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Southern Copper (SCCO) Q3 Earnings In Line, Sales Up Y/Y
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Southern Copper Corporation (SCCO - Free Report) reported third-quarter 2021 earnings of $1.12 per share, which matched the Zacks Consensus Estimate. The bottom line improved 72% from the prior-year quarter, primarily driven by higher sales on upbeat prices for its main metals and the company’s efforts to improve cost efficiency and productivity.
Net sales were $2,681 million, up 26% year over year. The top line beat the Zacks Consensus Estimate of $2,672 million. Revenues were mainly driven by higher metal prices for copper (43.6%), molybdenum (143.5%) and zinc (28.3%). Gold and silver prices were down 6.4% and 1.3%, respectively.
Operating cash cost per pound of copper, including by-product revenue credits, was 58 cents in the quarter under review, up 10% from the year-ago quarter. Total operating costs dipped 1% year over year to $1,173 million.
Southern Copper Corporation Price, Consensus and EPS Surprise
Operating profit surged 60% to $1,508 million on higher sales. Operating margin in the reported quarter was 56.2% compared with 44.3% in the prior-year quarter. Adjusted EBITDA improved 52% year over year to $1,709 million in third-quarter 2021. Adjusted EBITDA margin was 63.8% compared with the year-ago quarter figure of 52.9%.
Operating Highlights
Copper: Southern Copper mined 245,146 tons of copper in the reported quarter, down 0.6% year over year. Higher output at the Cuajone unit was offset by lower levels at other open pit operations due to variations in ore grade and recoveries.
The company anticipates copper production in 2021 to be around 957,000 tons.
Molybdenum: The company mined 8,103 tons of molybdenum in the reported quarter, reflecting a year-over-year improvement of 5.4%. Higher production at both the Toquepala and Buenavista mines were partially offset by lower production at the Cuajone and La Caridad mines.
Zinc: The company’s zinc production decreased 1.8% year over year to 16,894 tons in the quarter under review. Increased output at the San Martin mine was partially offset by lower production at Charcas and Santa Barbara.
Silver: Southern Copper’s silver production fell 8.8% year over year to 4,847,000 ounces due to lower production at Buenavista, IMMSA and Toquepala operations.
Financials
Southern Copper generated net cash from operating activities of $1,221 million in the third quarter of 2021 compared with $793.5 million in the prior-year quarter. Cash and cash equivalents were at $2,584 million at the end of the third quarter, up from $2,184 million as of 2020 end. Long-term debt was $6,547 million at the quarter end compared with $6,544 million as of 2020 end. It made capital investments worth $243 million during the quarter under review bringing the year-to-date total capital spending to $696 million.
According to the company, despite concerns regarding demand in China in the near term due to real estate troubles and power shortages, copper demand will be supported by growth in public infrastructure investment in the United States and global initiatives to address climate change. This will boost prices of copper and other metals.
Price Performance
Image Source: Zacks Investment Research
Shares of Southern Copper have appreciated 17.7% in the past year compared with the industry’s rally of 56.6%.
Zacks Rank & Stocks to Consider
Southern Copper currently carries a Zacks Rank #3 (Hold).
Image: Bigstock
Southern Copper (SCCO) Q3 Earnings In Line, Sales Up Y/Y
Southern Copper Corporation (SCCO - Free Report) reported third-quarter 2021 earnings of $1.12 per share, which matched the Zacks Consensus Estimate. The bottom line improved 72% from the prior-year quarter, primarily driven by higher sales on upbeat prices for its main metals and the company’s efforts to improve cost efficiency and productivity.
Net sales were $2,681 million, up 26% year over year. The top line beat the Zacks Consensus Estimate of $2,672 million. Revenues were mainly driven by higher metal prices for copper (43.6%), molybdenum (143.5%) and zinc (28.3%). Gold and silver prices were down 6.4% and 1.3%, respectively.
Operating cash cost per pound of copper, including by-product revenue credits, was 58 cents in the quarter under review, up 10% from the year-ago quarter. Total operating costs dipped 1% year over year to $1,173 million.
Southern Copper Corporation Price, Consensus and EPS Surprise
Southern Copper Corporation price-consensus-eps-surprise-chart | Southern Copper Corporation Quote
Operating profit surged 60% to $1,508 million on higher sales. Operating margin in the reported quarter was 56.2% compared with 44.3% in the prior-year quarter. Adjusted EBITDA improved 52% year over year to $1,709 million in third-quarter 2021. Adjusted EBITDA margin was 63.8% compared with the year-ago quarter figure of 52.9%.
Operating Highlights
Copper: Southern Copper mined 245,146 tons of copper in the reported quarter, down 0.6% year over year. Higher output at the Cuajone unit was offset by lower levels at other open pit operations due to variations in ore grade and recoveries.
The company anticipates copper production in 2021 to be around 957,000 tons.
Molybdenum: The company mined 8,103 tons of molybdenum in the reported quarter, reflecting a year-over-year improvement of 5.4%. Higher production at both the Toquepala and Buenavista mines were partially offset by lower production at the Cuajone and La Caridad mines.
Zinc: The company’s zinc production decreased 1.8% year over year to 16,894 tons in the quarter under review. Increased output at the San Martin mine was partially offset by lower production at Charcas and Santa Barbara.
Silver: Southern Copper’s silver production fell 8.8% year over year to 4,847,000 ounces due to lower production at Buenavista, IMMSA and Toquepala operations.
Financials
Southern Copper generated net cash from operating activities of $1,221 million in the third quarter of 2021 compared with $793.5 million in the prior-year quarter. Cash and cash equivalents were at $2,584 million at the end of the third quarter, up from $2,184 million as of 2020 end. Long-term debt was $6,547 million at the quarter end compared with $6,544 million as of 2020 end. It made capital investments worth $243 million during the quarter under review bringing the year-to-date total capital spending to $696 million.
According to the company, despite concerns regarding demand in China in the near term due to real estate troubles and power shortages, copper demand will be supported by growth in public infrastructure investment in the United States and global initiatives to address climate change. This will boost prices of copper and other metals.
Price Performance
Shares of Southern Copper have appreciated 17.7% in the past year compared with the industry’s rally of 56.6%.
Zacks Rank & Stocks to Consider
Southern Copper currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Nucor Corporation (NUE - Free Report) , Olin Corporation (OLN - Free Report) and Nutrien Ltd. (NTR - Free Report) . All of these stocks currently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nucor has a projected earnings growth rate of around 580% for the current year. The company’s shares have soared 128% in a year’s time.
Olin has an expected earnings growth rate of around 689% for the current fiscal year. The company’s shares have surged 236% in the past year.
Nutrien has an anticipated earnings growth rate of around 180% for 2021. The company’s shares have gained 70% in the past year.