Exhibit 99.1
LIMA, PERU, July 18, 2005- Southern Peru Copper Corporation (NYSE and LSE: PCU) (SPCC) today reported net earnings of $307.2 million, or diluted earnings per share of $2.09, for the second quarter of 2005 compared with $239.6 million, or diluted earnings per share of $1.63, for the second quarter of 2004. For the first half of 2005, net earnings were $605.6 million, or diluted earnings per share of $4.11, compared to $422.6 million, or diluted earnings per share of $2.87 in 2004.
Sales of products were $958.0 million in the second quarter of 2005 compared with $722.2 million in the second quarter of 2004, an increase of 32.6% over the 2004 period. Sales of products for the first half of 2005 were $1,904.1 million compared with $1,324.7 million for the same period of the previous year, an increase of 43.7%.
The average price for copper on the London Metal Exchange (LME) in the second quarter of 2005 was $1.54 per pound compared with $1.27 per pound in the 2004-second quarter. The average price for copper on the New York Commodity Exchange (COMEX) in the second quarter of 2005 was $1.53 per pound, compared with $1.23 per pound in the second quarter of 2004. The average price for zinc on the LME in the second quarter of 2005 was $0.58 per pound compared with $0.47 per pound in the 2004-second quarter. The average Metals Week Mean price for molybdenum one of SPCC’s principal by-products, was $35.27 per pound in the second quarter of 2005, compared with $14.57 per pound in the second quarter of 2004. The price of silver, on the COMEX was higher at $7.16 per ounce in the second quarter of 2005, compared with $6.25 per ounce in the second quarter of 2004.
Mine copper production decreased 7.7% to 371.9 million pounds in the second quarter of 2005 compared with the second quarter of last year. This decrease of 31.0 million pounds included 34.5 million pounds from the Peruvian
operations partially offset by an increase of 3.5 million pounds from Mexican mines. The decrease in Peruvian mine production was the result of lower ore grades in the 2005 period. The increase of 1.7 million pounds in the production from the Mexican mines was due to higher ore milled despite of lower ore grade. In addition, an increase of 1.8 million pounds in SX/EW plant production was due to higher volume of PLS processed partially offset by lower grade of PLS.
Reporting on the Company’s modernization program, Mr. Oscar Gonzalez Rocha, President and CEO of SPCC, said “The Ilo smelter modernization project is moving ahead on schedule with detailed engineering almost completed and preliminary construction work in process in order to finish by the end of 2006; however, the anode casting wheels part of this project is scheduled to be completed in the fourth quarter of this year and we will replace blister bar production with anodes. This will allow us to directly feed the refinery and eliminate the current cost of re-smelting blister into anode form. Additionally the Company’s leaching dumps, crushing and conveying project at the Toquepala mine is also progressing on schedule. The leaching dumps project investment through June 2005 is $60.6 million. This project is nearing completion and is expected to be operational in the third quarter of this year, with projected annual operating cost saving of $25 million.”
On April 1, 2005, SPCC completed its acquisition of Minera Mexico (MM) pursuant to the Agreement and Plan of Merger (Agreement), dated as of October 21, 2004. SPCC acquired a 99.1463% interest in MM in exchange for the issuance of 67,207,640 shares of common stock. Grupo Mexico’s interest in SPCC, through subsidiaries, increased from 54.2% to 75.1%. In addition, in compliance with the Agreement, SPCC paid a $100 million transaction dividend and MM reduced its outstanding net debt to less than $1.0 billion.
Southern Peru Copper Corporation
SUMMARY OF EARNINGS
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||||||
|
| 2005 |
| 2004 |
| % |
| 2005 |
| 2004 |
| % |
| ||||
|
| (in millions, except for per share data) |
| ||||||||||||||
Sales |
| $ | 958.0 |
| $ | 722.2 |
| 32.7 |
| $ | 1,904.1 |
| $ | 1,324.7 |
| 43.7 |
|
|
|
|
|
|
|
|
|
|
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|
|
|
| ||||
Earnings before taxes on income and minority interest of investment shares |
| 419.2 |
| 334.0 |
| 38.5 |
| 865.4 |
| 578.1 |
| 57.2 |
| ||||
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|
|
|
|
|
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|
|
|
|
|
|
| ||||
Taxes on income |
| 110.7 |
| 90.5 |
| 70.3 |
| 256.8 |
| 147.8 |
| 103.1 |
| ||||
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|
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|
|
|
|
|
|
|
| ||||
Minority interest of investment shares |
| 1.3 |
| 3.9 |
| (66.7 | ) | 3.0 |
| 7.7 |
| (61.0 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net earnings |
| 307.2 |
| 239.6 |
| 28.2 |
| 605.6 |
| 422.6 |
| 43.3 |
| ||||
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| ||||
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Weighted average common shares outstanding (Basic) |
| 147.2 |
| 147.2 |
|
|
| 147.2 |
| 147.2 |
|
|
| ||||
Weighted average common shares outstanding (Diluted) |
| 147.2 |
| 147.2 |
|
|
| 147.2 |
| 147.2 |
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Per common share amounts: |
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|
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|
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|
|
| ||||
Net earnings - Basic and Diluted |
| $ | 2.09 |
| $ | 1.63 |
|
|
| $ | 4.11 |
| $ | 2.87 |
|
|
|
Dividends paid |
| $ | 2.38 |
| $ | 0.54 |
|
|
| $ | 3.63 |
| $ | 0.81 |
|
|
|
Southern Peru Copper Corporation
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
|
| Three Months Ended |
|
|
| Six Months Ended |
|
|
| ||||||||
|
| 2005 |
| 2004 |
| % |
| 2005 |
| 2004 |
| % |
| ||||
|
| (in thousands, except for per share data) |
| ||||||||||||||
Net sales |
| $ | 958,012 |
| $ | 722,225 |
| 33 |
| $ | 1,904,087 |
| $ | 1,324,748 |
| 44 |
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| ||||
Operating costs and expenses: |
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|
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|
|
|
|
|
|
|
| ||||
Cost of sales (exclusive of depreciation, amortization and depletion, shown separately below) |
| 413,929 |
| 311,706 |
| 33 |
| 803,499 |
| 574,340 |
| 40 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative expenses |
| 20,683 |
| 17,380 |
| 19 |
| 39,003 |
| 33,998 |
| 15 |
| ||||
Depreciation, amortization and depletion |
| 70,544 |
| 47,769 |
| 48 |
| 131,511 |
| 95,300 |
| 38 |
| ||||
Exploration |
| 5,496 |
| 3,257 |
| 69 |
| 10,844 |
| 6,920 |
| 57 |
| ||||
Total operating costs and expenses |
| 510,652 |
| 380,112 |
| 34 |
| 984,857 |
| 710,558 |
| 39 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 447,360 |
| 342,113 |
| 31 |
| 919,230 |
| 614,190 |
| 50 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
| (18,239 | ) | (31,122 | ) | (41 | ) | (43,505 | ) | (61,897 | ) | (30 | ) | ||||
Capitalized interest |
| 2,684 |
| 1,466 |
| 83 |
| 4,953 |
| 2,803 |
| 77 |
| ||||
Gain (loss) on derivative instruments |
| (4,845 | ) | — |
| — |
| (12,121 | ) | — |
| — |
| ||||
Gain (loss) on debt prepayments |
| (5,674 | ) | — |
| — |
| (9,694 | ) | — |
| — |
| ||||
Other income (expense) |
| (5,133 | ) | 19,278 |
| 99 |
| (1,993 | ) | 19,446 |
| 113 |
| ||||
Interest Income |
| 3,038 |
| 2,289 |
| 33 |
| 8,490 |
| 3,625 |
| 134 |
| ||||
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| ||||
Earnings before taxes on income and minority interest |
| 419,191 |
| 334,024 |
| 38 |
| 865,360 |
| 578,167 |
| 57 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Taxes on income |
| 110,635 |
| 90,546 |
| 70 |
| 256,756 |
| 147,800 |
| 103 |
| ||||
Minority interest of investment shares |
| 1,335 |
| 3,918 |
| (66 | ) | 3,022 |
| 7,729 |
| (61 | ) | ||||
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| ||||
|
|
|
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|
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|
|
|
|
|
| ||||
Net earnings |
| $ | 307,221 |
| $ | 239,560 |
| 28 |
| $ | 605,582 |
| $ | 422,638 |
| 43 |
|
|
|
|
|
|
|
|
|
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|
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| ||||
Per common share amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net earnings - basic and diluted |
| $ | 2.09 |
| $ | 1.63 |
| 28 |
| $ | 4.11 |
| $ | 2.87 |
| 43 |
|
Dividends paid |
| $ | 2.38 |
| $ | 0.54 |
| 341 |
| $ | 3.63 |
| $ | 0.81 |
| 348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding (basic) |
| 147,226 |
| 147,222 |
|
|
| 147,226 |
| 147,222 |
|
|
| ||||
Weighted average common shares outstanding (diluted) |
| 147,226 |
| 147,231 |
|
|
| 147,226 |
| 147,231 |
|
|
| ||||
Southern Peru Copper Corporation
CONDENSED COMBINED BALANCE SHEET
(Unaudited)
|
| June 30, |
| December 31, |
| ||
|
| 2005 |
| 2004 |
| ||
|
| (in thousands) |
| ||||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents (1) |
| $ | 471,168 |
| $ | 710,707 |
|
Marketable securities |
| — |
| 45,267 |
| ||
Accounts receivable, net |
| 317,181 |
| 474,224 |
| ||
Inventories |
| 366,046 |
| 352,377 |
| ||
Other current assets,net |
| 233,414 |
| 52,966 |
| ||
Total current assets |
| 1,387,809 |
| 1,635,541 |
| ||
|
|
|
|
|
| ||
Property, net |
| 3,109,551 |
| 3,068,486 |
| ||
Capitalized mine stripping costs, net |
| 315,009 |
| 318,116 |
| ||
Intangible assets, net |
| 266,388 |
| 258,117 |
| ||
Other assets, net |
| 54,912 |
| 38,933 |
| ||
Total Assets |
| $ | 5,133,669 |
| $ | 5,319,193 |
|
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|
|
|
| ||
LIABILITIES |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Current portion of long-term debt |
| $ | 50,186 |
| $ | 152,314 |
|
Accounts payable |
| 216,311 |
| 142,362 |
| ||
Accrued income taxes |
| 244,738 |
| 293,295 |
| ||
Accrued liabilities |
| 227,865 |
| 373,947 |
| ||
Total current liabilities |
| 739,100 |
| 961,918 |
| ||
|
|
|
|
|
| ||
Long-term debt |
| 1,070,433 |
| 1,177,974 |
| ||
Deferred income taxes |
| 309,947 |
| 243,600 |
| ||
Other liabilities and reserves |
| 30,284 |
| 105,179 |
| ||
Asset retirement obligation |
| 5,830 |
| 5,643 |
| ||
Total non-current liabilities |
| 1,416,494 |
| 1,532,396 |
| ||
|
|
|
|
|
| ||
MINORITY INTEREST |
| 10,765 |
| 11,284 |
| ||
|
|
|
|
|
| ||
STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
Common stock (a) |
| 723,326 |
| 725,150 |
| ||
Retained earnings |
| 2,243,984 |
| 2,088,445 |
| ||
Total stockholders’ equity |
| 2,967,310 |
| 2,813,595 |
| ||
Total Liabilities, Minority Interest and Stockholders’ Equity |
| $ | 5,133,669 |
| $ | 5,319,193 |
|
(1) |
| The decrease in cash and cash equivalents is primarily a result of dividends paid, as well as our final 2004 income tax payment of $172 million. |
Southern Peru Copper Corporation
METAL PRODUCTION AND SALES
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2005 |
| 2004 |
| % |
| 2005 |
| 2004 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper (000s pounds) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mined |
| 371,900 |
| 402,900 |
| (7.7 | ) | 728,500 |
| 799,800 |
| (8.9 | ) |
Refined |
| 359,900 |
| 335,100 |
| 7.4 |
| 714,900 |
| 663,400 |
| 7.8 |
|
Sales |
| 377,200 |
| 412,900 |
| (8.6 | ) | 737,500 |
| 764,200 |
| (3.5 | ) |
|
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Silver (000s ounces) |
|
|
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|
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|
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Mined |
| 4,507 |
| 7,288 |
| (38.2 | ) | 9,160 |
| 9,349 |
| (2.0 | ) |
Refined |
| 2,207 |
| 1,913 |
| 15.4 |
| 4,048 |
| 3,404 |
| 18.9 |
|
Sales |
| 4,721 |
| 5,015 |
| (5.9 | ) | 9,700 |
| 10,000 |
| (3.0 | ) |
|
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Molybdenum (000s pounds) |
|
|
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|
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|
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|
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Mined |
| 7,921 |
| 7,081 |
| 11.9 |
| 16,786 |
| 14,134 |
| 18.8 |
|
Sales |
| 7,220 |
| 7,233 |
| (0.2 | ) | 15,946 |
| 14,173 |
| 12.5 |
|
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Zinc (000s pounds) |
|
|
|
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|
|
|
|
|
|
|
|
Mined |
| 81,800 |
| 73,900 |
| 10.7 |
| 158,300 |
| 147,600 |
| 7.2 |
|
Refined |
| 43,600 |
| 48,200 |
| (9.5 | ) | 103,600 |
| 108,700 |
| (4.7 | ) |
Sales |
| 79,000 |
| 69,000 |
| 14.5 |
| 158,200 |
| 134,300 |
| 17.8 |
|
Southern Peru Copper Corporation
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| June 30, |
| June 30, |
| ||||||||
|
| 2005 |
| 2004 |
| 2005 |
| 2004 |
| ||||
|
| (in thousands) |
| (in thousands) |
| ||||||||
|
|
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|
|
|
|
|
|
| ||||
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
| ||||
Net earnings |
| $ | 307,221 |
| $ | 239,560 |
| $ | 605,582 |
| $ | 422,638 |
|
Depreciation, amortization and depletion |
| 70,544 |
| 47,769 |
| 131,511 |
| 95,300 |
| ||||
Capitalized mine stripping |
| (12,827 | ) | (11,125 | ) | (23,609 | ) | (17,708 | ) | ||||
Minority interest of investment shares |
| 1,335 |
| 3,918 |
| 3,022 |
| 7,729 |
| ||||
Cash provided from (used for) operating assets and liabilities |
| (188,755 | ) | 50,452 |
| (195,376 | ) | (34,242 | ) | ||||
Other, net |
| 48,104 |
| 19,968 |
| 65,110 |
| 33,724 |
| ||||
Net cash provided from operating activities |
| 225,622 |
| 350,542 |
| 586,240 |
| 507,441 |
| ||||
|
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|
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|
|
|
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|
| ||||
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
| ||||
Capital expenditures |
| (97,000 | ) | (63,902 | ) | (195,162 | ) | (133,076 | ) | ||||
Other, net |
| (14,862 | ) | (7,380 | ) | 28,912 |
| (7,249 | ) | ||||
Net cash used for investing activities |
| (111,862 | ) | (71,282 | ) | (166,250 | ) | (140,325 | ) | ||||
|
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| ||||
FINANCING ACTIVITIES: |
|
|
|
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|
|
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|
| ||||
Debt incurred (repaid) |
| (99,562 | ) | (185,148 | ) | (218,605 | ) | (193,790 | ) | ||||
Escrow (deposits) withdrawals on long-term loans |
| (311 | ) | (241 | ) | (311 | ) | (5,241 | ) | ||||
Dividends paid |
| (350,043 | ) | (43,368 | ) | (450,043 | ) | (64,973 | ) | ||||
Distribution to minority interest |
| (2,729 | ) | (339 | ) | (3,509 | ) | (507 | ) | ||||
Treasury stock and investment share purchases, net |
| 123 |
| (22 | ) | 123 |
| (27 | ) | ||||
Net cash provided from (used for) financing activities |
| (452,522 | ) | (229,118 | ) | (672,345 | ) | (264,538 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Effect of exchange rate changes on cash |
| 596 |
| 284 |
| 12,816 |
| 832 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net increase in cash and cash equivalents |
| (338,166 | ) | $ | 50,426 |
| (239,539 | ) | $ | 103,410 |
| ||
