Southern Copper (SCCO) Q1 Earnings Beat, Fall Y/Y on Low Prices

Southern Copper Corporation SCCO reported first-quarter 2024 earnings of 95 cents per share, which beat the Zacks Consensus Estimate of 78 cents. The bottom line, however, declined 9.5% from the -year-ago quarter, mainly attributed to lower prices of copper, molybdenum and zinc. Also, reduced sales volumes for zinc and silver offset the gains from higher copper and molybdenum sales. Net sales were $2.6 billion, which marked a 7% decline year over year. The top line surpassed the consensus estimate of $2.5 billion.

Revenues were mainly impacted by lower prices for copper (5.4%), molybdenum (38.1%) and zinc (-21.8%). Southern Copper witnessed an 8.5% year-over-year increase in molybdenum sales volumes while its copper sales volume was up 2.8% in the first quarter of 2024. These gains were offset by lower sales volumes of zinc and silver, which declined 3.1% and 0.3% respectively.

Cost of sales decreased 3% year over year to $1.16 billion. Total operating costs were down 2% year over year to $1.4 billion.

Southern Copper Corporation Price, Consensus and EPS SurpriseSouthern Copper Corporation Price, Consensus and EPS Surprise

Southern Copper Corporation price-consensus-eps-surprise-chart | Southern Copper Corporation Quote

Operating profit was $1.19 billion, reflecting a 12% year-over-year decline. The operating margin was 45.8% compared with 48.5% in the year-ago quarter. Adjusted EBITDA declined 10% year over year to $1.42 billion in first-quarter 2024. Adjusted EBITDA margin was 54.5%, a 160-basis point contraction from the year-ago quarter’s margin of 56.1%.

Production Details

Copper: SCCO mined 240,270 tons of copper, up 8% year over year. This reflected an increase in copper from concentrate production at all SCCO’s mines, partially offset by a decrease in SXEW cathode production at Buenavista and Toquepala. Copper sales were up 2.8% year over year to 235,206 tons.Molybdenum: The company mined 7,079 tons of molybdenum, reflecting a year-over-year improvement of 9.5% driven by higher output at the Toquepala, offset by lower output at La Caridad mines. Molybdenum sales were 7,036 tons , an 8.4% increase from 6,488 tons in the first quarter of 2023.Zinc: The company’s zinc production surged 75% year over year to 26,366 tons attributed to the contribution from the new Buenavista zinc concentrator. Zinc sales decreased 3% year over year to 25,653 tons.Silver: Southern Copper’s silver production was up 8% year over year to 4.78 million ounces due to lower production at all operations, barring Buenavista. Sales were down 3.4% year over year to 4.95 million ounces.

Cash Flow & Balance Sheet

Southern Copper generated net cash from operating activities of $0.7 billion in the first quarter of 2024, down from $1.19 billion in the year-ago comparable quarter. This decline was due to a $310.8 million increase in working capital, which was driven primarily by Mexican operations.

Cash and cash equivalents were $1.25 billion at the end of the first quarter compared with $1.15 billion as of the end of 2023. Long-term debt was $6.26 billion as of Mar 31, 2024, flat compared with the debt balance as of Dec 31, 2023.

SCCO made capital investments worth $214 million, 10.2% lower than the spending in the year-ago comparable quarter.

Price Performance

Shares of Southern Copper have gained 57% in the past year compared with the industry’s 44% growth.

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Zacks Rank

Southern Copper currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Performances

Except gold and silver, other metals (copper, zinc, nickel) experienced declines in prices in the first quarter, which was reflected in the results of other mining companies as well.Teck Resources TECK reported first-quarter 2024 adjusted earnings per share (EPS) of 56 cents, missing the Zacks Consensus Estimate of 87 cents. The bottom line marked a 58% year-over-year plunge.Gains from increased prices for steelmaking coal and higher copper sales volumes were offset by lower zinc and copper prices and decreased steelmaking coal sales volumes. Teck’s earnings were also impacted by increased unit costs at the steelmaking and Quebrada Blanca operations.Freeport-McMoRan Inc. FCX reported adjusted EPS of 32 cents, topping the Zacks Consensus Estimate of 27 cents. Gains from higher copper and gold sales and elevated gold prices were offset by lower copper prices. This resulted in a 38% year-over-year decline in Freeport-McMoRan’s earnings.First Quantum Minerals FQVLF recorded an adjusted quarterly loss of 20 cents per share, wider than the Zacks Consensus Estimate of a loss of 14 cents per share. This is in contrast to earnings of 11 cents per share reported in the first quarter of 2023.  The company’s results have been negatively impacted by the disruptions experienced at the Cobre Panamá mine, which led to the mine being placed in a phase of Preservation and Safe Management since November 2023.

First Quantum Minerals witnessed a 32% decline in copper sales volumes in the quarter. This was mainly due to lower output at Cobre Panama while Kansanshi and Sentinel mines reported improvement in copper output. Lower copper realized prices also impacted FQVLF’s earnings in the quarter.

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Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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