Southern Copper Corporation (SCCO – Snapshot Report) posted net income of $348 million or 43 cents in the fourth quarter of 2014, down from with $406.2 million or 48 cents in the year-ago quarter. It however beat the Zacks Consensus Estimate of 37 cents.
For 2014, the company posted net income of $1,333 million or $1.61 per share compared with $1,618.5 million or $1.92 per share. It also beat the Zacks Consensus Estimate of $1.56.
For the fourth quarter, net sales came in at $1,471.3 million, down 4.2% from $1,535.2 million in the year ago quarter. It missed the Zacks Consensus Estimate of $1,492 million.
For full-year 2014, sales were $5787.7 million, down 2.8% year over year, but ahead of the Zacks Consensus Estimate of $5,768 million. For the full year, the company demonstrated improved operational performance and capital investments that reduced costs and increased copper and molybdenum production despite lower copper, silver and gold pricing.
Copper production in the quarter was 183,616 metric tons, up 11.2% from 165,062 metric tons in the fourth quarter of 2013. Copper production increased 9.2% from the sequentially prior quarter mainly due to higher production at the company’s Mexican operations, mainly at the Buenavista mine, and at its Peruvian operations.
Moybdenum production decreased 2.4% year over year to 5,710 tons in the quarter. Mined silver production fell 6.7% to 3.4 million ounces in the quarter and zinc production decreased 33% year over year to 15,980 metric tons.
Projects Update
Mexican Projects
Buenavista Projects: The company continues to develop its $3.4 billion investment program at the unit which is forecast to increase its copper production capacity by roughly 175%, and molybdenum production by 42%.
The new Copper Molybdenum Concentrator project is expected to be completed in the third quarter of 2015. All major equipment is on site and has been installed. The project is expected to produce 2.3 million ounces of silver and 21,000 ounces of gold per year.
SX-EW III Plant: Performance testing for the plant was completed and technical full capacity has been achieved. Capital budget of $444 million has been invested in the project.
Crushing, Conveying and Spreading System for Leachable Ore (Quebalix IV): The project has a crushing and conveying capacity of 80 million tons per year and is expected to be completed in the fourth quarter of 2015. So far the project has a 49.4% progress with a capital investment of $117.7 million out of the approved budget of $340 million.
Peruvian Projects
Toquepala Projects: The company, in Dec 14, received governmental approval of the Environmental Impact Assessment (EIA) for the Toquepala concentrator expansion, which is expected to increase annual production capacity by 100,000 tons of copper and 3,100 tons of molybdenum at a total capital cost of around $1.2 billion.
Cuajone Projects: The HPGR project will produce a more finely crushed material. The engineering and the purchase of equipment have been completed and the project is expected to generate cost savings, improve copper recovery and reduce power consumption in the crushing process.
Tia Maria Project: Southern Copper has received approval of Tia Maria’s EIA. The project, when completed, will represent an investment of roughly $1.4 billion to produce 120,000 tons of copper cathodes annually. The company expects it to generate 3,500 jobs during the construction phase.
Financial Position
Cash and cash equivalents as of Dec 31, 2014, was $401.7 million compared with $1,672.7 million as of Dec 31, 2013. Long term debt stood at $4,006 million as of Dec 31, 2014, compared with $4,204.9 million as of Dec 31, 2013.
In Jan 2015, the company’s board approved a $1 billion share repurchase program.
Capital expenditures for 2014 were $1,534.8 million, lower than the expectation of $2,300 million because of the delay in the Buenavista and Toquepala expansion programs.
Outlook
The company’s board has cleared a capital expenditure program of $2,687 million in 2015 to conclude the expansion of the Buenavista mine, expansion of Toquepala mine and construction of the Tia Maria project.
Original Article: http://www.zacks.com/stock/news/163251/southern-copper-scco-beats-earnings-in-q4-sales-miss
