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Southern Copper (SCCO) Q2 Earnings & Sales Miss Estimates

Zacks Equity Research

Southern Copper Corporation SCCO reported second-quarter 2019 earnings of 52 cents per share, missing the Zacks Consensus Estimate of 54 cents.  The figure declined from 53 cents recorded in the prior-year quarter.
 
Net sales came in at $1,818 million, down 1% year over year. The top line declined on lower metal prices of copper and silver in the reported quarter. Further, the reported sales figure missed the Zacks Consensus Estimate of $1,840 million.

Adjusted EBITDA edged down 1.3% year over year to $942.8 million in the second quarter. Adjusted EBITDA margin was 51.9% compared with the prior-year quarter’s 52%.

Southern Copper Corporation Price, Consensus and EPS Surprise

Southern Copper Corporation Price, Consensus and EPS Surprise

Southern Copper Corporation price-consensus-eps-surprise-chart | Southern Copper Corporation Quote

Operating Highlights

Copper: Southern Copper mined 256,352 tons of copper during the reported quarter, up 16.5% year over year, owing to higher production at the Peruvian Toquepala and Buenavista mines in Mexico. These increases were partially offset by lower production at the Cuajone mine. During first-half 2019, copper production grew 14.2%, year on year, driven by production improvement at Toquepala mine and higher production at Buenavista plants.

Molybdenum: The company mined 6,729 tons of molybdenum during the quarter, indicating year-over-year growth of 24.7%. Higher production at all of its mines drove molybdenum’s production.
 
Zinc: The company’s zinc production declined 1.3% year over year to 17,749 tons in the second quarter of 2019 due to lower production at the Santa Eulalia and Charcas mines.
 
Silver: Southern Copper’s silver production went up 5.3% year over year to 4,880,000 ounces. Higher production at the Toquepala mine was partially offset by lower production at the Cuajone, La Caridad and IMMSA operations.

Financials
 
The company’s net cash from operating activities during the June-end quarter was $414.1 million compared with $406.2 million recorded in the prior-year quarter.
 
Cash and cash equivalents went down to $752.2 million at the end of the second quarter from $844.6 million recorded at the end of 2018. Long-term debt decreased to $5,562 million at the end of the quarter from $5,960 million at the end of 2018. Capital investments were $353.5 million during first-half 2019.

This July, the company received a construction permit, worth $1.4 billion, for its Tia Maria copper mine project in Peru. On completion, Tia Maria is expected to produce 120,000 tons of copper cathodes, annually.
 
Price Performance

Shares of Southern Copper have depreciated 18% over the past year compared with the industry’s decline of 16.7%.



Zacks Rank & Key Picks

Southern Copper currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are SSR Mining Inc. SSRM, Kinross Gold Corporation KGC and Arconic Inc. ARNC, all sporting a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of a whopping 134.8% for 2019. The company’s shares have surged 56% over the past year.

Kinross has a projected earnings growth rate of 100% for the current year. The company’s shares have gained 18.3% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the ongoing year. Its shares have moved up 16% in the past year.

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