Summary
Southern Peru Copper Corporation (SCCO) reported a decline in net earnings for the second quarter and the first six months of 2001 compared to the prior year. This decrease was primarily driven by lower average copper prices and reduced production volumes, exacerbated by operational disruptions from a significant earthquake in southern Peru. Despite lower earnings, the company saw an increase in net sales due to higher copper sales volumes. SCCO also made significant progress on its expansion and modernization plans, securing a $400 million credit facility to finance projects like the Toquepala mine expansion and Ilo smelter modernization. The company maintains a strong liquidity position, anticipating it can meet future cash requirements from internal generation, cash on hand, and existing credit facilities.
Key Highlights
- 1Net earnings for Q2 2001 decreased to $7.5 million ($0.093/share) from $18.0 million ($0.225/share) in Q2 2000, largely due to lower copper prices and production.
- 2Average copper prices (LME and COMEX) were down in both Q2 and year-to-date 2001 compared to 2000.
- 3Mine copper production decreased by 7.3% in Q2 2001, impacted by a 4-day stoppage at the Cuajone mine due to an earthquake and lower ore grades.
- 4Net sales increased slightly to $162.8 million in Q2 2001 from $157.0 million in Q2 2000, driven by higher copper sales volumes.
- 5The company secured a $400 million credit facility, with $400 million drawn as of March 31, 2001, to fund expansion and modernization projects.
- 6Cash and cash equivalents significantly increased to $519.6 million as of June 30, 2001, from $149.1 million at year-end 2000, primarily due to the credit facility drawdown.
- 7A lawsuit concerning former employees' claims for investment shares in Peru is ongoing, with the company having filed an appeal to the Supreme Court after a lower court decision against them.