01—Abstract
Summary
Summary of the 10-Q filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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.
02—Key points
Key Highlights
- Net 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.
- Net 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.
- Copper 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.
- Operating 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.
- The 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.
- Southern 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.
- Capital expenditures for the first nine months of 2024 totaled $792.0 million, primarily directed towards expansion and maintenance projects in Mexico and Peru.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Southern Copper Corp kept $0.31.
- Revenue$2.93B100.0%
- Cost of revenue−$1.22B41.7%
- Gross profit$1.71B58.3%
- Operating costs−$257.5M8.8%
- Operating income$1.45B49.5%
- Interest, other & tax−$553.6M18.9%
- Net income$896.7M30.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 31, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $2.93B$2.51B | +17.0% |
| Cost of Revenue | $1.22B$1.18B | +4.0% |
| Gross Profit | $1.71B$1.33B | +28.4% |
| SG&A Expenses | $31.20M$32.70M | −4.6% |
| Operating Expenses | $1.48B$1.44B | +3.1% |
| Operating Income | $1.45B$1.07B | +35.6% |
| Net Income | $896.70M$619.50M | +44.7% |
| EPS (Basic) | $1.12$0.80 | +40.0% |
| EPS (Diluted) | $1.12$0.80 | +40.0% |
| Shares Outstanding (Basic) | 798.60M773.10M | +3.3% |
| Shares Outstanding (Diluted) | 798.60M773.10M | +3.3% |
05—Questions
Frequently Asked Questions
What drove the increase in Southern Copper's net sales and net income in the reported period?
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.
How is Southern Copper managing its operating costs, particularly for copper production?
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.
What is the outlook for Southern Copper's key commodities, and how do they contribute to revenue?
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.
What are the company's key capital investment and development activities?
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).
06—Continue