Exhibit 99.1
FOR IMMEDIATE RELEASE
SPCC REPORTS FIRST QUARTER 2004 ECONOMIC RESULTS
LIMA, PERU, April 21, 2004 - - Southern Peru Copper Corporation (SPCC) (NYSE and LSE PCU) today reported net earnings of $86.8 million or diluted earnings per share of $1.09, for the first quarter of 2004 compared with net earnings of $18.3 million or diluted earnings per share of 23 cents for the first quarter of 2003, an increase of 374% over the 2003 period.
Sales of products were $274.1 million in the first quarter of 2004, compared with $174.8 million in the first quarter of 2003, an increase of 56.8% over the 2003 period.
The average price for copper on the London Metal Exchange in the first quarter of 2004 was $1.24 per pound, compared with 75 cents per pound in the 2003 first quarter. The average price for copper on the New York Commodity Exchange (COMEX) in the first quarter of 2004 was $1.23 per pound, compared with 76 cents per pound in the first quarter of 2003. The average price for molybdenum, one of SPCC’s principal by-products, was $8.27 per pound in the first quarter of 2004, compared to $4.06 per pound in the first quarter of 2003. The price of silver, on the COMEX was higher at $6.71 per ounce in the first quarter of 2004, compared to $4.66 per ounce during the first quarter of 2003.
Mine copper production increased 8.7% to 209 million pounds in the first quarter of 2004 compared with the first quarter of last year. This increase of 16.7 million pounds included 5.7 million pounds from the Toquepala mine, 14.5 million pounds from the Cuajone mine and a decrease of 3.5 million pounds in solvent extraction/electrowinning (SX/EW) production. The increase in Toquepala production was a result of a higher volume of material milled and higher ore grade in the 2004 period. The increase in Cuajone production was principally the result of higher ore grade in the first quarter of 2004. The main reason for the 3.5 million pound decrease in SX/EW production was lower grade of PLS (pregnant leaching solution).
Commenting on the Company’s economic results for the first quarter of 2004, Mr. Oscar González Rocha, President and General Director of SPCC said, “The improvement in earnings for the first quarter of 2004 is principally due to the significant increases in copper and molybdenum prices which began in late 2003 and have continued into 2004. Economic improvement in much of the industrial world has fueled the improvement in these prices. Increased production (10.2%) and sale (9.3%) of molybdenum also improved first quarter 2004 results as compared with the 2003 first quarter. In addition, SPCC’s mined copper production
increased by 8.7% in the first quarter of 2004 as compared with the first quarter of 2003. This, however, did not show up in first quarter sales volume, because the Company’s new program of converting copper cathodes into semi manufactured form was initiated in the first quarter of 2004 and necessitated the build up of an inventory in transit and in process. This is a one-time requirement and is not expected to reduce sales volumes in future quarters. The Company’s operating cash cost decreased to 39.9 cents per pound of copper in the first quarter of 2004 from 43 cents in the first quarter of 2003. For the reasons mentioned above, which include increases in production, increases in metal prices, and continuing reduction of production costs, the operating cash cost for this quarter was one of the lowest experienced by SPCC.”
Reporting on the Company’s modernization program, Mr. González Rocha said, “The Ilo smelter project is moving ahead on schedule with detailed engineering work in process in order to finish by the end of 2006. Additionally, the Company’s leaching project at the Toquepala mine is also progressing on schedule. An $8 million contract for construction work was awarded to Cosapi, a Peruvian construction firm, in March 2004. The contract is part of the $70 million project, which is scheduled for completion in mid-2005 and projected to save the Company $25 million in annual operating costs.”
Southern Peru Copper Corporation is one of Peru’s largest companies and one of the ten largest copper producers worldwide. The ownership of SPCC’s shares, either directly or through subsidiaries, is as follows: Grupo Mexico (54.2%), Cerro Trading Company (14.2%), Phelps Dodge (14.0%) and other shareholders (17.6%).
Southern Peru Copper Corporation
and Subsidiaries
SUMMARY OF EARNINGS
(Unaudited)
|
| Three Months Ended |
|
|
| ||||
|
| 2004 |
| 2003 |
| Variance |
| ||
|
| (in millions, except for per share data) |
| ||||||
|
|
|
|
|
|
|
| ||
Sales |
| $ | 274.1 |
| $ | 174.8 |
| 56.8 | % |
|
|
|
| �� |
|
|
| ||
Earnings before taxes on income, minority interest and cumulative effect of the change in accounting principle |
| 134.8 |
| 32.8 |
| 311.0 |
| ||
|
|
|
|
|
|
|
| ||
Taxes on income |
| 47.2 |
| 12.7 |
| 270.7 |
| ||
|
|
|
|
|
|
|
| ||
Minority interest of investment shares |
| 0.8 |
| 0.2 |
| 277.4 |
| ||
|
|
|
|
|
|
|
| ||
Earnings before cumulative effect of the change in accounting principle |
| 86.8 |
| 19.9 |
| 337.1 |
| ||
|
|
|
|
|
|
|
| ||
Cumulative effect of the change in accounting principle net of income tax |
| — |
| 1.5 |
| — |
| ||
|
|
|
|
|
|
|
| ||
Net earnings |
| $ | 86.8 |
| $ | 18.3 |
| 373.9 | % |
|
|
|
|
|
|
|
| ||
Weighted average common shares outstanding (basic) |
| 80.0 |
| 80.0 |
|
|
| ||
Weighted average common shares outstanding (diluted) |
| 80.0 |
| 80.0 |
|
|
| ||
|
|
|
|
|
|
|
| ||
Per common share amounts: |
|
|
|
|
|
|
| ||
Net earnings before cumulative effect of the change in accounting principle |
| $ | 1.09 |
| $ | 0.25 |
|
|
|
Cumulative effect of the change in accounting principle |
| — |
| 0.02 |
|
|
| ||
Net earnings – basic and diluted |
| $ | 1.09 |
| $ | 0.23 |
|
|
|
3
Southern Peru Copper Corporation
and Subsidiaries
AVERAGE METAL PRICES
|
| Three Months Ended |
| ||||||
|
| 2004 |
| 2003 |
| Variance |
| ||
|
|
|
|
|
|
|
| ||
Copper (per pound – LME) |
| $ | 1.24 |
| $ | 0.75 |
| 65 | % |
|
|
|
|
|
|
|
| ||
Copper (per pound – COMEX) |
| $ | 1.23 |
| $ | 0.76 |
| 62 | % |
|
|
|
|
|
|
|
| ||
Silver (per ounce – COMEX) |
| $ | 6.71 |
| $ | 4.66 |
| 44 | % |
|
|
|
|
|
|
|
| ||
Molybdenum (per pound – Metals Week Mean) |
| $ | 8.27 |
| $ | 4.06 |
| 104 | % |
Metal Production and Sales
|
| Three Months Ended |
| ||||
|
| 2004 |
| 2003 |
| Variance |
|
|
|
|
|
|
|
|
|
Copper (000s pounds) |
|
|
|
|
|
|
|
Mined |
| 209,000 |
| 192,300 |
| 8.7 | % |
Refined |
| 178,400 |
| 180,000 |
| (0.9 | )% |
Sales |
| 155,300 |
| 198,700 |
| (21.8 | )% |
|
|
|
|
|
|
|
|
Silver (000s ounces) |
|
|
|
|
|
|
|
Mined |
| 892 |
| 923 |
| (3.4 | )% |
Refined |
| 896 |
| 868 |
| 3.2 | % |
Sales |
| 940 |
| 979 |
| (4.0 | )% |
|
|
|
|
|
|
|
|
Molybdenum (000s pounds) |
|
|
|
|
|
|
|
Mined |
| 4,852 |
| 4,401 |
| 10.2 | % |
Sales |
| 4,862 |
| 4,448 |
| 9.3 | % |
4
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
|
| Three Months Ended |
|
|
| ||||
|
| 2004 |
| 2003 |
| Variance |
| ||
|
| (in thousands, except for per share data) |
| ||||||
|
|
|
|
|
|
|
| ||
Net sales |
| $ | 274,066 |
| $ | 174,838 |
| 57 | % |
|
|
|
|
|
|
|
| ||
Operating costs and expenses: |
|
|
|
|
|
|
| ||
Cost of sales |
| 108,796 |
| 114,685 |
| (5 | ) | ||
Administrative and other expenses |
| 7,080 |
| 6,683 |
| 6 |
| ||
Depreciation, amortization and depletion |
| 18,994 |
| 17,872 |
| 6 |
| ||
Exploration expense |
| 2,175 |
| 875 |
| 149 |
| ||
Total operating costs and expenses |
| 137,045 |
| 140,115 |
| (2 | ) | ||
|
|
|
|
|
|
|
| ||
Operating income |
| 137,021 |
| 34,723 |
| 295 |
| ||
|
|
|
|
|
|
|
| ||
Interest income |
| 1,079 |
| 713 |
| 51 |
| ||
Other income (expense) |
| (178 | ) | 337 |
| (153 | ) | ||
Interest expense |
| (3,154 | ) | (2,969 | ) | 6 |
| ||
|
|
|
|
|
|
|
| ||
Earnings before taxes on income, minority interest and cumulative effect of the change in accounting principle |
| 134,768 |
| 32,804 |
| 311 |
| ||
|
|
|
|
|
|
|
| ||
Taxes on income |
| 47,168 |
| 12,731 |
| 270 |
| ||
|
|
|
|
|
|
|
| ||
Minority interest of investment shares |
| 790 |
| 212 |
| 273 |
| ||
|
|
|
|
|
|
|
| ||
Earnings before cumulative effect of the change in accounting principle |
| 86,810 |
| 19,861 |
| 337 |
| ||
|
|
|
|
|
|
|
| ||
Cumulative effect of the change in accounting principle net of income tax |
| — |
| 1,541 |
| — |
| ||
|
|
|
|
|
|
|
| ||
Net earnings |
| $ | 86,810 |
| $ | 18,320 |
| 374 | % |
|
|
|
|
|
|
|
| ||
Per common share amounts: |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
Net earnings |
|
|
|
|
|
|
| ||
Earnings before cumulative effect of the change in accounting principle |
| $ | 1.09 |
| $ | 0.25 |
| 339.1 | % |
Cumulative effect of the change in accounting principle |
| — |
| 0.02 |
| (100.0 | ) | ||
Net earnings – basic and diluted |
| $ | 1.09 |
| $ | 0.23 |
| 376.0 |
|
Dividends paid |
| $ | 0.27 |
| $ | 0.09 |
| 193.5 |
|
|
|
|
|
|
|
|
| ||
Weighted average common shares outstanding (basic) |
| 80,014 |
| 80,009 |
|
|
| ||
Weighted average common shares outstanding (diluted) |
| 80,023 |
| 80,014 |
|
|
| ||
5
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
|
| March 31, |
| December 31, |
| |||
|
| (in thousands) |
| |||||
ASSETS |
|
|
|
|
| |||
Current assets: |
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 276,034 |
| $ | 295,472 |
| |
Accounts receivable, net |
| 146,124 |
| 89,238 |
| |||
Inventories |
| 102,197 |
| 76,692 |
| |||
Other current assets |
| 14,374 |
| 14,549 |
| |||
Total current assets |
| 538,729 |
| 475,951 |
| |||
|
|
|
|
|
| |||
Net property |
| 1,134,412 |
| 1,118,202 |
| |||
Capitalized mine stripping, net |
| 219,909 |
| 215,207 |
| |||
Intangible assets |
| 108,303 |
| 109,007 |
| |||
Other assets |
| 17,676 |
| 12,385 |
| |||
Total Assets |
| $ | 2,019,029 |
| $ | 1,930,752 |
| |
|
|
|
|
|
| |||
LIABILITIES |
|
|
|
|
| |||
Current liabilities: |
|
|
|
|
| |||
Current portion of long-term debt |
| $ | 64,884 |
| $ | 60,000 |
| |
Accounts payable |
| 58,219 |
| 48,322 |
| |||
Accrued liabilities |
| 88,756 |
| 78,875 |
| |||
Total current liabilities |
| 211,859 |
| 187,197 |
| |||
|
|
|
|
|
| |||
Long-term debt |
| 284,159 |
| 289,043 |
| |||
Deferred income taxes |
| 112,284 |
| 110,075 |
| |||
Other liabilities and reserves |
| 16,221 |
| 15,854 |
| |||
Asset retirement obligation |
| 5,361 |
| 5,267 |
| |||
Total non-current liabilities |
| 418,025 |
| 420,239 |
| |||
|
|
|
|
|
| |||
MINORITY INTEREST |
| 8,523 |
| 7,913 |
| |||
|
|
|
|
|
| |||
STOCKHOLDERS’ EQUITY |
|
|
|
|
| |||
Common stock (a) |
| 261,889 |
| 261,875 |
| |||
Retained earnings |
| 1,118,733 |
| 1,053,528 |
| |||
Total stockholders’ Equity |
| 1,380,622 |
| 1,315,403 |
| |||
Total Liabilities, Minority Interest and Stockholders’ Equity |
| $ | 2,019,029 |
| $ | 1,930,752 |
| |
|
|
|
|
|
| |||
| ||||||||
(a) Common Shares: | Authorized |
| 34,099 |
| 34,099 |
| ||
| Outstanding |
| 14,114 |
| 14,108 |
| ||
|
|
|
|
|
| |||
Class A Common Shares: Authorized and Outstanding |
| 65,901 |
| 65,901 |
| |||
6
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Three Months Ended |
| ||||
|
| 2004 |
| 2003 |
| ||
|
| (in thousands) |
| ||||
|
|
|
|
|
| ||
OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net earnings |
| $ | 86,810 |
| $ | 18,320 |
|
Cumulative effect of the change in accounting principle, net of income tax |
| — |
| 1,541 |
| ||
Depreciation, amortization and depletion |
| 18,994 |
| 17,872 |
| ||
Capitalized mine stripping |
| (6,583 | ) | (8,904 | ) | ||
Minority interest of investment shares |
| 790 |
| 212 |
| ||
Cash provided from (used for) operating assets and liabilities |
| (61,589 | ) | (16,373 | ) | ||
Other, net |
| 2,209 |
| 3,444 |
| ||
Net cash provided from operating activities |
| 40,631 |
| 16,112 |
| ||
|
|
|
|
|
| ||
INVESTING ACTIVITIES: |
|
|
|
|
| ||
Capital expenditures |
| (33,628 | ) | (9,189 | ) | ||
Other, net |
| — |
| 2 |
| ||
Net cash used for investing activities |
| (33,628 | ) | (9,187 | ) | ||
|
|
|
|
|
| ||
FINANCING ACTIVITIES: |
|
|
|
|
| ||
Escrow deposits on long-term loans |
| (5,000 | ) | — |
| ||
Dividends paid |
| (21,605 | ) | (7,361 | ) | ||
Distributions to minority interests |
| (168 | ) | (111 | ) | ||
Purchases of investment shares |
| (5 | ) | (135 | ) | ||
Net cash used for financing activities |
| (26,778 | ) | (7,607 | ) | ||
|
|
|
|
|
| ||
Effect of exchange rate changes on cash |
| 337 |
| 2,473 |
| ||
|
|
|
|
|
| ||
Net increase (decrease) in cash and cash equivalents |
| $ | (19,438 | ) | $ | 1,791 |
|
7
