Southern Copper SCCO Q2 2025 Earnings Transcript

Core Insights - Molybdenum prices decreased by 5% to an average of $20.57 per pound in Q2 2025 compared to Q2 2024, while production increased by 3.5% year-on-year [1] - Copper production in Mexico dropped by 2.5% due to lower output at Buenavista and La Caridad mines, with a forecast of 965,300 tons for 2025, a decrease of 0.9% from 2024 [2] - A potential 50% tariff on U.S. copper imports could impact global economic growth and copper demand, despite a positive long-term outlook for copper [3] - Global copper inventories fell by 28% from 627,000 tons at the end of March to 450,000 tons by the end of June 2025, covering approximately 6 days of global demand [4] - Silver production increased by 15% year-on-year, with an expected output of 22.8 million ounces in 2025, a 9% increase from 2024 [5] - Zinc production surged by 56% quarter-on-quarter, totaling 45,899 tons, with a forecast of 173,400 tons for 2025, a 33% increase from 2024 [6] - Total sales for Q2 2025 were $3.1 billion, a 2% decrease from Q2 2024, with copper sales value dropping by 5% due to lower LME prices [7] - Molybdenum sales fell by 7% due to lower prices, while total operating costs decreased by $47 million or 3% compared to the previous year [8] - Adjusted EBITDA for Q2 2025 was $1,791 million, a slight decrease of 0.3% from the previous year, with an adjusted EBITDA margin of 59% [8] - Net income for Q2 2025 was $973 million, a 2% increase from the previous year, driven by lower operating costs and increased interest income [11] - Cash flow from operating activities in the first half of 2025 was $1,698 million, a 5% increase from the same period in 2024 [12] - The company plans to invest over $10.3 billion in Peruvian projects over the next decade, supported by the Peruvian government's openness to private investment [13] - The Tia Maria project has created 1,376 jobs, with a focus on hiring local applicants [14] - The company is also advancing the Los Chancas project and has signed a framework agreement with the Tiaparo community [15] - The Michiquillay project is 45% complete, with ongoing geological studies [16] - Southern Copper is planning to invest over $600 million in its Mexican operations in 2025 [17] - The company has made significant progress in sustainability, achieving a 24% reduction in lost time injury frequency and sourcing 39% of electricity from renewable energy [20] - Southern Copper was included in sustainability indices, recognizing its compliance with ESG standards [21] - The company announced a quarterly cash dividend of $0.80 per share, payable on September 4, 2025 [25]