01—Abstract
Summary
Summary of the 10-Q filed August 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Southern Copper Corporation (SCCO) reported robust financial results for the second quarter and first half of 2024, demonstrating significant year-over-year improvements.
Net sales saw a substantial increase of 35.5%a in Q2 2024 and 12.2% for the first half, driven by higher commodity prices, particularly for copper, and increased sales volumes across key metals like copper, molybdenum, zinc, and silver. Net income attributable to SCC surged by 73.6% in Q2 and 23.9% for the first half, reflecting strong operational performance and effective cost management. The company also announced the restart of construction activities for the Tia Maria project in Peru, a significant development for future growth.
Dividends remain a focus for shareholders, with the Board authorizing both a cash and stock dividend for the upcoming payment. SCCO's operational highlights include significant production increases in copper, molybdenum, silver, and zinc, largely due to improved ore grades and the ramp-up of new facilities such as the Buenavista Zinc concentrator.
The company continues to invest in capital projects aimed at increasing production and reducing costs, with substantial expenditures in both Mexican and Peruvian operations. Despite some increases in operating costs, driven by factors like repairs and labor, the company has managed to maintain competitive operating cash costs, especially when factoring in by-product revenues.
02—Key points
Key Highlights
- Net sales increased by 35.5% in Q2 2024 and 12.2% year-to-date, driven by higher commodity prices (copper, molybdenum, zinc, silver) and increased sales volumes.
- Net income attributable to SCC rose significantly by 73.6% in Q2 2024 and 23.9% year-to-date, reflecting strong operational performance and improved pricing.
- Production saw substantial year-over-year increases across key metals, including copper (+7.1% YTD), molybdenum (+15.1% YTD), silver (+8.2% YTD), and zinc (+72.7% YTD), bolstered by new concentrator facilities and improved ore grades.
- The company announced the restart of construction for the Tia Maria project in Peru, a significant step towards future production capacity.
- Operating cash cost per pound of copper, net of by-product revenues, decreased by 2.8% year-to-date to $0.91, showcasing effective cost management and the benefit of strong by-product sales.
- SCCO declared both a cash dividend of $0.60 per share and a stock dividend of 0.0056 shares per share, indicating a continued focus on returning value to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Southern Copper Corp kept $0.30.
- Revenue$3.12B100.0%
- Cost of revenue−$1.25B40.1%
- Gross profit$1.87B59.9%
- Operating costs−$262.1M8.4%
- Operating income$1.61B51.5%
- Interest, other & tax−$657.1M21.1%
- Net income$950.2M30.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 2, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $3.12B$2.30B | +35.5% |
| Cost of Revenue | $1.25B$1.15B | +8.8% |
| Gross Profit | $1.87B$1.15B | +62.1% |
| SG&A Expenses | $33.90M$31.00M | +9.4% |
| Operating Expenses | $1.51B$1.40B | +7.9% |
| Operating Income | $1.61B$900.70M | +78.5% |
| Net Income | $950.20M$547.50M | +73.6% |
| EPS (Basic) | $1.21$0.71 | +70.4% |
| EPS (Diluted) | $1.21$0.71 | +70.4% |
| Shares Outstanding (Basic) | 785.60M773.10M | +1.6% |
| Shares Outstanding (Diluted) | 785.60M773.10M | +1.6% |
05—Questions
Frequently Asked Questions
How did Southern Copper's revenue and profitability perform in the recent quarter compared to last year?
Southern Copper Corporation reported a significant increase in net sales by 35.5% to $3,118.3 million for the second quarter of 2024 compared to $2,300.7 million in the same period of 2023. Net income attributable to SCC also saw a substantial rise of 73.6% to $950.2 million from $547.5 million year-over-year. This performance was driven by higher commodity prices and increased sales volumes.
What were the key drivers behind the strong production growth reported by SCCO?
Production growth was primarily driven by improved ore grades and higher recoveries at various mining operations, particularly in Peru. Additionally, the ramp-up of new facilities like the Buenavista Zinc concentrator in Mexico significantly contributed to the substantial increases in zinc production. Overall, copper, molybdenum, silver, and zinc production all saw notable year-over-year increases for the first half of 2024.
What is the outlook for the Tia Maria project?
Southern Copper announced that it has restarted construction activities for the Tia Maria project in Peru as of July 1, 2024. This decision follows discussions with the Peruvian government and reflects positive social and political developments. The company expects significant economic and social contributions from this project, with mine construction anticipated to begin in 2025 and operations to start in 2027.
How is the company managing its operating costs and what is the impact of by-product revenues?
The company's operating cash cost per pound of copper, net of by-product revenues, decreased by 2.8% year-to-date to $0.91. While total operating costs increased due to factors like repairs, labor, and fuel, the significant increase in by-product revenues (molybdenum, silver, zinc, etc.) per pound has substantially offset these costs, leading to improved net cash costs. This demonstrates effective cost management and the value derived from diversified product streams.
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