10-QPeriod: Q2 FY2023

SOUTHERN COPPER CORP/ Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 1, 2023For Securities:SCCO

Summary

Southern Copper Corporation (SCCO) reported its second quarter and first six months of 2023 financial results. For the second quarter, net sales were $2.30 billion, a slight decrease of 0.3% year-over-year, primarily due to lower metal prices, particularly for copper and zinc. However, net income attributable to SCC saw a significant increase of 26.6% to $547.5 million, driven by improved operating cost efficiencies and higher sales volumes of copper and zinc, which offset the impact of lower average metal prices. For the first six months of 2023, net sales increased by 0.5% to $5.09 billion. Net income attributable to SCC also grew by 11.8% to $1.36 billion, reflecting higher sales volumes across most metal products, cost reductions, and a notable decrease in income taxes. The company continues to invest in capital projects, with $490.6 million spent in the first half of 2023, and has announced a $1.00 per share dividend for the third quarter.

Financial Highlights

48 data points
Beta

Revenue

$2.30B

50.1% Gross Margin

Net Income

$547.50M

23.8% Net Margin

EPS (Diluted)

$0.71

Total Assets

$16.94B

Cash & Equivalents

$2.20B

Free Cash Flow

$544.60M

Financial Statements
Beta
Revenue$2.30B
Cost of Revenue$1.15B
Gross Profit$1.15B
SG&A Expenses$31.00M
Operating Expenses$1.40B
Operating Income$900.70M
Net Income$547.50M
EPS (Basic)$0.71
EPS (Diluted)$0.71
Shares Outstanding (Basic)773.10M
Shares Outstanding (Diluted)773.10M

Key Highlights

  • 1Net sales for Q2 2023 were $2.30 billion, a slight decrease of 0.3% compared to Q2 2022, impacted by lower copper and zinc prices.
  • 2Net income attributable to SCC increased significantly by 26.6% to $547.5 million in Q2 2023, driven by cost efficiencies and higher sales volumes.
  • 3For the first six months of 2023, net sales were $5.09 billion, up 0.5% year-over-year.
  • 4Net income attributable to SCC for the first six months of 2023 rose 11.8% to $1.36 billion, supported by cost reductions and lower taxes.
  • 5Capital expenditures for the first six months of 2023 totaled $490.6 million, an increase of 14.2% year-over-year.
  • 6The company announced a Q3 2023 dividend of $1.00 per share, a decrease from the $1.25 per share paid in Q2 2022.
  • 7Copper production increased by 9.2% in Q2 2023 and 6.6% for the first six months of 2023 compared to the prior year periods.

Frequently Asked Questions

For the second quarter of 2023, Southern Copper reported net sales of $2.30 billion, a 0.3% decrease year-over-year. Net income attributable to Southern Copper Corporation was $547.5 million, a significant increase of 26.6% compared to the same period in 2022.

In the first half of 2023, Southern Copper's copper production increased by 6.6% year-over-year, driven by higher production at its Peruvian operations. Molybdenum production decreased by 4.6%, while silver production increased by 5.6%, and zinc production rose by 8.1%.

The company noted that LME copper prices decreased by 10.9% in the second quarter of 2023. Factors influencing the market include reduced global inflation, recovery in Peruvian mining production, and lower copper inventories. Despite short-term price concerns, Southern Copper believes the long-term demand for copper will remain strong due to its role in the clean energy transition.

Southern Copper continues to invest in growth projects. Key projects include the Buenavista Zinc project in Mexico (nearing completion), the Pilares project in Mexico (operational), and the El Pilar project in Mexico. In Peru, projects include the Quebrada Honda dam expansion, with the large-scale Tia Maria project's development still subject to various considerations. Capital investments in the first six months of 2023 totaled $490.6 million.