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PCU

PCU. Southern Copper Corporation. What do they do?.

marvin-carney
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PCU

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  1. PCU Southern Copper Corporation

  2. What do they do? • Southern Copper Corporation is an integrated copper producer. The Company produces copper, molybdenum, zinc and silver. All of its mining, smelting and refining facilities are located in Peru and in Mexico, and it conducts exploration activities in those countries and Chile. Southern Copper Corporation’s Peruvian copper operations involve mining, milling and flotation of copper ore to produce copper concentrates and molybdenum concentrates; the smelting of copper concentrates to produce anode and blister copper, and the refining of blister/anode copper to produce copper cathodes. It operates the Toquepala and Cuajone mines high in the Andes mountains. It also operates a smelter and refinery west of the Toquepala and Cuajone mines in the coastal city of Ilo, Peru. Its Mexican operations are conducted through the Company’s subsidiary, Minera Mexico S.A. de C.V. (Minera Mexico). Minera Mexico engages in the mining and processing of copper, molybdenum, zinc, silver, gold and lead.

  3. Stock Chart

  4. Financials • (In millions of USD) • Income Statement Q3(Sep '08) Annual(2007) Annual(2006) • Total Revenue 1,440.08 6,085.67 5,460.22 • Gross Profit 794.28 3,963.51 3,440.38 • Operating Income 675.95 3,480.78 3,053.20 • Net Income 417.80 2,216.37 2,037.64 • Balance Sheet • Total Current Assets 2,350.00 2,635.51 2,442.88 • Total Assets 6,346.71 6,580.56 6,376.41 • Total Current Liabilities 654.16 927.19 859.57 • Total Liabilities 2,450.27 2,732.44 2,709.81 • Total Equity 3,896.44 3,848.12 3,666.61 • Cash Flow • Net Income/Starting Line 417.80 2,216.37 2,037.64 • Cash from Operating Activities 698.78 2,703.46 2,059.31 • Cash from Investing Activities -67.71 -245.98 -725.29 • Cash from Financing Activities -574.34 -2,088.35 -1,164.30 • Net Change in Cash 25.39 386.49 146.78 Revenue and Income nearly in line with previous year. Expected to be reduced due to lower commodity prices and demand. This is already reflected in stock price. Total current assets almost fully cover all liabilities.

  5. Key Statistics Profit Margins remain strong despite huge price deterioration of copper • Q3(Sep '08) Annual(2007) Annual(TTM) • Net Profit Margin 29.19% 36.59% 32.53% • Operating Margin 46.94% 57.20% 51.75% • EBITD Margin - 61.57% 57.65% • Return on Average Assets 26.44% 34.37% 28.30% • Return on Average Equity 42.18% 58.99% 45.90% • Employees 12,134

  6. 1 year price chart - Copper One-third the price it was only 6 months ago

  7. 5 year price chart - Copper

  8. Key Stats Continued • P/E Ratio: 7.6 • Price as of today: $15.80 • Dividend & Yield: 1.36 (8.6%) • EPS: $2.09

  9. Summary • Positives: • Copper Prices are set to rebound • Large dividend of 8.6% • Strong Balance Sheet • High Margins • Insiders have purchased over 11.8 million shares in the past 2 months. • Negatives: • Copper Prices are at lowest since 2005 • Global demand for Copper is currently weak • No news that dividend would be cut. However, dividend is 65% of earnings • See news: http://biz.yahoo.com/ap/090105/southern_copper_mover.html?.v=2

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