01—Abstract
Summary
Summary of the 8-K filed October 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Southern Copper Corporation (SCCO) reported strong third-quarter 2024 results, with net sales of $2,930.9 milliona, up 17.0% year over year, and net income attributable to SCC of $896.7 million, up 44.7%.
Growth was driven by higher sales volumes across all products (copper +7.7%, zinc +50.1%, silver +19.0%, molybdenum +5.7%) and higher prices for copper (+10.0% LME), zinc (+14.5%), and silver (+24.7%), partly offset by lower molybdenum prices (-8.1%). Adjusted EBITDA rose 30.5% to $1,684.6 millionb, and the adjusted EBITDA margin expanded to 57.5% from 51.5%. Operating cash cost net of by-product credits fell 22.6% to $0.76 per pound of copper, and the year-to-date figure was $0.86 per pound.
The board declared a quarterly cash dividend of $0.70c per share plus a stock dividend of 0.0062 shares per share, payable November 21, 2024 to holders of record on November 6, 2024. Cash will be paid in lieu of fractional shares based on a $112.43 reference price. Balance sheet liquidity improved, with cash and equivalents of $2,654.8 million at September 30, 2024, compared with $1,151.5 million at year-end 2023.
Total debt was about $6.26 billiond, including $499.6 million current. Operating cash flow was $1,439.5 million in the quarter, up 37.1%, and 9M24 capital investments were $792.0 million. Looking ahead, management reiterated a capital program exceeding $15 billion this decade, centered on Mexico and Peru.
Key projects include Tia Maria (120,000 tons per year of SX-EW cathode, with construction expected to begin in 2025 and operations in 2027), Los Chancas (estimated $2.6 billion, operations expected in 2031), and Michiquillay (estimated $2.5 billion, production start-up expected in 2032). The company is reviewing the Tia Maria budget, previously $1.4 billion, and will update it by year-end. The company is 88.9% owned by Grupo Mexico, and the free float is about 11.1%.
02—Key points
Key Highlights
- Net income attributable to SCC rose 44.7% to $896.7 million in 3Q24 (net margin 30.6% vs. 24.7%); 9M24 net income was $2,582.9 million, up 30.4%.
- Net sales grew 17.0% to $2,930.9 million, driven by volume growth in all products and higher copper, zinc, and silver prices, partly offset by lower molybdenum prices.
- Adjusted EBITDA increased 30.5% to $1,684.6 million, with a 57.5% margin (vs. 51.5%); 9M24 adjusted EBITDA was $4,899.3 million, up 23.3%.
- Operating cash cost net of by-product credits fell 22.6% to $0.76/lb of copper in 3Q24 (vs. $0.98), and 9M24 was $0.86/lb, down 9.7%.
- Quarterly cash dividend of $0.70/share plus a stock dividend of 0.0062 shares/share, payable November 21, 2024 (record date November 6, 2024).
- Cash and equivalents rose to $2,654.8 million at September 30, 2024, from $1,151.5 million at December 31, 2023; 3Q24 operating cash flow was $1,439.5 million (up 37.1%).
- Capital program exceeds $15 billion this decade; the Tia Maria budget ($1.4 billion historical) is under review, with an update expected by year-end 2024.
03—Questions
Frequently Asked Questions
What dividend did Southern Copper declare, and when is it payable?
On October 17, 2024, the board authorized a quarterly cash dividend of $0.70 per share and a stock dividend of 0.0062 shares per share. Both are payable on November 21, 2024 to shareholders of record at the close of business on November 6, 2024. Cash will be paid in lieu of fractional shares, based on a $112.43 reference price (the average of the October 17 high and low). Shareholders need not take any action, and the stock dividend is administered by Computershare.
How did Southern Copper's profitability change in the third quarter of 2024?
Net income attributable to SCC was $896.7 million, up 44.7% from $619.5 million, and EPS was $1.15 versus $0.80. Operating income rose 35.6% to $1,450.3 million. Adjusted EBITDA reached $1,684.6 million, up 30.5%. Gains came from higher sales volumes and metal prices, along with cost control. Interest expense was roughly flat, and income taxes rose 33.2% to $526.4 million.
What drove the improvement in unit costs?
The operating cash cost per pound of copper, net of by-product credits, fell to $0.76 in 3Q24 from $0.98 in 3Q23, a 22.6% decrease. Management attributed this to higher volumes and prices and a 11.9% increase in copper pounds produced, partly offset by a 5.5% decline in by-product revenue credits. The 9M24 figure was $0.86/lb, down 9.7%. Before by-product credits, the 3Q24 cost was $195.5 cents per pound (per the reconciliation table) versus $228.5 cents in cost of sales.
What are the major growth projects and their timelines?
Management reiterated a capital program exceeding $15 billion this decade, mainly in Mexico and Peru. Tia Maria (Arequipa, 120,000 tons/year SX-EW copper) is expected to begin construction in 2025 and operate in 2027; the company is reviewing its historical $1.4 billion budget and will update it by year-end. Los Chancas (Apurimac, estimated $2.6 billion, 130,000 tons/year copper) is expected to begin operations in 2031, pending completion of the environmental impact assessment. Michiquillay (Cajamarca, estimated $2.5 billion, 225,000 tons/year copper) is expected to start production in 2032. In 9M24, the company spent $792.0 million on capital investments.
Who controls Southern Copper, and how is the company's balance sheet positioned?
Grupo Mexico owns 88.9% of Southern Copper, and international investors hold the remaining 11.1%. At September 30, 2024, the company had 785.5 million shares outstanding, $2,654.8 million in cash and equivalents, $318.8 million in short-term investments, and total debt of about $6.26 billion ($499.6 million current, $5,757.8 million long-term). Total equity was $8,989.4 million. Liquidity improved substantially during the year, though the company still carries significant leverage relative to its cash position.
04—Continue