Exhibit 99.1
FOR IMMEDIATE RELEASE
LIMA, PERU, July 22, 2004 - Southern Peru Copper Corporation (NYSE: PCU and LSE: PCUC1) today reported net earnings of $120.9 million, or diluted earnings per share of $1.51, for the second quarter of 2004 compared with $21.6 million, or diluted earnings per share of 27 cents, for the second quarter of 2003. For the first half of 2004, net earnings were $207.7 million, or diluted earnings per share of $2.60, compared to $40.0 million, or diluted earnings per share of 50 cents after the cumulative effect of a change in accounting principle, which reduced earnings per share by 2 cents for the first half of 2003.
Sales of products were $389.0 million in the second quarter of 2004 compared with $168.4 million in the second quarter of 2003. Sales of products for the first half of 2004 totaled $663.1 million compared with $343.2 million for the same period of the previous year.
The average price for copper on the London Metal Exchange (LME) in the second quarter of 2004 was $1.27 per pound compared with 74 cents per pound for the same period in the prior year. The average price for copper on the New York Commodity Exchange (COMEX) in the second quarter of 2004 was $1.23 per pound, compared with 75 cents per pound in the second quarter of 2003. The average price for molybdenum, one of the Company’s principal by-products, was $14.57 per pound in the second quarter of 2004, compared with $5.21 per pound for the same period of 2003. The price of silver, another important by-product was $6.25 per ounce on the COMEX in the second quarter of 2004, compared with $4.59 per ounce in the second quarter of 2003.
Mine copper production increased 6.9% to 218 million pounds in the second quarter of 2004 compared with the second quarter of last year. This increase of 14 million pounds included 13.9 million pounds from the Toquepala mine, 3.5 million pounds from the Cuajone mine and a decrease of 3.4 million pounds in solvent extraction/electrowinning (SX/EW) production. The increase in production from the Toquepala and Cuajone mines was largely the result of higher ore grades in the 2004 period. The principal reason for the 3.4 million pound decrease in SX/EW production was lower grade of PLS (pregnant leaching solution).
Commenting on the Company’s economic results for the second quarter of 2004, Mr. Oscar González Rocha, President and General Director of SPCC said, “The improvement in earnings for the second quarter of 2004 is principally due to the continued robust metal prices and the increase in production and sales of Company products, and to the contributions of the program started in the first quarter to add value to our main product by converting copper cathodes into semi-manufactured form, (the inventory build-up for this purpose was completed in the first quarter of 2004). In addition, during the quarter the Company increased cash balances by $55.9 million despite paying off $55 million of debt. The Company, however, is concerned by the imposition of a royalty tax late in the second quarter, which may result in a slowdown of the growth of Peru’s mining industry.
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 |
| Six Months Ended |
| ||||||||||||
|
| 2004 |
| 2003 |
| % |
| 2004 |
| 2003 |
| % |
| ||||
|
| (in millions, except for per share data) |
| ||||||||||||||
Sales |
| $ | 389.0 |
| $ | 168.4 |
| 131.0 |
| $ | 663.1 |
| $ | 343.2 |
| 93.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings before taxes on income and minority interest of investment shares and non-recurring items |
| 187.8 |
| 36.0 |
| 421.7 |
| 322.5 |
| 68.8 |
| 368.8 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Taxes on income |
| 66.0 |
| 14.2 |
| 364.8 |
| 113.1 |
| 26.9 |
| 320.4 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Minority interest of investment shares |
| 0.9 |
| 0.2 |
| 350.0 |
| 1.7 |
| 0.4 |
| 325.0 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings before cumulative effect of the change in accounting principle |
| 120.9 |
| 21.6 |
| 459.7 |
| 207.7 |
| 41.5 |
| 400.5 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cumulative effect of the change in accounting principle, net of income tax |
| — |
| — |
| — |
| — |
| 1.5 |
| — |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net earnings |
| $ | 120.9 |
| $ | 21.6 |
| 459.7 |
| $ | 207.7 |
| $ | 40.0 |
| 419.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding (Basic) |
| 80.0 |
| 80.0 |
|
|
| 80.0 |
| 80.0 |
|
|
| ||||
Weighted average common shares outstanding (Diluted) |
| 80.0 |
| 80.0 |
|
|
| 80.0 |
| 80.0 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Per common share amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings before cumulative effect of the change in accounting principle |
| $ | 1.51 |
| $ | 0.27 |
|
|
| $ | 2.60 |
| $ | 0.52 |
|
|
|
Cumulative effect of the change in accounting principle |
| — |
| — |
|
|
| — |
| $ | (0.02 | ) |
|
| |||
Net earnings - Basic and Diluted |
| $ | 1.51 |
| $ | 0.27 |
|
|
| $ | 2.60 |
| $ | 0.50 |
|
|
|
Dividends paid |
| $ | 0.54 |
| $ | 0.11 |
|
|
| $ | 0.81 |
| $ | 0.21 |
|
|
|
Southern Peru Copper Corporation
and Subsidiaries
Average Metal Prices
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||
|
| 2004 |
| 2003 |
| % |
| 2004 |
| 2003 |
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Copper (per pound - LME) |
| $ | 1.27 |
| $ | 0.74 |
| 72 |
| $ | 1.25 |
| $ | 0.75 |
| 67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Copper (per pound - COMEX) |
| $ | 1.23 |
| $ | 0.75 |
| 64 |
| $ | 1.23 |
| $ | 0.75 |
| 64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Silver (per ounce - COMEX) |
| $ | 6.25 |
| $ | 4.59 |
| 36 |
| $ | 6.48 |
| $ | 4.63 |
| 40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Molybdenum (per pound - Metals Week Mean) |
| $ | 14.57 |
| $ | 5.21 |
| 180 |
| $ | 11.42 |
| $ | 4.63 |
| 147 |
|
Metal Production and Sales
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2004 |
| 2003 |
| % |
| 2004 |
| 2003 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper (000s pounds) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mined |
| 218,000 |
| 204,000 |
| 6.9 |
| 427,100 |
| 396,300 |
| 7.8 |
|
Refined |
| 174,400 |
| 182,300 |
| (4.3 | ) | 352,800 |
| 362,200 |
| (2.6 | ) |
Sales |
| 238,900 |
| 184,300 |
| 29.6 |
| 394,200 |
| 383,000 |
| 2.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver (000s ounces) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mined |
| 1,030 |
| 910 |
| 13.2 |
| 1,922 |
| 1,833 |
| 4.9 |
|
Refined |
| 968 |
| 846 |
| 14.4 |
| 1,865 |
| 1,714 |
| 8.8 |
|
Sales |
| 1,161 |
| 869 |
| 33.6 |
| 2,101 |
| 1,848 |
| 13.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (000s pounds) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mined |
| 4,859 |
| 4,683 |
| 3.8 |
| 9,711 |
| 9,083 |
| 6.9 |
|
Sales |
| 4,882 |
| 4,672 |
| 4.5 |
| 9,743 |
| 9,120 |
| 6.8 |
|
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||
|
| 2004 |
| 2003 |
| % |
| 2004 |
| 2003 |
| % |
| ||||
|
| (in thousands, except for per share data) |
| ||||||||||||||
Net sales |
| $ | 389,013 |
| $ | 168,387 |
| 131 |
| $ | 663,079 |
| $ | 343,225 |
| 7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of sales |
| 168,736 |
| 102,653 |
| 64 |
| 277,531 |
| 217,337 |
| 28 |
| ||||
Administrative and other expenses |
| 7,643 |
| 7,042 |
| 9 |
| 14,723 |
| 13,725 |
| 7 |
| ||||
Depreciation, amortization and depletion |
| 18,684 |
| 18,497 |
| 1 |
| 37,677 |
| 36,369 |
| 4 |
| ||||
Exploration expense |
| 2,414 |
| 2,280 |
| 6 |
| 4,589 |
| 3,155 |
| 45 |
| ||||
Total operating costs and expenses |
| 197,477 |
| 130,472 |
| 51 |
| 334,520 |
| 270,586 |
| 24 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 191,536 |
| 37,915 |
| 405 |
| 328,559 |
| 72,639 |
| 352 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest income |
| 1,122 |
| 813 |
| 38 |
| 2,201 |
| 1,526 |
| 44 |
| ||||
Other income (expense) |
| (1,864 | ) | 518 |
| (460 | ) | (2,043 | ) | 855 |
| (339 | ) | ||||
Interest expense |
| (3,031 | ) | (3,243 | ) | (7 | ) | (6,186 | ) | (6,212 | ) | (0 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings before taxes on income, minority interest and cumulative effect of the change in accounting principle |
| 187,763 |
| 36,003 |
| 422 |
| 322,531 |
| 68,808 |
| 369 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Taxes on income |
| 65,958 |
| 14,180 |
| 365 |
| 113,126 |
| 26,911 |
| 320 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Minority interest of investment shares |
| 894 |
| 177 |
| 405 |
| 1,684 |
| 390 |
| 332 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings before cumulative effect of the change in accounting principle |
| 120,911 |
| 21,646 |
| 459 |
| 207,721 |
| 41,507 |
| 400 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cumulative effect of the change in accounting principle, net of income tax. |
| — |
| — |
|
|
| — |
| 1,541 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net earnings |
| $ | 120,911 |
| $ | 21,646 |
| 459 |
| $ | 207,721 |
| $ | 39,966 |
| 420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Per common share amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings before cumulative effect of the change in accounting principle |
| $ | 1.51 |
| $ | 0.27 |
| 459 |
| $ | 2.60 |
| $ | 0.52 |
|
|
|
Cumulative effect of the change in accounting principle |
| — |
| — |
|
|
| — |
| (0.02 | ) |
|
| ||||
Net earnings - basic and diluted |
| $ | 1.51 |
| $ | 0.27 |
| 459 |
| $ | 2.60 |
| $ | 0.50 |
|
|
|
Dividends paid |
| $ | 0.54 |
| $ | 0.11 |
| 375 |
| $ | 0.81 |
| $ | 0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding (Basic) |
| 80,017 |
| 80,010 |
|
|
| 80,015 |
| 80,009 |
|
|
| ||||
Weighted average common shares outstanding (Diluted) |
| 80,025 |
| 80,015 |
|
|
| 80,025 |
| 80,014 |
|
|
| ||||
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2004 |
| 2003 |
| 2004 |
| 2003 |
| ||||
|
| (in thousands) |
| (in thousands) |
| ||||||||
|
|
|
|
|
|
|
|
|
| ||||
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
| ||||
Net earnings |
| $ | 120,911 |
| $ | 21,646 |
| $ | 207,721 |
| $ | 39,966 |
|
Cumulative of effect of the change in accounting principle, net of income tax |
| — |
| — |
| — |
| 1,541 |
| ||||
Depreciation, amortization and depletion |
| 18,684 |
| 18,497 |
| 37,677 |
| 36,369 |
| ||||
Capitalized mine stripping |
| (11,125 | ) | (10,338 | ) | (17,708 | ) | (19,242 | ) | ||||
Minority interest of investment shares |
| 894 |
| 177 |
| 1,684 |
| 390 |
| ||||
Cash provided from (used for) operating assets and liabilities |
| 51,553 |
| 13,231 |
| (10,036 | ) | (1,098 | ) | ||||
Other, net |
| 1,868 |
| 3,966 |
| 4,078 |
| 5,365 |
| ||||
Net cash provided from operating activities |
| 182,785 |
| 47,179 |
| 223,416 |
| 63,291 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
| ||||
Capital expenditures |
| (28,014 | ) | (6,815 | ) | (61,642 | ) | (16,004 | ) | ||||
Other, net |
| — |
| 1 |
| — |
| 3 |
| ||||
Net cash used for investing activities |
| (28,014 | ) | (6,814 | ) | (61,642 | ) | (16,001 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
| ||||
Debt incurred (repaid) |
| (55,000 | ) | 50,000 |
| (55,000 | ) | 50,000 |
| ||||
Escrow (deposits) withdrawals on long-term loans |
| (241 | ) | 183 |
| (5,241 | ) | 183 |
| ||||
Dividends paid |
| (43,368 | ) | (9,121 | ) | (64,973 | ) | (16,482 | ) | ||||
Distribution to minority interest |
| (339 | ) | (72 | ) | (507 | ) | (183 | ) | ||||
Treasury stock and investment share purchases, net |
| (22 | ) | (171 | ) | (27 | ) | (306 | ) | ||||
Net cash provided from (used for) financing activities |
| (98,970 | ) | 40,819 |
| (125,748 | ) | 33,212 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Effect of exchange rate changes on cash |
| 138 |
| 73 |
| 475 |
| 2,546 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net increase in cash and cash equivalents |
| $ | 55,939 |
| $ | 81,257 |
| $ | 36,501 |
| $ | 83,048 |
|
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
|
| June 30, |
| December 31, |
| Variance |
| ||
|
| (in thousands) |
|
|
| ||||
ASSETS |
|
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 331,973 |
| $ | 295,472 |
| 12.4 | % |
Accounts receivable, net |
| 161,568 |
| 89,238 |
| 81.1 |
| ||
Inventories |
| 96,049 |
| 76,692 |
| 25.2 |
| ||
Other current assets |
| 11,938 |
| 14,549 |
| (17.9 | ) | ||
Total current assets |
| 601,528 |
| 475,951 |
| 26.4 |
| ||
|
|
|
|
|
|
|
| ||
Net property |
| 1,144,455 |
| 1,118,202 |
| 2.3 |
| ||
Capitalized mine stripping, net |
| 229,190 |
| 215,207 |
| 6.5 |
| ||
Intangible assets |
| 107,642 |
| 109,007 |
| (1.3 | ) | ||
Other assets |
| 15,311 |
| 12,385 |
| 23.6 |
| ||
Total Assets |
| $ | 2,098,126 |
| $ | 1,930,752 |
| 8.7 | % |
|
|
|
|
|
|
|
| ||
LIABILITIES |
|
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
|
| ||
Current portion of long-term debt |
| $ | 20,694 |
| $ | 60,000 |
| (65.5 | )% |
Accounts payable |
| 61,155 |
| 48,322 |
| 26.6 |
| ||
Accrued liabilities |
| 138,210 |
| 78,875 |
| 75.2 |
| ||
Total current liabilities |
| 220,059 |
| 187,197 |
| 17.6 |
| ||
|
|
|
|
|
|
|
| ||
Long-term debt |
| 273,349 |
| 289,043 |
| (5.4 | ) | ||
Deferred income taxes |
| 114,153 |
| 110,075 |
| 3.7 |
| ||
Other liabilities and reserves |
| 17,871 |
| 15,854 |
| 12.7 |
| ||
Asset retirement obligation |
| 5,455 |
| 5,267 |
| 3.4 |
| ||
Total non-current liabilities |
| 410,828 |
| 420,239 |
| (2.2 | ) | ||
|
|
|
|
|
|
|
| ||
MINORITY INTEREST |
| 9,017 |
| 7,913 |
| 14.0 |
| ||
|
|
|
|
|
|
|
| ||
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
| ||
Common stock (a) |
| 261,946 |
| 261,875 |
| — |
| ||
Retained earnings |
| 1,196,276 |
| 1,053,528 |
| 13.5 |
| ||
Total stockholders’ equity |
| 1,458,222 |
| 1,315,403 |
| 10.9 |
| ||
Total Liabilities, Minority Interest and Stockholders’ Equity |
| $ | 2,098,126 |
| $ | 1,930,752 |
| 8.7 | % |
(a) Common Shares: | Authorized |
| 34,099 |
| 34,099 |
|
|
|
| Outstanding |
| 14,116 |
| 14,113 |
|
|
|
|
|
|
|
|
|
|
| |
Class A Common Shares: Authorized and Outstanding |
| 65,901 |
| 65,901 |
|
|
| |
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
(unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2004 |
| 2003 |
| 2004 |
| 2003 |
| ||||
|
| (in thousands) |
| (in thousands) |
| ||||||||
CAPITAL STOCK: |
|
|
|
|
|
|
|
|
| ||||
Common Stock, balance at beginning and end of period |
| $ | 143 |
| $ | 143 |
| $ | 143 |
| $ | 143 |
|
|
|
|
|
|
|
|
|
|
| ||||
Class A Common Stock, balance at beginning and end of period |
| $ | 659 |
| $ | 659 |
| $ | 659 |
| $ | 659 |
|
|
|
|
|
|
|
|
|
|
| ||||
ADDITIONAL PAID-IN CAPITAL, balance at beginning and end of period |
| $ | 265,745 |
| $ | 265,745 |
| $ | 265,745 |
| $ | 265,745 |
|
|
|
|
|
|
|
|
|
|
| ||||
TREASURY STOCK: |
|
|
|
|
|
|
|
|
| ||||
Balance at beginning of period |
| (4,658 | ) | (4,810 | ) | (4,672 | ) | (4,821 | ) | ||||
Used for corporate purposes |
| 57 |
| — |
| 71 |
| 11 |
| ||||
Balance at end of period |
| (4,601 | ) | (4,810 | ) | (4,601 | ) | (4,810 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
RETAINED EARNINGS: |
|
|
|
|
|
|
|
|
| ||||
Balance at beginning of period |
| $ | 1,118,733 |
| $ | 990,608 |
| $ | 1,053,528 |
| $ | 979,649 |
|
Net earnings |
| 120,911 |
| 21,646 |
| 207,721 |
| 39,966 |
| ||||
Dividends paid |
| (43,368 | ) | (9,121 | ) | (64,973 | ) | (16,482 | ) | ||||
Stock awards |
| — |
| — |
| — |
| — |
| ||||
|
| 1,196,276 |
| 1,003,133 |
| 1,196,276 |
| 1,003,133 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
TOTAL STOCKHOLDER’S EQUITY |
| $ | 1,458,222 |
| $ | 1,264,870 |
| $ | 1,458,222 |
| $ | 1,264,870 |
|
