Southern Copper Q2 2025 slides: Net income rises despite sales dip, dividends increase

Southern Copper Corporation (NYSE:SCCO) presented its second quarter 2025 results on July 30, revealing modest net income growth despite a slight decline in sales, while announcing increased dividend payouts for shareholders. The company’s stock fell 6.33% following the presentation, closing at $90.54.

Market Context & Performance Highlights

Southern Copper reported Q2 2025 net sales of $3.051 billion, representing a 2% year-over-year decrease from Q2 2024, primarily due to lower copper prices. Despite this revenue decline, the company achieved a 2% increase in net income to $973 million, demonstrating improved operational efficiency.

The company highlighted several market factors affecting copper demand, including an expected market deficit in 2025, low copper inventories (currently covering only 6 days of consumption), and new demand from decarbonization and artificial intelligence technologies. However, Southern Copper also noted potential headwinds from US-China trade tensions and the possibility of tariffs on US copper imports.

As shown in the following chart detailing copper market conditions:

Production & Financial Results

Southern Copper’s Q2 2025 production results showed mixed performance across its metal portfolio. Copper production reached 238,980 tons, down 1% year-over-year, while molybdenum production increased 4% to 7,919 tons. The company reported particularly strong growth in zinc production, which surged 56% to 45,899 tons, and silver production, which rose 15% to 6.0 million ounces.

The following production data illustrates these trends:

On the financial front, Southern Copper achieved significant cost reductions, with operating costs decreasing 3% year-over-year to $1.464 billion. Most notably, cash cost per pound of copper fell 17% to $0.63, enhancing profitability despite lower sales. EBITDA remained relatively stable at $1.791 billion, representing a marginal 0.3% decrease from the previous year.

The company’s financial results are summarized in the following table:

When comparing quarterly performance, Southern Copper showed sequential improvement in several metrics. While sales decreased 2% from Q1 2025, EBITDA increased 3% and net income grew 3% quarter-over-quarter, indicating strengthening operational performance.

The key financial highlights are illustrated below:

Capital Investment Strategy

Southern Copper outlined an ambitious capital investment program aimed at expanding production capacity through 2032. The company has board-approved projects expected to add 156,000 tons of copper production, with additional projects potentially adding 545,000 tons.

Major investments include the Tía María project in Peru (120,000 tons copper capacity, $1.8 billion investment, targeted for 2027), El Arco in Mexico (190,000 tons copper capacity, $2.9 billion investment, targeted for 2030), and Michiquillay in Peru (225,000 tons copper capacity, $2.5 billion investment, targeted for 2032).

The timeline for these capital investments is shown below:

Dividend Policy & Shareholder Returns

In a move that contrasts with its modest sales performance, Southern Copper announced an increase in its quarterly dividend to $1.50 for Q2 2025, with a further increase to $1.80 planned for Q3 2025. This represents a significant increase from the $1.20 paid in Q2 2024 and reflects the company’s commitment to shareholder returns.

The company’s annual dividend yield for 2025 is projected at 6.4%, up from 4.6% in 2024 and 5.4% in 2023, making it an attractive option for income-focused investors despite recent stock price volatility.

The dividend history and projections are illustrated in the following chart:

ESG Initiatives & Market Outlook

Southern Copper highlighted its environmental, social, and governance (ESG) efforts, noting that its Sustainable Development Report was verified by an independent third party. The company has been included in several sustainability indices, including FTSE4Good Developed, FTSE4Good US, and FTSE4Good US 100.

On the social front, Southern Copper reported creating 1,367 jobs in the Tía María mining project, emphasizing its commitment to local community development.

Looking ahead, the company maintains an optimistic outlook for copper demand, citing low global inventories and increasing demand from emerging technologies. However, the stock’s 6.33% decline following the presentation suggests investors may have concerns about near-term challenges, including potential US-China trade tensions and their impact on copper prices.

This cautious market reaction comes despite Southern Copper’s improved profitability metrics and increased dividend payouts, potentially reflecting broader economic uncertainties affecting the mining sector.

Full presentation:

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