01—Abstract
Summary
Summary of the 8-K filed April 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Southern Copper (SCCO) reported a record first quarter 2026, with net sales of $4,251.4 milliona (up 36.2% year over year), net income attributable to SCC of $1,576.9 million (up 66.7%), and adjusted EBITDA of $2,712.8 million (up 55.4%) at a 63.8% margin.
Growth was driven by higher metal prices (copper +37.5%, silver +157.9%, molybdenum +24.2%, zinc +14.0% versus 1Q25) and higher silver and zinc sales volumes. Operating cash cost net of by-product credits turned negative at -$0.11b per pound of copper, versus $0.77 a year earlier, as by-product revenues rose sharply. Operating cash flow rose 135% to $1,694.5 million, and the company held $4.9 billion in cash at quarter-end.
The main operational negative was copper production, which fell 4.0% on mined volumes, driven by a 9.8% decline at Peruvian operations due to lower ore grades and recoveries. Management expects ore grades to recover by the end of 2026. Capital investments rose 39% to $441.9 millionc, and the program for this decade exceeds $20.5 billion, including Tia Maria (32.5% complete, operations expected 3Q27).
Governance also changed: Oscar Gonzalez Rocha, CEO, died on April 7, 2026, and the Board appointed Leonardo Contreras Lerdo de Tejada as CEO on April 23, 2026. For shareholders, the Board declared a quarterly cash dividend of $1.00d per share plus a stock dividend of 0.0100 shares per share, payable May 29, 2026, to holders of record on May 13, 2026. Investors should weigh the exceptional margins and cash generation against the reliance on elevated metal prices, the Peruvian grade-driven production shortfall, and the pace of large-scale project execution and permitting, particularly at Los Chancas, where illegal mining has stalled progress.
02—Key points
Key Highlights
- Record net income of $1,576.9 million (EPS $1.92), up 66.7% year over year and 20.6% sequentially, with a 37.1% net margin.
- Net sales rose 36.2% to $4,251.4 million, led by higher silver (+11.6% volume) and zinc (+16.4% volume) sales and stronger metal prices.
- Operating cash cost net of by-products was -$0.11/lb of copper, versus $0.77/lb in 1Q25, as by-product revenue credits rose 87.4%.
- Operating cash flow rose 135.0% to $1,694.5 million, helped by a $448.8 million reduction in operating assets and liabilities requirements.
- Copper production fell 4.0% (mined), driven by a 9.8% decline in Peru on lower ore grades and recoveries; management expects a recovery by end-2026.
- Cash dividend of $1.00 per share plus a 0.0100-share stock dividend, payable May 29, 2026 to holders of record May 13, 2026.
- Leadership transition: CEO Oscar Gonzalez Rocha died April 7, 2026; Leonardo Contreras Lerdo de Tejada appointed CEO April 23, 2026.
03—Questions
Frequently Asked Questions
Why did Southern Copper's profitability improve so sharply in 1Q26?
The improvement came mainly from higher metal prices (copper +37.5%, silver +157.9%, molybdenum +24.2%, zinc +14.0% versus 1Q25) combined with higher silver and zinc sales volumes. Operating income rose 61.5% to $2,480.4 million, while cost of sales increased only 13.6%.
Is the negative operating cash cost per pound sustainable?
The negative figure reflects by-product revenue ($1,188.6 million) exceeding operating cash costs before by-products ($1,136.0 million). It depends heavily on silver, zinc, and molybdenum prices, which the company notes can fluctuate significantly. Investors should not assume it will persist if metal prices decline.
What is the outlook for copper production given the decline in 1Q26?
Management attributes the 4.0% decline in mined copper to lower Peruvian ore grades and recoveries, in line with the annual plan, and expects ore grades to recover by the end of 2026. The company's stated goal is to increase production to 1.6 million tons, though the filing does not provide a specific quarterly production target.
What does the dividend announcement mean for shareholders?
Shareholders of record on May 13, 2026 will receive a $1.00 cash dividend per share and a stock dividend of 0.0100 shares per share, payable May 29, 2026. Cash will be paid in lieu of fractional shares based on a $187.45 reference price, the average of the April 23, 2026 high and low.
What are the main risks to the growth pipeline?
Los Chancas in Peru has been stalled by illegal miners occupying the project area, and the El Arco project in Mexico depends on Mexican government action to provide power transmission. Tia Maria is 32.5% complete with operations expected in 3Q27, and the decade's capital program exceeds $20.5 billion, so execution and permitting timing are key risks.
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