10-QPeriod: Q3 FY2024

SOUTHERN COPPER CORP/ Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 31, 2024For Securities:SCCO

Summary

Southern Copper Corporation (SCCO) reported strong financial results for the third quarter and first nine months of 2024, showcasing significant year-over-year growth in net sales and net income. Net sales increased by 17.0% to $2.93 billion for the quarter and 13.8% to $8.65 billion for the nine-month period, driven by higher sales volumes across key commodities including copper, molybdenum, silver, and zinc, coupled with favorable price increases for copper, zinc, and silver. Net income attributable to SCC saw a substantial increase of 44.7% to $896.7 million in the third quarter and 30.4% to $2.58 billion for the nine months. This profitability was supported by robust production levels, particularly in copper and zinc, and effective cost management, which led to a notable decrease in operating cash costs per pound of copper, both before and after by-product revenues. The company also highlighted progress on its capital investment projects and exploration activities, signaling a continued focus on growth and operational efficiency.

Financial Highlights

49 data points
Beta

Revenue

$2.93B

58.3% Gross Margin

Net Income

$896.70M

30.6% Net Margin

EPS (Diluted)

$1.12

Total Assets

$18.42B

Cash & Equivalents

$2.65B

Free Cash Flow

$1.19B

Financial Statements
Beta
Revenue$2.93B
Cost of Revenue$1.22B
Gross Profit$1.71B
SG&A Expenses$31.20M
Operating Expenses$1.48B
Operating Income$1.45B
Net Income$896.70M
EPS (Basic)$1.12
EPS (Diluted)$1.12
Shares Outstanding (Basic)798.60M
Shares Outstanding (Diluted)798.60M

Key Highlights

  • 1Net sales for Q3 2024 increased by 17.0% to $2.93 billion, and for the first nine months by 13.8% to $8.65 billion, driven by higher sales volumes and improved commodity prices.
  • 2Net income attributable to SCC surged by 44.7% to $896.7 million in Q3 2024 and by 30.4% to $2.58 billion for the first nine months.
  • 3Copper production increased by 11.5% in Q3 and 8.6% for the nine-month period, with significant contributions from Peruvian operations and the Buenavista zinc concentrator.
  • 4Operating cash cost per pound of copper (net of by-product revenues) decreased significantly by 22.6% in Q3 to $0.76 and by 9.7% to $0.86 for the nine-month period, reflecting improved efficiency and cost control.
  • 5The company achieved strong growth in zinc production, up 90.9% in Q3 and 78.8% for the nine months, primarily due to the start-up of the Buenavista zinc concentrator.
  • 6Southern Copper declared a quarterly cash dividend of $0.70 per share and a stock dividend of 0.0062 shares per share, signaling continued commitment to shareholder returns.
  • 7Capital expenditures for the first nine months of 2024 totaled $792.0 million, primarily directed towards expansion and maintenance projects in Mexico and Peru.

Frequently Asked Questions

The increase in net sales was primarily driven by higher sales volumes across key commodities like copper, molybdenum, silver, and zinc, along with favorable price increases for copper, zinc, and silver. The significant growth in net income was supported by these increased sales, improved production levels, and effective cost management strategies that reduced operating cash costs.

Southern Copper has effectively reduced its operating cash cost per pound of copper. For the third quarter, the cost net of by-product revenues fell by 22.6% to $0.76, and for the nine-month period, it decreased by 9.7% to $0.86. This improvement is attributed to higher production volumes, operational efficiencies, and strong cost control measures, which more than offset any declines in by-product revenues.

Copper remains the primary revenue driver, accounting for approximately 77.1% of sales in Q3 2024. The company expects continued demand supported by economic growth in China, a resilient US economy, and new demand from decarbonization technologies. Molybdenum (10.1% of sales) is expected to see strong support due to a market deficit. Silver (5.2% of sales) benefits from industrial applications and emerging technologies. Zinc (3.9% of sales) has strong long-term fundamentals driven by industrial demand, with anticipated supply tightening.

Southern Copper invested $792.0 million in capital projects during the first nine months of 2024, focusing on increasing production, decreasing costs, and addressing environmental and social commitments. Major investments include projects in Mexico (e.g., Buenavista Zinc project, replacement and maintenance) and Peru (e.g., Tia Maria project, Quebrada Honda dam expansion, and replacement/maintenance expenditures).