8-K: Southern Copper Reports Record Net Sales for 2024, Driven by Increased Production and Higher Prices

Southern Copper Corporation announces strong financial results for Q4 2024 and full year 2024, highlighted by record net sales and increased copper production.

Summary

• Southern Copper Corporation (SCC) reported its financial results for the fourth quarter and full year ended December 31, 2024.
• Net sales for 4Q24 were $2,784.3 million, a 21.3% increase compared to 4Q23, driven by higher sales volumes and better prices.
• 2024 net sales reached a record high of $11,433.4 million, a 15.5% increase over 2023, also due to increased sales volumes and better prices.
• Net income for 4Q24 was $793.9 million, a 78.4% increase from 4Q23, with a net income margin of 28.5%.
• 2024 net income was $3,376.8 million, 39.2% higher than in 2023, with a net income margin of 29.5%.
• Adjusted EBITDA for 4Q24 was $1,506.7 million, a 42.7% increase, and for 2024, it was $6,406.1 million, a 27.4% increase.
• Copper production increased by 2.1% in 4Q24 and 6.9% for the full year, reaching 973,851 tons.
• The company expects to maintain copper production at 967,000 tons in 2025.
• The Board of Directors authorized a quarterly cash dividend of $0.70 per share and a stock dividend of 0.0073 shares per share, payable on February 27, 2025.
• Minera Mexico issued a $1 billion 7-year note at an annual interest rate of 5.625% due in 2032.

Sentiment

Score: 9

Explanation: The document presents a highly positive outlook with record sales, increased profits, and successful financing activities. The company's strong financial performance and commitment to sustainability contribute to a very favorable sentiment.

Positives

• Record net sales of $11,433.4 million for 2024.
• Significant increase in net income, up 39.2% to $3,376.8 million.
• Strong growth in adjusted EBITDA, increasing by 27.4% to $6,406.1 million.
• Increased copper production, up 6.9% to 973,851 tons.
• Decrease in operating cash cost per pound of copper, net of by-product revenue credits, by 13.9% to $0.89.
• Successful issuance of a $1 billion 7-year note by Minera Mexico.
• The company is among the top 10 mining companies with the highest ratings for sustainability in 2024.

Negatives

• Molybdenum prices decreased by 10.6% in 2024.
• Production decreased at the Toquepala and La Caridad mines in 4Q24.
• The Michiquillay project is only 35% complete as of December 31, 2024.

Risks

• Fluctuations in commodity prices could impact future revenues and profitability.
• Delays in project development, such as Los Chancas, due to illegal mining activities.
• Potential environmental and social challenges associated with mining operations.
• The company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements.

Future Outlook

For 2025, the company expects to maintain the current activity level in copper by producing 967,000 tons, and also expects to produce 171,700 tons of zinc (+32%), 23 million ounces of silver (+10%) and 26,200 tons of molybdenum (-10%).

Management Comments

• Mr. German Larrea, Chairman of the Board, stated that the company is pleased with the 2024 results, with net sales hitting a record of $11,433 million.
• He also noted that the strong sales growth was accompanied by strict cost control measures, yielding net income of $3,377 million for 2024.

Industry Context

Southern Copper's strong performance reflects the overall positive trends in the copper industry, driven by increased demand and higher prices. The company's focus on cost control and operational efficiency has allowed it to capitalize on these favorable market conditions.

Comparison to Industry Standards

• Southern Copper's adjusted EBITDA margin of 56.0% in 2024 compares favorably to industry peers such as Freeport-McMoRan (FCX) and BHP, which have reported adjusted EBITDA margins in the range of 45-55% for similar periods.
• The company's operating cash cost of $0.89 per pound of copper is competitive with other major copper producers like Codelco and Rio Tinto, which have reported cash costs in the range of $0.80-$1.00 per pound.
• Southern Copper's sustainability rating places it among the top 10 mining companies, indicating a strong commitment to ESG practices, which is increasingly important for attracting investors and maintaining a social license to operate.

Stakeholder Impact

• Shareholders will benefit from increased dividends and stock dividends.
• Employees will benefit from job creation and improved working conditions.
• Local communities will benefit from social programs and economic development.
• Customers will benefit from a reliable supply of copper and other metals.

Next Steps

• Continue project development at El Pilar, El Arco, Tia Maria, Los Chancas, and Michiquillay.
• Maintain focus on cost control and operational efficiency.
• Implement the Global Industry Standard on Tailings Management of the International Council on Mining and Metals (ICMM) at main operations.
• Continue to implement social programs in education, healthcare and productive development to improve the quality of life in the region.

Key Dates

Keywords

Southern Copper, Copper, Financial Results, Production, Dividends, EBITDA, Net Sales, Mining