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Southern Copper (SCCO) Q4 Earnings & Sales Miss, Stock Down
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Shares of Southern Copper Corporation (SCCO - Free Report) have declined 2% since the company reported fourth-quarter 2023 earnings of 58 cents per share, which missed the Zacks Consensus Estimate of 77 cents. The bottom-line figure also marked a 50% slump from the year-ago quarter. Results were impacted by lower volumes for copper, silver and zinc, partly offset by an uptick in molybdenum volumes. While prices for copper and silver were favorable, the decline in molybdenum and zinc prices impacted results.
Net sales were around $2.3 billion, which declined 18.6% year over year. The top line missed the Zacks Consensus Estimate of $2.4 billion.
Copper and silver prices improved 2.2% and 9.4%, respectively, in the quarter under review. However, molybdenum and zinc prices were down 13% and 16.9%, respectively. The company, however, witnessed a 5.9% year-over-year increase in molybdenum sales volumes. This gain was offset by lower sales volumes of copper, silver and zinc, which declined 6.5%, 14.8% and 8.6%, respectively.
Southern Copper Corporation Price, Consensus and EPS Surprise
Operating cash cost per pound of copper (net of by-product revenue credits) was $1.25 in the quarter under review, up 27% from the year-ago quarter.
The cost of sales decreased 3% year over year to $1.17 billion in the fourth quarter of 2023. Total operating costs moved down 2% year over year to $1.43 billion.
Operating profit in the fourth quarter was $869 million, reflecting a 36.6% year-over-year decline. The operating margin in the reported quarter was 37.8% compared with 48.6% in the year-ago quarter.
Adjusted EBITDA plunged 35% year over year to $1.06 billion in fourth-quarter 2023. Adjusted EBITDA margin was 46.0% compared with the year-ago quarter margin of 57.8%.
Production Details
Copper: SCCO mined 234,089 tons of copper in the reported quarter, down 3% year over year. Copper sales declined 6.5% year over year to 217,416 tons.
Copper production for the year was 911,014 tons, up 1.8% year over year. This was driven by higher production at Peruvian operations, offset by lower output at the Mexican operations, which was mainly driven by a drop in ore grades, mineral processing and recovery. Sales rose 2.2% year over year to 889,858 tons.
Molybdenum: The company mined 7,180 tons of molybdenum in the reported quarter, reflecting a year-over-year improvement of 6.6%. Sales were 7,158 tons in the quarter under review, up 6% from the fourth quarter of 2022.
SCCO produced 26,836 tons of molybdenum in 2023, which was 2% higher compared with 2022 driven by higher production at each of the mines, barring Toquepala, where grades and recoveries dropped. Molybdenum sales were recorded at 26,876 tons, up 2.3% year over year.
Zinc: The company’s zinc production rose 10.9% year over year to 16,930 tons in the quarter under review. Zinc sales decreased 8.6% year over year to 26,419 tons in the fourth quarter of 2023.
Zinc production improved 9.2% year over year to 65,509 tons in 2023, aided by higher production at the Charcas and Santa Barbara mines. Sales dipped 1.4% to 99,677 tons.
Silver: Southern Copper’s silver production declined 3% year over year to 4,802,000 ounces while sales were down 14.8% year over year to 4,436,000 ounces.
In 2023, silver production dipped 0.8% to 18,407,000 tons from 2022 levels due to lower production at Mexican operations, somewhat offset by higher output at Peruvian mines. Sales declined 4.3% year over year to 18,021,000 ounces.
Cash Flow & Balance Sheet
Southern Copper generated net cash from operating activities of $3.6 billion in 2023, up from $2.8 billion in 2022, attributable to a reduction in working capital. Cash and cash equivalents were $1.15 billion at the end of 2023 compared with $2.1 billion as of the end of 2022. Long-term debt was $6.25 billion as of Dec 31, 2023, flat compared with the debt balance as of Dec 31, 2022. SCCO made capital investments worth $1 billion in 2023, 6.3% higher than the spending in 2022.
Performance in 2023
Southern Copper reported earnings per share of $3.14 in 2023. The bottom line declined 7% and missed the Zacks Consensus Estimate of earnings of $3.36 per share. Net sales were around $9.9 billion, which dipped 1.5% year over year on low metal prices. The top line missed the consensus estimate of $10 billion.
Guidance for 2024
SCCO expects to produce 935,900 tons of copper in 2024, which projects a 2.7% year-over-year improvement. Zinc output is expected to be 117,800 tons, which factors in a 79.8% surge year over year. Silver production is likely to be around 20.7 million ounces of silver, 12.2% higher than in 2022 while molybdenum production is anticipated to dip 4.2% to 25,500 tons.
Price Performance
Shares of Southern Copper have gained 8.7% in the past year against the industry’s 4.8% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Southern Copper currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 25.9% in a year.
The Zacks Consensus Estimate for Cameco’s 2024 earnings is pegged at 72 cents per share, indicating an increase of 188% from the prior year’s reported number. CCJ shares have gained 52% in a year.
Alpha Metallurgical Resources has an average trailing four-quarter earnings surprise of 9.6%. The Zacks Consensus Estimate for AMR’s 2024 earnings is pegged at $43.05 per share. Earnings estimates have moved 48% north in the past 60 days. AMR shares have rallied 134% in the last year.
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Southern Copper (SCCO) Q4 Earnings & Sales Miss, Stock Down
Shares of Southern Copper Corporation (SCCO - Free Report) have declined 2% since the company reported fourth-quarter 2023 earnings of 58 cents per share, which missed the Zacks Consensus Estimate of 77 cents. The bottom-line figure also marked a 50% slump from the year-ago quarter. Results were impacted by lower volumes for copper, silver and zinc, partly offset by an uptick in molybdenum volumes. While prices for copper and silver were favorable, the decline in molybdenum and zinc prices impacted results.
Net sales were around $2.3 billion, which declined 18.6% year over year. The top line missed the Zacks Consensus Estimate of $2.4 billion.
Copper and silver prices improved 2.2% and 9.4%, respectively, in the quarter under review. However, molybdenum and zinc prices were down 13% and 16.9%, respectively. The company, however, witnessed a 5.9% year-over-year increase in molybdenum sales volumes. This gain was offset by lower sales volumes of copper, silver and zinc, which declined 6.5%, 14.8% and 8.6%, respectively.
Southern Copper Corporation Price, Consensus and EPS Surprise
Southern Copper Corporation price-consensus-eps-surprise-chart | Southern Copper Corporation Quote
Operating cash cost per pound of copper (net of by-product revenue credits) was $1.25 in the quarter under review, up 27% from the year-ago quarter.
The cost of sales decreased 3% year over year to $1.17 billion in the fourth quarter of 2023. Total operating costs moved down 2% year over year to $1.43 billion.
Operating profit in the fourth quarter was $869 million, reflecting a 36.6% year-over-year decline. The operating margin in the reported quarter was 37.8% compared with 48.6% in the year-ago quarter.
Adjusted EBITDA plunged 35% year over year to $1.06 billion in fourth-quarter 2023. Adjusted EBITDA margin was 46.0% compared with the year-ago quarter margin of 57.8%.
Production Details
Copper: SCCO mined 234,089 tons of copper in the reported quarter, down 3% year over year. Copper sales declined 6.5% year over year to 217,416 tons.
Copper production for the year was 911,014 tons, up 1.8% year over year. This was driven by higher production at Peruvian operations, offset by lower output at the Mexican operations, which was mainly driven by a drop in ore grades, mineral processing and recovery. Sales rose 2.2% year over year to 889,858 tons.
Molybdenum: The company mined 7,180 tons of molybdenum in the reported quarter, reflecting a year-over-year improvement of 6.6%. Sales were 7,158 tons in the quarter under review, up 6% from the fourth quarter of 2022.
SCCO produced 26,836 tons of molybdenum in 2023, which was 2% higher compared with 2022 driven by higher production at each of the mines, barring Toquepala, where grades and recoveries dropped. Molybdenum sales were recorded at 26,876 tons, up 2.3% year over year.
Zinc: The company’s zinc production rose 10.9% year over year to 16,930 tons in the quarter under review. Zinc sales decreased 8.6% year over year to 26,419 tons in the fourth quarter of 2023.
Zinc production improved 9.2% year over year to 65,509 tons in 2023, aided by higher production at the Charcas and Santa Barbara mines. Sales dipped 1.4% to 99,677 tons.
Silver: Southern Copper’s silver production declined 3% year over year to 4,802,000 ounces while sales were down 14.8% year over year to 4,436,000 ounces.
In 2023, silver production dipped 0.8% to 18,407,000 tons from 2022 levels due to lower production at Mexican operations, somewhat offset by higher output at Peruvian mines. Sales declined 4.3% year over year to 18,021,000 ounces.
Cash Flow & Balance Sheet
Southern Copper generated net cash from operating activities of $3.6 billion in 2023, up from $2.8 billion in 2022, attributable to a reduction in working capital. Cash and cash equivalents were $1.15 billion at the end of 2023 compared with $2.1 billion as of the end of 2022. Long-term debt was $6.25 billion as of Dec 31, 2023, flat compared with the debt balance as of Dec 31, 2022.
SCCO made capital investments worth $1 billion in 2023, 6.3% higher than the spending in 2022.
Performance in 2023
Southern Copper reported earnings per share of $3.14 in 2023. The bottom line declined 7% and missed the Zacks Consensus Estimate of earnings of $3.36 per share. Net sales were around $9.9 billion, which dipped 1.5% year over year on low metal prices. The top line missed the consensus estimate of $10 billion.
Guidance for 2024
SCCO expects to produce 935,900 tons of copper in 2024, which projects a 2.7% year-over-year improvement. Zinc output is expected to be 117,800 tons, which factors in a 79.8% surge year over year. Silver production is likely to be around 20.7 million ounces of silver, 12.2% higher than in 2022 while molybdenum production is anticipated to dip 4.2% to 25,500 tons.
Price Performance
Shares of Southern Copper have gained 8.7% in the past year against the industry’s 4.8% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Southern Copper currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation (CRS - Free Report) , Cameco Corporation (CCJ - Free Report) and Alpha Metallurgical Resources, Inc. (AMR - Free Report) . Each of these companies sport a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 25.9% in a year.
The Zacks Consensus Estimate for Cameco’s 2024 earnings is pegged at 72 cents per share, indicating an increase of 188% from the prior year’s reported number. CCJ shares have gained 52% in a year.
Alpha Metallurgical Resources has an average trailing four-quarter earnings surprise of 9.6%. The Zacks Consensus Estimate for AMR’s 2024 earnings is pegged at $43.05 per share. Earnings estimates have moved 48% north in the past 60 days. AMR shares have rallied 134% in the last year.