Southern Copper (SCCO) Q4 2023 earnings summary

Executive summary

• 2023 net sales were $9,895.8M, down 1.5% YoY; net income was $2,425.2M, down 8.1%, while copper production rose 1.8% to 911,014 tons.

• 4Q23 net sales were $2,295.6M, down 18.6% YoY; adjusted EBITDA was $1,055.5M, down 35.3%, and net income was $445.0M, down 50.7%.

Financial highlights

• 2023 adjusted EBITDA was $5,029.5M, down 6.0%; operating income was $4,192.3M, down 5.5%.

• 4Q23 operating income was $868.7M versus $1,370.0M in 4Q22; sequentially, sales fell 8%, EBITDA fell 18% and net income fell 28%.

• 4Q23 operating cost was $1,427M, down 2% YoY; FY23 operating cost was $5,704M, up 2%.

• 2023 capital investments were $1,008.6M, up 6.3% YoY and equal to 41.6% of net income.

Outlook and guidance

• 2024 production forecast: copper 935,900 tons (+2.7% YoY), zinc 117,800 tons (+79.8%), silver 20.7M oz (+12.2%) and molybdenum 25,500 tons (-4.2%).

• Buenavista Zinc ramp-up began in 1Q24; 2024 output is expected at 54,500 tons of zinc and 11,900 tons of copper.

• Pilares and Buenavista Zinc are expected to contribute 44,000 tons of copper and 54,000 tons of zinc to 2024 production.

• The 2024 copper outlook cited a potential market deficit and low inventories, with a slow recovery in China, recession in Europe and a US soft landing or minor recession.