What was the primary driver of the increase in net sales for the third quarter of 2016?

The primary driver of the increase in net sales for the third quarter of 2016 was a significant rise in copper sales volume, up 30.5% year-over-year, largely attributed to the successful expansion of the Buenavista mine. Higher sales volumes for silver and molybdenum also contributed to the overall sales growth.

Why did net income decrease for the nine-month period despite higher sales?

The decrease in net income for the nine-month period, despite higher sales, was mainly due to increased operating costs and expenses. This included higher depreciation, amortization, and depletion expenses resulting from recent capital investments in expansion projects. Additionally, interest expenses were higher compared to the same period in the previous year.

What is the company's outlook on copper prices and demand for the remainder of 2016 and into 2017?

For the remainder of 2016, Southern Copper expected a slight deficit in copper supply, which would support current prices. For 2017, the company anticipated demand growth between 2.5% and 3.0% and foresaw the beginning of a structural copper market deficit due to a lack of new project investments in recent years. They believed that production cuts and project delays would significantly offset new production coming to the market.

What significant capital projects is Southern Copper undertaking?

Southern Copper continued to invest heavily in growth projects. Key ongoing projects include the expansion of the Toquepala concentrator in Peru, which is expected to increase annual production capacity by 100,000 tons of copper. In Mexico, the company was advancing its $3.5 billion investment program at the Buenavista unit, with new facilities like the concentrator already operational and others nearing completion. The company also highlighted potential future projects like El Arco and El Pilar.

SCCO 10-Q Quarterly Report Q3 FY2016 — Revenue, Net Income, EPS

Summary

Southern Copper Corporation (SCCO) reported a significant increase in net sales for the third quarter of 2016, up 23.6% year-over-year to $1,400.7 million, driven primarily by a 30.5% increase in copper sales volume. This surge in volume, largely attributable to the successful expansion at the Buenavista mine, helped offset lower copper prices. For the first nine months of 2016, net sales also saw a modest 5.0% increase, reaching $3,980.8 million, again supported by higher sales volumes across key products including copper and silver. Despite the top-line growth, net income attributable to SCC for the third quarter saw a substantial increase of 100.8% to $197.6 million. However, for the nine-month period, net income decreased by 10.5% to $604.6 million. This divergence is due to higher operating costs and expenses, including increased depreciation, amortization, and depletion related to expansionary capital investments, as well as higher interest expenses in the nine-month period compared to the prior year. The company also noted a decrease in dividends paid per share. SCCO continues to invest heavily in capital projects aimed at increasing production capacity, with $840.5 million invested in the first nine months of 2016. Notable ongoing projects include the Toquepala expansion in Peru and further developments at the Buenavista mine in Mexico. The company is also actively managing its capital structure, evidenced by ongoing share repurchase programs.

Financial Highlights

46 data points

Beta

Net Income

$197.60M

EPS (Diluted)

$0.26

Total Assets

$13.06B

Cash & Equivalents

$511.50M

Free Cash Flow

$31.50M

Financial Statements

Beta

Cost of Revenue	$831.40M
Gross Profit	$394.70M
SG&A Expenses	$22.70M
Operating Expenses	$1.04B
Operating Income	$362.40M
Net Income	$197.60M
EPS (Basic)	$0.26
Shares Outstanding (Basic)	773.60M

Key Highlights

1Net sales increased by 23.6% year-over-year to $1,400.7 million in Q3 2016, driven by a 30.5% increase in copper sales volume.
2Net income attributable to SCC surged by 100.8% to $197.6 million in Q3 2016, but decreased by 10.5% to $604.6 million for the nine months ended September 30, 2016.
3Copper production volume increased by 25.3% for the nine months ended September 30, 2016, largely due to the Buenavista mine expansion.
4Operating cash cost per pound of copper produced (with by-product revenues) decreased by 13.6% in Q3 2016 and 11.2% for the nine months ended September 30, 2016, indicating improved cost efficiency.
5Capital investments remained substantial at $840.5 million for the first nine months of 2016, primarily focused on expanding production capacity in Mexico and Peru.
6The company paid dividends of $0.05 per share in Q3 2016, a decrease from $0.10 per share in the prior year's quarter and $0.13 for the nine-month period compared to $0.30 in the prior year.
7Significant environmental remediation efforts and ongoing litigation, particularly related to a spill in Mexico, continue to be disclosed, though management asserts they will not have a material adverse effect on financial position.

SOUTHERN COPPER CORP/ Quarterly Report for Q3 Ended Sep 30, 2016

Summary

Financial Highlights

Key Highlights

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