Southern Copper third-quarter net income rises to $1.8 billion on record sales

Southern Copper Corporation (SCCO) reported record third-quarter net sales and profit, the company said Tuesday in a press release attached to a regulatory filing. Net sales were $4,696.6 million for the quarter ended Sept. 30, up 39.1% from a year earlier.

Net income attributable to the company rose 62.7% to $1,801.8 million, a record high.

Here's how the company did:

• Net sales: $4,696.6 million vs. $3,377.3 million a year earlier
• Net income attributable to the company: $1,801.8 million vs. $1,107.6 million a year earlier
• Income per share: $2.15 vs. $1.32 a year earlier
• Adjusted EBITDA: $3,040.2 million vs. $1,975.4 million a year earlier
• Operating cash cost per pound of copper, net of by-product credits: 9.5 cents vs. 42.0 cents a year earlier

Adjusted EBITDA margin was 64.7%, up from 58.5% a year earlier. Net income margin was 38.4%, against 32.8%.

Higher metal prices drove the sales increase. The average LME copper price was $6.41 per pound in the quarter, up from $4.44 a year earlier. Sales volumes for copper, molybdenum and silver fell, which the company said slightly offset the gains.

For the first nine months, net sales rose 38.6% to $13,237.0 million from $9,550.2 million. Net income rose 66.8% to $5,048.6 million from $3,027.0 million.

Adjusted EBITDA for the nine months was $8,609.0 million, 56.2% higher than a year earlier, with a margin of 65.0% against 57.7%.

Cash flow from operating activities was $2,224.3 million in the quarter, 42.6% above the year-earlier figure. For the nine months it was $5,907.3 million, up 81.3%.

Capital investments were $515.8 million in the quarter, up 47.7% from $349.2 million, and $1,380.5 million for the nine months.

Mined copper output fell 1.1% to 232,396 tonnes in the quarter from 234,892 tonnes a year earlier. Output at the Mexican operations rose 2.5%, while Peruvian production dropped 6.1% on lower ore grades.

Chairman of the Board German Larrea said, "We are very pleased with our strong third-quarter performance, which delivered a record for net sales, adjusted EBITDA and net income. These achievements were thanks to our strategy and disciplined cost control at the operational level."

Operating cash cost per pound of copper, net of by-product credits, was 9.5 cents in the quarter, down from 42.0 cents, as by-product revenue credits rose 30.6%.

The board on Oct. 15 authorized a quarterly cash dividend of $1.30 per share and a stock dividend of 0.0106 shares per share. The dividends are payable Nov. 19 to holders of record at the close of business Nov. 3. Cash will be paid in place of fractional shares, based on $197.83, the average of the high and low share price on Oct. 15.

The company said its capital program for this decade exceeds $15 billion, with projects in Peru and Mexico. Its Peruvian projects could surpass $10.3 billion over the next decade.

Tia Maria, a greenfield copper project in Arequipa, Peru, was 49.6% complete as of Sept. 30. The company has invested $884.3 million in the project and committed $1,101 million. It is expected to produce 120,000 tonnes of copper cathodes a year in its early years and begin operations in the first half of 2028.

El Pilar, in Sonora, Mexico, has a capital budget of $551 million and operations will commence in 2029. The chairman said it will contribute 36,000 tonnes of copper a year in its initial years, while the project overview gives annual production of 29,000 tons of copper cathode.

The chairman said the two greenfield projects are expected to add about 156,000 tonnes of refined copper a year, which would take annual production past one million tonnes, 85% of it refined.

Los Chancas in Apurimac, Peru, carries an estimated capital investment of $2.6 billion, with operations expected in 2031. Michiquillay in Cajamarca, Peru, requires an estimated $2.5 billion, with production start-up expected by 2032.

The company is evaluating an expansion of the Cuajone operation in Moquegua, Peru, from 90,000 to 120,000 tonnes a day of milling capacity, at a capital cost of $680 million. Studies are also underway on 150,000 tonnes a day.

The release contains no full-year financial guidance. The company will hold its third-quarter earnings call on Oct. 22 at 11:00 a.m. Eastern.