Southern Copper (SCCO) Q4 Earnings In Line, Sales Rise Y/Y

Southern Copper Corporation (NYSE:SCCO) reported net loss of $287.5 million or 37 cents per share for the fourth quarter of 2017, as against net earnings of $171.9 million or 22 cents a year ago. The bottom line in the reported quarter was affected by a one-time income tax reform adjustment of $743.3 million resulting from the new U.S. income tax legislation.

Barring one-time items, adjusted earnings came in at 59 cents per share for the quarter, which came in line with the Zacks Consensus Estimate.

Net sales went up 33.3% year over year in the quarter to $1,864.3 million, topping the Zacks Consensus Estimate of $1,808 million. Revenues were driven by higher sales volume of copper and zinc along with better prices for copper, zinc and molybdenum.

Full-Year 2017 Results

For full-year 2017, Southern Copper reported net income of $728.5 million or 94 cents per share, down from net income of $776.5 million or $1.00 in 2016.

Revenues for the full year went up roughly 23.7% year over year to $6,654.5 million.

Southern Copper Corporation Price, Consensus and EPS Surprise

Southern Copper Corporation Price, Consensus and EPS Surprise | Southern Copper Corporation Quote

Operating Highlights

Copper: Southern Copper produced 237,307 tons of copper in the fourth quarter, up 4.2% year over year. The company sold 222,416 tons of copper during the quarter, up 5.7% year over year.

Molybdenum: Southern Copper sold 5,183 tons of molybdenum during the quarter, down 1.8% year over year.

Zinc: The company’s zinc sales went up 19.8% year over year to 33,050 tons in the fourth quarter.

Silver: Southern Copper’s silver sales went down 12.5% year over year to 3,986,000 ounces in the fourth quarter.

Financials

The company’s net cash from operating activities in 2017 increased more than two-fold year-over-year to $1,976.6 million.

Cash and cash equivalents rose nearly two-fold year over year to $1,004.8 million at the end of 2017. Long-term debt slightly increased to $5,957.1 million in 2017 from $5,954.2 million in 2016.

Outlook

During 2017, Southern Copper continued to witness the benefits of cost-reduction programs and expansion actions. The company is looking forward to complete the Peruvian Toquepala expansion project in 2018, which will add 100,000 tons to its annual copper production and lower cash costs per pound of copper.

According to Southern Copper, the company is well poised to deliver improved performance, sustainable growth and greater value. Moreover, the company is confident of attaining 1.5 million copper tons by 2023 on the back of low cost operations, high quality reserve base and robust capital structure that provides financial and strategic flexibility.

Price Performance

Shares of Southern Copper have moved up 20.6% in the last six months, outperforming the industry’s 17.2% growth.

Zacks Rank & Stocks to Consider

Southern Copper currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Methanex Corporation (NASDAQ:MEOH) , Steel Dynamics, Inc. (NASDAQ:STLD) and LyondellBasell Industries N.V. (NYSE:LYB) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. Its shares soared 28.1% over the last six months.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have moved up 28.4% in a year’s time.

LyondellBasell has an expected long-term earnings growth rate of 9%. Its shares gained 22.1% over the last six months.

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