10-QPeriod: Q3 FY2018

SOUTHERN COPPER CORP/ Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 31, 2018For Securities:SCCO

Summary

Southern Copper Corporation (SCCO) reported solid financial results for the nine months ending September 30, 2018, with net sales increasing by 12.8% to $5.40 billion, primarily driven by higher metal prices for copper, molybdenum, and zinc. Net income attributable to SCC also saw a substantial increase of 23.0% to $1.25 billion. The company's operating cash costs, when measured net of by-product revenues, decreased by 10.3% to $0.83 per pound of copper, reflecting the positive impact of higher by-product prices. Significant capital investments of $831.8 million were made during the period, primarily focused on expanding production capacity in Peru, notably the Toquepala concentrator expansion, which is nearing completion. The company is strategically positioned for future growth, with substantial projects in Mexico and Peru under development. SCCO also demonstrated a commitment to returning capital to shareholders, with dividends paid increasing significantly to $1.00 per share for the nine-month period.

Financial Highlights

46 data points
Beta

Revenue

$1.75B

41.6% Gross Margin

Net Income

$369.40M

21.1% Net Margin

EPS (Diluted)

$0.48

Total Assets

$14.32B

Cash & Equivalents

$967.30M

Free Cash Flow

$450.50M

Financial Statements
Beta
Revenue$1.75B
Cost of Revenue$824.00M
Gross Profit$729.10M
SG&A Expenses$26.40M
Operating Expenses$1.03B
Operating Income$696.70M
Net Income$369.40M
EPS (Basic)$0.48
Shares Outstanding (Basic)773.00M

Key Highlights

  • 1Net sales increased by 12.8% to $5.40 billion for the nine months ended September 30, 2018, driven by higher metal prices.
  • 2Net income attributable to SCC rose by 23.0% to $1.25 billion for the nine months ended September 30, 2018.
  • 3Operating cash cost per pound of copper, net of by-product revenues, decreased by 10.3% to $0.83 for the nine months ended September 30, 2018.
  • 4Capital investments totaled $831.8 million for the nine months, with a focus on production expansion projects, such as the Toquepala concentrator expansion.
  • 5Dividends paid increased substantially by 194.1% to $1.00 per share for the nine months ended September 30, 2018.
  • 6Copper production slightly decreased by 0.3% to 1.43 billion pounds for the nine months, while molybdenum production increased by 1.6% and silver production increased by 7.1%.
  • 7The company is advancing significant development projects in Mexico and Peru, indicating a strong focus on future growth and production capacity.

Frequently Asked Questions

For the nine months ended September 30, 2018, Southern Copper Corporation reported a 12.8% increase in net sales to $5.40 billion and a 23.0% increase in net income attributable to SCC to $1.25 billion, compared to the same period in 2017. This improvement was driven by higher metal prices and increased sales volumes for certain by-products like silver and zinc.

Southern Copper invested $831.8 million in capital projects during the first nine months of 2018. A significant portion was allocated to the Toquepala concentrator expansion in Peru, which is nearing completion. The company also has a robust pipeline of future projects in Mexico (e.g., Buenavista Zinc, Pilares) and Peru (e.g., Michiquillay, Los Chancas, Tia Maria), aimed at increasing copper production capacity and enhancing operational efficiencies.

Operating cash cost per pound of copper, before by-product revenues, increased slightly by 2.7% to $1.53 for the nine months of 2018. However, when accounting for by-product revenues, the operating cash cost per pound of copper, net of by-product revenues, decreased significantly by 10.3% to $0.83. This improvement was primarily due to higher prices for its major by-products, highlighting the substantial contribution of these by-products to cost management.

Southern Copper has demonstrated a strong commitment to returning capital to shareholders. For the nine months ended September 30, 2018, dividends paid per share increased by 194.1% to $1.00, compared to $0.34 in the prior year period. The company also authorized a dividend of $0.40 per share in October 2018, indicating a consistent approach to dividend distribution.