10-QPeriod: Q3 FY2023

SOUTHERN COPPER CORP/ Quarterly Report for Q3 Ended Sep 30, 2023

Filed November 1, 2023For Securities:SCCO

Summary

Southern Copper Corporation (SCCO) reported a solid third quarter for 2023, with net sales increasing by 16.2% year-over-year to $2.51 billion. This growth was primarily driven by higher metal prices, particularly for copper (up 8.0% on LME), molybdenum (up 47.4%), and silver (up 23.6%), along with an increase in molybdenum sales volumes. Net income attributable to SCC also saw a healthy increase of 19.4% to $619.5 million, or $0.80 per diluted share. For the first nine months of 2023, net sales grew 5.2% to $7.60 billion, and net income attributable to SCC rose 14.1% to $1.98 billion. The company maintained strong operating cash flows, with $3.03 billion generated year-to-date. Capital expenditures for the nine months totaled $753.2 million, reflecting ongoing investments in production capacity and operational improvements in both Peru and Mexico. The company also announced a quarterly dividend of $1.00 per share, payable in November 2023.

Financial Highlights

48 data points
Beta

Revenue

$2.51B

53.1% Gross Margin

Net Income

$619.50M

24.7% Net Margin

EPS (Diluted)

$0.80

Total Assets

$16.96B

Cash & Equivalents

$1.97B

Free Cash Flow

$787.10M

Financial Statements
Beta
Revenue$2.51B
Cost of Revenue$1.18B
Gross Profit$1.33B
SG&A Expenses$32.70M
Operating Expenses$1.44B
Operating Income$1.07B
Net Income$619.50M
EPS (Basic)$0.80
EPS (Diluted)$0.80
Shares Outstanding (Basic)773.10M
Shares Outstanding (Diluted)773.10M

Key Highlights

  • 1Net sales increased 16.2% in Q3 2023 to $2.51 billion, driven by higher metal prices (copper, molybdenum, silver) and increased molybdenum volumes.
  • 2Net income attributable to SCC rose 19.4% in Q3 2023 to $619.5 million ($0.80 per diluted share).
  • 3Nine-month net sales grew 5.2% to $7.60 billion, with net income up 14.1% to $1.98 billion.
  • 4Operating cash flow for the first nine months was robust at $3.03 billion.
  • 5Capital expenditures for the first nine months totaled $753.2 million, focused on growth and operational improvements.
  • 6The company announced a quarterly dividend of $1.00 per share, reflecting confidence in financial performance.

Frequently Asked Questions

Net sales increased by 16.2% to $2.51 billion primarily due to higher metal prices for copper, molybdenum, and silver. An increase in molybdenum sales volume also contributed to the revenue growth.

Operating costs and expenses increased by 4.9% to $1.44 billion in the third quarter of 2023 compared to the same period in 2022. This increase was mainly attributed to higher costs in materials, labor, depreciation, and exploration expenses, partially offset by a decrease in energy costs and inventory variances.

While copper prices saw an increase in Q3 2023, market intelligence suggests a potential surplus for 2023. However, the company believes that the long-term demand for copper will remain strong due to its crucial role in the clean energy transition, anticipating current low price cycles to be short-lived.

Capital investments in the first nine months of 2023 totaled $753.2 million. Major investments are focused on projects in Mexico, such as the Buenavista Zinc plant and Pilares mine, and in Peru, including the Quebrada Honda dam expansion and the Tia Maria project. The company also has potential future projects like El Arco, Los Chancas, and Michiquillay.