Southern Copper (SCCO) Q1 2025 Earnings Transcript

Core Viewpoint - Southern Copper Corporation reported strong first-quarter results for 2025, with notable increases in production and sales across various metals, despite challenges such as a decrease in copper production at La Caridad and potential tariffs on U.S. copper imports. Production and Sales - Copper production for 2025 is expected to reach 968,200 tons, a 2,400-ton increase from the initial plan of 965,000 tons [1] - Copper represented 78% of total sales in Q1 2025, with stable production at 240,226 tons [2] - Molybdenum production rose by 9% year-over-year, contributing 10% to sales value [1][5] - Silver sales increased by 58% due to higher prices and larger volumes, with an average price of $32.31 per ounce [5][8] - Zinc sales surged by 59%, driven by better prices and a 42% increase in sold volumes [8] Financial Performance - Net sales for Q1 2025 reached $3 billion, a 20% increase from Q1 2024 [8] - Adjusted EBITDA for Q1 2025 was $1,746 million, up 23% from $1,418 million in Q1 2024, with an EBITDA margin of 56% [9] - Net income for Q1 2025 was $946 million, a 29% improvement compared to $736 million in Q1 2024 [12] Cost Management - Total operating costs increased by $176 million or 12% compared to Q1 2024, primarily due to higher inventory consumption and repair materials [9] - Operating cash cost per pound of copper before by-product credits was $2.05, a 12% decrease from the previous quarter [10] - Cash cost including by-product credits was $0.77 per pound, a 21% reduction from $0.96 in Q4 2024 [11] Market Outlook - The London Metal Exchange copper price increased by 11% year-over-year, averaging $4.24 per pound [3] - A projected copper market deficit of approximately 300,000 metric tons is expected by year-end [3] - The company maintains a positive long-term outlook for copper, despite potential impacts from U.S.-China trade tensions [2][56] Capital Investments and Projects - The capital program for the decade exceeds $15 billion, focusing on projects in Mexico and Peru [13] - Significant investments are planned for the Tia Maria project, with $200 million expected in 2025 [29] - Progress on the Los Chancas project includes acquiring land and addressing illegal mining issues [16][52] Environmental, Social, and Governance (ESG) Initiatives - Southern Copper has invested $60 million in building high-performance schools in Peru, contributing to educational development [18] - The company received the Exceptional Company award for its commitment to community development in Mexico [19] Dividends - A quarterly cash dividend of $0.70 per share and a stock dividend of 0.0099 shares per share were announced, payable on May 19, 2025 [21]