1 million in 4Q 2016 as we continued
  facing challenges with the pricing mechanism on supply contracts with
  CFE.

2017 Full-Year Highlights

• Adjusted EBITDA reached US$ 180 million, a 23% decrease versus
  2016 Adjusted EBITDA of US$ 234 million.
• Steel Segment Adjusted EBITDA was US$ 216 million, a 13%
  decline from US$ 248 million in 2016.
  • Steel volumes reached 3.7 million MT, 11% below 2016
  • Average realized prices rose 24% due to an improved steel market,
    which was offset by the 12.4% increase in cost of sales driven by
    lower productivity at our iron ore and metallurgical coal mines.
• Coal Segment adjusted EBITDA registered a loss of US$ 11
  million for 2017 compared to a profit of US$ 4 million in 2016.

Corporate Update

• In preparation for its re-emergence as a publicly-traded company,
  AHMSA’s shareholders appointed three new independent directors. An
  additional director will be appointed at a later date.
  • Plans are underway for the re-instatement of AHMSA’s shares on the Mexican
    Stock Exchange (BMV).
• A number of strategic investments continue to progress:
  • During the second quarter of 2018, the Company expects to launch
    its new vacuum degassing system as part of the strategy to
    migrate towards higher value-added products.
  • we achieved 45% implementation of Proyecto Artemisa and
    anticipate that the SAG mill will be installed by mid-2018,
    which will help to enhance recovery of our iron mineral reserves
    and restore historical iron ore concentrate production.
  • AHMSA continues to report advances in the repair of 35 coke
    ovens at our #1 Coking Battery. The project is expected to
    increase annual coke capacity by approximately 177 thousand MT.
  • We are in the process of renegotiating both of our steam coal
    contracts with the CFE, in advance of the expiration of these
    contracts in 2018.

For the full version of this release, in English:

http://ir.ahmsa.com/wp-content/uploads/2018/03/AHMSA_4Q17_Earnings_Release_EN_FINAL.pdf

In Spanish:

http://ir.ahmsa.com/wp-content/uploads/2018/03/AHMSA_4Q17_Earnings_Release_SPA_Final.pdf

Contacts

IR:
In Mexico
Altos Hornos de México,
S.A.B. de C.V.
Luis Guillermo Valdés Portales, 52 (866)
649-3366
Director of Financial Planning
[email protected]
or
In
New York
i-advize Corporate Communications, Inc.
Maria
Barona / Rafael Borja
212-406-3691/3693
[email protected]
/ [email protected]