Summary
Southern Copper Corporation (SCCO) reported a strong performance for the nine months ended September 30, 2017, with net sales increasing by 20.3% to $4.79 billion and net income attributable to SCC growing by 68.0% to $1.016 billion, compared to the same period in 2016. This improvement was driven by a significant increase in metal prices, particularly copper, which saw an average LME price rise of 26.2%. The company's capital investment program continues, with significant spending on expanding production capacity, aiming to exceed one million tons of copper by mid-2018 and reach 1.5 million tons by 2023. SCCO also announced a higher dividend per share for the fourth quarter of 2017, reflecting its positive financial results and outlook.
Financial Highlights
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Financial Statements
Beta
| Revenue | $1.68B |
| Cost of Revenue | $781.50M |
| Gross Profit | $725.70M |
| SG&A Expenses | $25.00M |
| Operating Expenses | $983.90M |
| Operating Income | $692.60M |
| Net Income | $401.80M |
| EPS (Basic) | $0.52 |
| Shares Outstanding (Basic) | 773.00M |
Key Highlights
- 1Net sales for the nine months ended September 30, 2017, increased by 20.3% to $4.79 billion, driven by higher metal prices and sales volumes.
- 2Net income attributable to SCCO for the nine months ended September 30, 2017, grew by 68.0% to $1.016 billion, reflecting improved profitability.
- 3Copper prices, a key driver for SCCO, saw a significant increase, with the LME average price rising 26.2% for the nine-month period compared to 2016.
- 4Capital investments totaled $710.4 million for the nine months of 2017, focused on increasing copper production capacity with ambitious targets set for 2018 and 2023.
- 5The company's operating cash cost per pound of copper, net of by-product revenues, slightly decreased by 1.1% to $0.93 for the nine-month period, indicating improved cost management or favorable by-product pricing.
- 6Dividends paid increased significantly, with $262.8 million distributed in the nine months of 2017, up from $100.6 million in the prior year, and a higher dividend of $0.25 per share authorized for the fourth quarter.
- 7The company's outlook remains positive, anticipating a copper market deficit after 2018 which should support prices, along with strong demand from China.
Frequently Asked Questions
The primary driver was a significant increase in metal prices, particularly copper, which rose by 26.2% on average for the nine-month period compared to the same period in 2016. Higher sales volumes for copper and silver also contributed to the revenue growth.
Southern Copper anticipates a copper market deficit after 2018, which they expect to support prices. Strong economic growth in China, a major copper consumer, is also seen as a positive factor for demand.
The company is focused on cost control and operational efficiency. For the nine months ended September 30, 2017, the operating cash cost per pound of copper, net of by-product revenues, slightly decreased by 1.1% to $0.93. This improvement was attributed to higher by-product revenues and efforts to manage production costs.
SCCO is executing an aggressive organic growth program, with capital investments totaling $710.4 million in the first nine months of 2017. Key projects include the Toquepala concentrator expansion in Peru, expected to increase annual copper production, and various projects in Mexico aimed at increasing zinc and copper production capacity. The company aims to exceed one million tons of copper production by mid-2018 and reach 1.5 million tons by 2023.