Southern Copper (SCCO) Q3 Earnings call transcript Oct 23, 2024
2min read Southern Copper Corporation recently held its third quarter and nine months 2024 earnings call, where it discussed its financial performance and strategic outlook. The call, led by Raul Jacob, Vice President, Finance, Treasurer and CFO, provided valuable insights into the company's copper market analysis, production updates, financial results, expansion projects, and ESG practices.
Copper Market and Demand Outlook
The copper market is experiencing a slight surplus due to the London Metal Exchange copper price increase of 10% from an average of $3.79 per pound in the third quarter of 2023 to $4.17 in the recent quarter. Despite China's weak demand, the recently announced economic measures are expected to promote economic growth and fuel demand from the world's largest copper consumer. Furthermore, a resilient U.S. economy and the need for decarbonization technologies are expected to bolster copper demand, making it a crucial element in the transition to a low-carbon economy.
Production Highlights
Southern Copper's production for the past quarter saw copper representing 77% of sales, with a 10% increase in copper production to 252,219 tons. This growth was driven by higher mineral throughput at Cuajone and Toquepala in Peru, along with increased production at Buenavista and La Caridad in Mexico. The company is forecasting a 7% increase in total copper production for 2024, reaching 975,000 tons, fueled by recovery at SX-EW facilities, higher production in Peru, and copper production at the new Buenavista Zinc concentrator.
Molybdenum production increased by 6% in the third quarter of 2024, and the company expects to produce 28,200 tons of molybdenum in 2024, representing a 5% increase over the 2023 production level. Silver, the second-largest by-product, showed a 22% increase in mined silver production and a 25% increase in average price, signaling a positive outlook for the company's precious metals portfolio.
Financial Results
Southern Copper reported sales of $2.9 billion for the third quarter of 2024, a 17% increase from the third quarter of 2023. Copper sales value increased by 21%, while zinc sales rose by 61% due to higher volumes and better prices. Silver sales grew by 46% due to higher prices and volumes. Despite an increase in operating costs, the company's adjusted EBITDA stood at $1,685 million in the third quarter of 2024, representing a 31% increase over the same period in 2023. The company's net income for the quarter was $897 million, a 45% increase from the third quarter of 2023.
Expansion and ESG Practices
Southern Copper is investing in several key projects, including Tia Maria in Peru, Los Chancas in Apurimac, and Michiquillay in Cajamarca. The company is also committed to environmental, social, and corporate governance practices, with three of its operations in Peru receiving the Copper Mark and Molybdenum Mark certifications for responsible production. Southern Copper has also made significant strides in education and community outreach, with the delivery of an engineering laboratories facility to Universidad Nacional de San Agustín de Arequipa in Peru and the opening of the Cultural Center in Charcas, Mexico.
Looking Ahead
Southern Copper's outlook for the future is promising, with the company expecting to maintain its production levels and expand its zinc production significantly. The company is also focused on capital investments, with a current capital investment program exceeding $15 billion. Despite challenges such as regulatory changes and water management, Southern Copper is well-positioned to capitalize on the growing demand for copper and other metals in the transition to a low-carbon economy.
In summary, Southern Copper Corporation's third quarter and nine months 2024 earnings call provided a comprehensive overview of the company's financial performance and strategic initiatives. The company's focus on production growth, financial results, and ESG practices underscores its commitment to sustainable operations and future growth. With a strong outlook for copper demand and strategic investments in key projects, Southern Copper is well-positioned to capitalize on the opportunities and challenges ahead.
