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SOUTHERN COPPER CORP/ (SCCO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong profitability despite a slight revenue decline: net income rose 2.4% YoY to $973.4M, adjusted EBITDA was essentially flat YoY at $1,790.9M with margin expansion to 58.7% .
  • EPS beat consensus ($1.22 vs $1.09*) and adjusted EBITDA beat consensus (~$1.79B vs ~$1.74B*), while revenue was roughly in line/marginally below ($3.051B vs ~$3.056B*)—a quality beat driven by lower operating costs and higher interest income .
  • Operating cash cost fell to $0.63/lb (–17% YoY), aided by stronger by‑product credits; management raised the quarterly cash dividend to $0.80 and increased the stock dividend ratio to 0.0101 shares per share .
  • Management highlighted tariff risk monitoring and continued project execution (Tía María, Los Chancas, Michiquillay), framing SCCO as resilient to macro volatility and positioned for medium‑term growth .

What Went Well and What Went Wrong

What Went Well

  • Margin resilience with cost discipline: net income margin improved to 31.9% (+140 bps YoY), and adjusted EBITDA margin improved to 58.7% (+110 bps YoY), driven by lower operating costs and higher interest income .
  • By‑product strength and cash cost: operating cash cost fell to $0.63/lb (–17% YoY), supported by +6% by‑product revenue credits; mined zinc production +56% YoY, silver production +15% YoY .
  • Dividend increase and confidence: Board authorized a $0.80 cash dividend and lifted stock dividend to 0.0101 per share; Chairman Larrea emphasized strong YTD sales and cash cost reductions driving EBITDA and net income growth .

Specific management quote:

  • “Most notably, sales volumes rose for copper (+0.3%), zinc (+25.3%), silver (+14.0%) and molybdenum (+5.9%)… cash cost decreased from $0.91 to $0.70 (–23.6%), which drove an increase of 10.0% in EBITDA and 13.8% in net income.” — German Larrea, Chairman .

What Went Wrong

  • Top‑line softness: net sales declined 2.2% YoY to $3,051.0M, impacted by lower copper sales volumes (–3.0%) and metal price variances (LME copper –2.3%, moly –5.2%, zinc –7.0%), partially offset by silver price strength (+16.6%) .
  • Production headwinds in Mexico: copper production fell 1.4% QoQ to 238,980 tonnes due to lower grades, with declines at Buenavista (–2.9%) and La Caridad (–1.7%) .
  • Higher interest expense: net interest expense rose (interest expense +12.8% YoY), though higher interest income partly offset the impact .

Financial Results

Consolidated P&L and Margins

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$3,118.3 $3,121.9 $3,051.0
Operating Income ($USD Millions)$1,607.3 $1,535.5 $1,587.0
Net Income ($USD Millions)$950.2 $945.9 $973.4
EPS ($USD)$1.22 $1.19 $1.22
Adjusted EBITDA ($USD Millions)$1,797.0 $1,745.6 $1,790.9
Net Income Margin (%)30.5% 30.3% 31.9%
Adjusted EBITDA Margin (%)57.6% 55.9% 58.7%

Consensus vs Actual (Q2 2025)

MetricConsensus EstimateActualBeat/Miss
EPS ($USD)$1.09*$1.22 Beat
Revenue ($USD Millions)$3,055.9*$3,051.0 Slight Miss
Adjusted EBITDA ($USD Millions)$1,737.2*$1,790.9 Beat

Values marked with * retrieved from S&P Global.

Segment / Product Metrics (Volumes)

MetricQ2 2024Q2 2025
Copper Sales (tonnes)231,015 224,063
Molybdenum Sales (tonnes)7,640 7,846
Zinc Sales (tonnes)39,012 44,483
Silver Sales (000s ounces)5,305 6,044

KPIs

KPIQ2 2024Q1 2025Q2 2025
Operating Cash Cost (net of by‑product, $/lb)$0.76 $0.77 $0.63
Capital Investments ($USD Millions)$331.8 $317.8 $235.7
Operating Cash Flow ($USD Millions)$962.1 $721.3 $976.8
Copper Mined Production (tonnes)242,474 240,226 238,980
Dividends Paid (cash and stock, $/share in quarter)$1.20 $1.40 $1.40

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash Dividend per ShareQ3 2025 (payable Sep 4, record Aug 15)$0.70 cash (authorized Apr 10, 2025) $0.80 cash (authorized Jul 24, 2025) Raised
Stock Dividend RatioQ3 20250.0099 shares per share 0.0101 shares per share Raised
Copper ProductionFY 2025967,000 tons (Q4 2024) 968,200 tons (Q1 call) Raised slightly
Zinc ProductionFY 2025171,700 tons (Q4 2024) 170,100 tons (Q1 call) Lowered slightly
Molybdenum ProductionFY 202526,200 tons (Q4 2024) 27,400 tons (Q1 call) Raised
Operating Cash Cost (net of by‑product)FY 2025—$0.75–$0.80/lb (Q1 call) New range communicated
CapexFY 2025–2028—$1.5B (2025), $2.3B (2026), $2.7B (2027), $2.7B (2028) (Q1 call) New multi‑year outlook

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not available in the document set; Q2 “Current Period” reflects press release commentary. Prior quarter references use Q4 2024 and Q1 2025 transcripts/press releases.

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Tariffs / MacroRecord sales; outlook for 2025 volumes COMEX–LME arbitrage; potential U.S. tariffs risk; expectation of ~300k ton market deficit Company monitoring U.S. trade policy; confident in resilience Continued monitoring; cautious optimism
COMEX vs LMEPrice variance context provided for 2024 Arbitrage peaked at $0.73/lb; contracts mix; spread narrowed (~7%) Price variance YoY: LME –2.3%, COMEX +3.7% Arbitrage normalized vs Q1 peak
Cost control4Q cash cost $0.96; FY 2024 $0.89 FY 2025 target $0.75–$0.80/lb Q2 cash cost $0.63/lb; 6M $0.70/lb Improving beyond target
Tía María (Peru)Construction prep; budget $1.802B; ops start 2027 Early works 61%; jobs >628 (503 local) Early works ~90% for access/platforms; jobs 1,376 (802 local) Advancing construction
Los Chancas (Peru)Illegal mining removal process Land acquisition; camps attacked; govt coordination Framework agreement signed; illegal mining control progress Progress toward permitting
Michiquillay (Peru)Exploration progress 35% Progress 39%; drilling ~146k meters Progress 45%; drilling complete; resource estimate underway Advancing exploration
Dividend policy$0.70 cash; stock dividend 0.0073 $0.70 cash; 0.0099 stock $0.80 cash; 0.0101 stock Increasing shareholder returns

Management Commentary

  • Strategic focus: “In the current scenario of market volatility and uncertainty, the Company is closely monitoring U.S. trade policy developments… Given our strong operational and financial performance, we believe SCC’s position will successfully navigate any uncharted seas ahead.” — German Larrea .
  • Operational highlights: Emphasis on year‑to‑date sales growth and cash cost reductions driving EBITDA and net income; continued project execution across Peru and Mexico (Tía María, Los Chancas, Michiquillay) .

Q&A Highlights

Note: Q2 2025 Q&A transcript not found; highlights below reflect Q1 2025 Q&A for context.

  • Cash cost trajectory: Management expects FY 2025 operating cash cost of $0.75–$0.80/lb, contingent on by‑product prices and cost discipline .
  • Capex cadence: Multi‑year capex outlook—$1.5B (2025), $2.3B (2026), $2.7B (2027–2028), aligned to project ramps (e.g., Tía María) .
  • COMEX–LME dynamics: Arbitrage peaked in Q1; mix of COMEX‑based contracts; spread narrowed by late April; company managing customer discussions prudently .
  • Product mix flexibility: While TC/RC favored concentrates, refining economics plus by‑products (precious metals, sulfuric acid) make smelting competitive; focus remains on contract fulfillment .
  • Tariff contingency: If U.S. tariffs were imposed, SCCO would redirect volumes to other markets to mitigate impact; as of Q1, no tariffs on Mexico/Peru copper .

Estimates Context

  • EPS beat: $1.22 actual vs $1.09* consensus driven by lower operating costs and higher interest income; net income rose 2.4% YoY .
  • Revenue roughly in line/slight miss: $3,051.0M actual vs ~$3,055.9M* consensus, reflecting lower copper volumes and weaker molybdenum/zinc prices, partially offset by stronger silver prices .
  • Adjusted EBITDA beat: $1,790.9M actual vs ~$1,737.2M* consensus on margin resilience and cost control .

Values marked with * retrieved from S&P Global.

Implications: Consensus models likely need higher margin and cash cost assumptions (lower cost per lb), with minor top‑line adjustments given the narrow revenue delta. Mix shifts (zinc/silver strength, moly modest) and interest income support should be reflected.

Key Takeaways for Investors

  • Quality beat: EPS and EBITDA outperformed on costs and margins, even as revenue slipped—supportive of multiple and dividend coverage .
  • Cost leadership: Cash cost at $0.63/lb materially below the FY target range, aided by by‑product credits; sustainability of low cost is a key driver of cash generation .
  • Dividend momentum: Cash dividend raised to $0.80 and stock dividend increased—signals confidence in near‑term cash flow .
  • Project pipeline de‑risking: Tía María construction advancing; Los Chancas securing social license; Michiquillay resource estimate underway—medium‑term growth credible .
  • Macro watch: Tariff risk and COMEX–LME spreads normalized vs Q1 extremes; copper price/AI‑related demand tailwinds remain, but policy uncertainty could inject volatility .
  • Near‑term trading: Favorable risk‑reward on margin strength and dividend; watch copper prices, by‑product pricing, and any tariff headlines.
  • Medium‑term thesis: Low‑cost integrated producer with expanding by‑product base and visible growth projects; valuation sensitivity primarily to copper price and permitting cadence.