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SOUTHERN COPPER CORP/ (SCCO)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: net sales $3.38B (+15.2% y/y), adjusted EBITDA $1.98B (+17.3% y/y), and net income $1.11B (+23.5% y/y), driven by higher metal prices and strong by-product volumes; net income margin expanded to 32.8% .
  • Solid beat vs Wall Street: revenue $3.38B vs $3.21B consensus (+~5%); EPS $1.35 vs $1.25 consensus, supported by a collapse in operating cash cost to $0.42/lb (net of by-products) as zinc, silver and moly volumes/prices surged . Consensus from S&P Global estimates.*
  • Dividend raised: cash dividend increased to $0.90 (from $0.80 in Q2) plus 0.0085 stock dividend; payable Nov 28, 2025 (record Nov 12) .
  • Strategic progress: Peru’s Ministry of Energy and Mines authorized commencement of exploitation activities for Tía María; ramp expected through 2027, with financing likely via debt as rates fall .
  • Setup for 2026-2027: Company reiterated 2025 copper production ~960kt and indicated 2026 forecast ~911kt (under review), with 2026 capex ~$2.0B including ~$866M for Tía María; medium-term growth levered to Tía María, El Pilar, and El Arco .

What Went Well and What Went Wrong

  • What Went Well

    • New company records in net sales, adjusted EBITDA, and net income; management credited improved prices across all products and by-product strength: “cash cost of $0.42/lb… one of the industry’s lowest” .
    • By-product volumes and prices materially improved cost structure: zinc mined +46.3% y/y; silver mined +16.4%; moly mined +8.3%; by-product credit drove the $0.42/lb net cash cost in Q3 .
    • Peru project momentum: Tía María received authorization to begin exploitation; early works progressing; management expects ramp in 2027 .

  • What Went Wrong

    • Copper production softness: mined copper 234,892 tonnes in Q3, down 6.9% q/q and total production -6.4% y/y, with lower grades in Peru and Mexico and Buenavista concentrator fully dedicated to zinc/silver instead of copper .
    • Smelting/refining throughput down y/y: smelted -16.9%, refined/rod -10.3% in Q3; some maintenance at Ilo impacted throughput and sulfuric acid by-product credits .
    • Cost line items mixed beneath the surface: while net cash cost plunged, purchased concentrates, workers’ participation, and services were cited as areas of cost increase; cash cost before by-product credits rose to $2.23/lb .

Financial Results

Headline vs Prior Periods and vs Estimates

MetricQ3 2024Q2 2025Q3 2025 ActualConsensus Estimate*
Revenue ($USD Millions)$2,930.9 $3,051.0 $3,377.3 $3,209.7*
Diluted EPS ($)$1.12 $1.22 $1.35 $1.2462*
Net Income Margin (%)30.6% 31.9% 32.8% NA
Adjusted EBITDA ($USD Millions)$1,684.6 $1,790.9 $1,975.4 NA
Adjusted EBITDA Margin (%)57.5% 58.7% 58.5% NA
Operating Cash Cost net of by-products ($/lb)$0.76 $0.63 $0.42 NA

Notes: Estimates from S&P Global; see Estimates Context for details.

Production and Sales Mix (selected KPIs)

KPIQ3 2024Q3 2025Change
Copper mined (tonnes)252,219 234,892 -6.9% q/q; -6.9% y/y context per release
Copper sales (tonnes)243,101 234,300 -3.6% y/y
Molybdenum sales (tonnes)7,327 7,908 +7.9% y/y
Zinc mined (tonnes)31,078 45,482 +46.3% y/y
Silver sales (000 oz)5,190 6,324 +21.9% y/y
Copper share of sales (value)—73%CFO remark

Cash Flow and Capex

KPIQ3 2024Q3 2025
Cash from Operations ($USD Millions)$1,439.4 $1,559.6
Capital Investments ($USD Millions)$246.4 $349.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash cost before by-product credits ($/lb)Q4 2025NA~$2.15–$2.20New/clarified (lower vs Q3 actual $2.23/lb)
Copper production (kt)FY 2025NA~960Maintained/confirmed level (slightly below plan; ~2% below 2024 final plan)
Copper production (kt)FY 2026 (under review)NA~911Initial outlook (under review)
Capex ($B)FY 2026NA~2.0New outlook; includes Tía María ~$0.866B
DividendQ4 2025 payout$0.80 cash + 0.0101 stock (Q2) $0.90 cash + 0.0085 stockCash dividend raised; stock dividend adjusted
Tía María permits2025NAExploitation authorization receivedMilestone achieved; ramp through 2027

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Tariffs/macroMonitoring U.S. trade policy; positioning to navigate volatility “Recent U.S. tariff policy changes have thus far had a limited impact” Risk noted, impact limited
By-product strategy (Buenavista zinc)Zinc mined +49% (Q1); +56% (Q2), new concentrator emphasized Zinc mined +46.3% y/y; Buenavista zinc concentrator operating at full capacity, prioritizing Zn/Ag vs Cu Sustained focus; cost tailwind
Copper grades/productionQ1/Q2 commentary on mixed grades and modest declines Copper mined -6.9% q/q; grade-driven declines in Peru/Mexico, and Buenavista prioritization of Zn/Ag Persistent headwind near term
Tía María projectProgressing early works; jobs and local sourcing (Q1/Q2) Exploitation authorization granted; ramp planned through 2027; financing likely via debt Acceleration toward execution
ESG credentialsCDP climate/water ratings maintained (Q1); FTSE4Good inclusions (Q2) S&P Global CSA rating +4 points; leading sector positioning Momentum improving
Capital returnsQuarterly hybrid dividends ongoing Cash dividend raised to $0.90; stock dividend continues Higher cash payout

Management Commentary

  • Chairman German Larrea: “We are very pleased with our third-quarter results, where our performance delivered new Company records for net sales, adjusted EBITDA and net income… The combination of higher production volumes and better copper and by-product prices enabled us to achieve a cash cost of $0.42 per pound of copper in 3Q25, one of the industry’s lowest.”
  • CFO Raul Jacob on cost and market: “cash cost of $0.42 per pound… one of the industry's lowest,” and a copper market deficit of “almost 400,000 tonnes” with inventories covering ~8 days of demand .
  • On Tía María: exploitation authorization obtained; ramp through 2027; financing likely via debt given lowering rates .
  • On 2026 outlook: initial copper forecast ~911kt; 2026 capex ~$2B including ~$866M for Tía María .

Q&A Highlights

  • Costs: Q4 cash cost before by-product credits guided to ~$2.15–$2.20/lb (down from ~$2.23/lb in Q3), with partial production recovery in Peru expected .
  • Mix/strategy: Buenavista concentrator dedicated to maximizing zinc/silver in 2025 given ore grades, reducing copper output vs 2024; silver production target raised to 23Moz (+10% y/y) .
  • 2026 planning: Copper ~911kt (under review); capex ~$2.0B with ~$866M for Tía María; potential financing via debt markets .
  • Growth pipeline: Tía María ramp in 2027; El Pilar expected 2028; El Arco into 2029; actions contemplated to mitigate long-term ore grade decay (e.g., potential Cuajone concentrator line, $600–$700M for ~40kt, not yet board-approved) .
  • Dividends/hedging: Stock dividend continues to supplement cash payouts; no current hedging plans (past used zero-cost collar) .

Estimates Context

  • Q3 2025 actuals vs S&P Global consensus: revenue $3,377.3M vs $3,209.7M*; EPS $1.35 vs $1.2462* — both beats, aided by by-product uplift and price strength .
  • Street models likely raise by-product contribution, lower net cash cost trajectory, and modestly temper copper volumes near term given grade headwinds; 2026 capex uplift and 2027 ramp for Tía María to be incorporated .
  • Asterisk indicates values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quality beat with record revenue/EBITDA/NI and a marked cost-down to $0.42/lb net, primarily from by-product strength — a potent positive for FY25 FCF conversion .
  • The dividend story is strengthening: cash dividend raised to $0.90, reinforcing returns while preserving capacity for a ~$2B capex year in 2026 .
  • Near-term copper volumes remain pressured by grades and Buenavista mix, but 2027+ trajectory improves with Tía María; early execution milestones (permit) reduce project risk .
  • 2026 looks like an investment year (capex ~$2B) — expect transient FCF compression before Tía María contributions; financing likely via debt at improving rate backdrops .
  • Macro tailwinds intact: management sees a copper deficit (~400kt) and lean inventories (~8 days), supporting constructive price assumptions amid limited tariff impact to date .
  • Watchlist: Q4 cash cost progression (pre-credit $/lb), Peru production recovery, Buenavista mix, final 2026 production outlook in January, and Tía María execution cadence .

References:

  • Q3 2025 8-K and press release: financials, costs, production, dividend, Tía María permit
  • Q3 2025 Earnings call transcript: market deficit/inventories, cash cost trajectory, 2025/2026 volume/capex, project pipeline, dividends/hedging
  • Prior quarters (Q2/Q1 2025) for trend: sales/EBITDA, cash cost, dividend baseline, by-product ramp, ESG recognitions

*Values retrieved from S&P Global.