01—Abstract
Summary
Summary of the 10-K filed March 7, 2022. Cited figures are marked; the original filing is the authoritative source.
Southern Copper Corporation (SCCO) reported strong financial performance for the fiscal year ending December 31, 2021, driven by significantly higher commodity prices, particularly for copper.
The company's net sales reached a historic high of $10.9 billiona, an increase of 36.9% compared to 2020, primarily due to robust price increases across its key products: copper (+51.1%), molybdenum (+81.0%), zinc (+32.0%), and silver (+22.1%). Despite some volume decreases in copper and other metals, the favorable price environment translated into a substantial increase in profitability, with net income attributable to SCC soaring by 116.3% to $3.4 billion. SCCO's operational efficiency and cost management remain a key focus, as evidenced by the operating cash cost per pound of copper, net of by-product revenues, decreasing by 2.9% to $0.67.
The company also demonstrated a strong commitment to growth and shareholder returns, with capital investments increasing by 50.7% to $892.3 millionb in 2021, supporting ongoing development projects and future production expansions. The company announced an ambitious capital investment program of $1.54 billion for 2022, signaling confidence in future growth and favorable market conditions.
02—Key points
Key Highlights
- Record Net Sales: Achieved historical high net sales of $10.9 billion in 2021, a 36.9% increase year-over-year, driven by strong commodity prices.
- Significant Profitability Growth: Net income attributable to SCC surged by 116.3% to $3.4 billion, reflecting higher metal prices and effective cost control.
- Improved Cash Costs: Operating cash cost per pound of copper, net of by-product revenues, decreased by 2.9% to $0.67, demonstrating operational efficiency.
- Increased Capital Investments: Capital expenditures rose by 50.7% to $892.3 million in 2021, with a planned investment of $1.54 billion for 2022, indicating a focus on growth and expansion.
- Strong Balance Sheet: Maintained a solid financial position with a net debt to net capitalization ratio of 27.1% as of December 31, 2021.
- Substantial Mineral Reserves: Holds significant mineral reserves, with approximately 93.5 billion pounds of copper contained in ore reserves, positioning the company for long-term production.
- Strategic Growth Projects: Advancing several key development projects, including Buenavista Zinc, Pilares, and El Pilar in Mexico, and Tia Maria in Peru, to support future production increases.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Southern Copper Corp kept $0.31.
- Revenue$10.93B100.0%
- Cost of revenue−$3.89B35.6%
- Gross profit$7.04B64.4%
- Operating costs−$974.6M8.9%
- Operating income$6.07B55.5%
- Interest, other & tax−$2.67B24.4%
- Net income$3.40B31.1%
Where FY2021 revenue went
$10.93B- Cost of revenue: $3.89B, 36% of revenue
- Net income: $3.40B, 31% of revenue
- Interest, other & tax: $2.67B, 24% of revenue
- SG&A: $125.2M, 1.1% of revenue
- Other operating costs: $849.4M, 7.8% of revenue
Kept 31% as net incomeSG&A $125.2M · 1.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed March 7, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $10.93B$7.98B | +36.9% |
| Cost of Revenue | $3.89B$3.93B | −0.9% |
| Gross Profit | $7.04B$4.06B | +73.6% |
| SG&A Expenses | $125.20M$126.20M | −0.8% |
| Operating Expenses | $4.87B$4.86B | +0.1% |
| Operating Income | $6.07B$3.12B | +94.4% |
| Net Income | $3.40B$1.57B | +116.3% |
| EPS (Basic) | $4.39$2.03 | +116.3% |
| EPS (Diluted) | $4.39$2.03 | +116.3% |
| Shares Outstanding (Basic) | 773.10M773.10M | 0.0% |
| Shares Outstanding (Diluted) | 773.10M773.10M | 0.0% |
05—Questions
Frequently Asked Questions
What were Southern Copper's primary financial highlights in 2021?
Southern Copper reported record net sales of $10.9 billion, a 36.9% increase from 2020, driven by a 51.1% rise in copper prices and significant increases in molybdenum, zinc, and silver prices. Net income attributable to SCC more than doubled, increasing by 116.3% to $3.4 billion. Operating cash cost per pound of copper, net of by-product revenues, decreased by 2.9% to $0.67.
How did commodity prices impact Southern Copper's performance?
Higher commodity prices were the primary driver of Southern Copper's strong financial performance in 2021. Copper prices, in particular, saw a significant increase, positively impacting revenue and profitability. The company's results are highly sensitive to these market prices, as copper accounted for approximately 81% of its revenues in 2021.
What is Southern Copper's strategy for future growth?
Southern Copper is focused on increasing production and managing costs effectively. The company invested heavily in capital projects in 2021 and plans further significant investments in 2022, including projects in Mexico like Buenavista Zinc, Pilares, and El Pilar, and in Peru with the Tia Maria project. These projects are aimed at expanding copper production capacity and enhancing operational efficiencies.
How is Southern Copper managing its financial health and shareholder returns?
The company maintained a solid financial position, with a decrease in its net debt to net capitalization ratio to 27.1% as of December 31, 2021. Southern Copper also demonstrated its commitment to shareholder returns through consistent dividend payments and a share repurchase program. For 2021, dividends per share totaled $3.20.
06—Continue