Summary
Southern Copper Corporation (SCCO) reported a decrease in net sales and net earnings for the three and six months ended June 30, 2008, compared to the same periods in 2007. This decline was primarily attributed to significantly reduced production volumes, notably from the ongoing labor strike at the Cananea mine in Mexico. Despite lower sales volumes, higher average prices for copper and molybdenum provided some offset, though zinc prices experienced a notable decline. Operational challenges, particularly the prolonged strike at the Cananea mine, have significantly impacted production and led to substantial costs, including severance payments and idle fixed costs. The company is also facing increased power and fuel costs, especially in Peru. Despite these headwinds, SCCO is moving forward with significant capital expenditure programs aimed at expanding copper production capacity in Peru and is evaluating various power supply options to manage rising energy costs.
Financial Highlights
26 data points| Cost of Revenue | $550.46M |
| SG&A Expenses | $26.73M |
| Operating Expenses | $669.38M |
| Operating Income | $792.42M |
| Net Income | $548.47M |
| EPS (Basic) | $0.62 |
| EPS (Diluted) | $0.62 |
| Shares Outstanding (Basic) | 883.40M |
| Shares Outstanding (Diluted) | 883.40M |
Key Highlights
- 1Net sales for the six months ended June 30, 2008, decreased by 7.0% to $2,961.0 million from $3,184.8 million in the same period of 2007.
- 2Net earnings for the six months ended June 30, 2008, decreased by 12.9% to $1,113.5 million from $1,277.6 million in the same period of 2007.
- 3The primary driver for the decline in net sales and earnings was a significant decrease in copper production volume, largely due to the ongoing labor strike at the Cananea mine in Mexico.
- 4Operating cash costs per pound of copper produced, when excluding by-product revenues, increased significantly to $167.3 cents in the first six months of 2008 from $127.9 cents in the comparable 2007 period, driven by higher power/fuel costs and lower production.
- 5Capital expenditures for the first six months of 2008 totaled $180.8 million, with significant investments planned for the expansion of Peruvian operations, including the Tia Maria, Toquepala, and Cuajone projects.
- 6The company's balance sheet shows a decrease in cash and cash equivalents to $1,150.3 million as of June 30, 2008, from $1,409.3 million as of December 31, 2007.
- 7The company has a significant ongoing capital expansion program in Peru, with expected increases in annual copper production upon completion.