Jul. 30 (Bloomberg) –Southern Copper Corp. (SCCO), the largest producer of the metal in Peru and Mexico, said second-quarter profit more than doubled after copper prices and output increased.
Net income climbed to $658 million, or 78 cents a share, from $313.4 million, or 37 cents, from the same period a year earlier, the Phoenix-based company said today in an e-mailed statement. Profit, excluding items, was expected to be 74 cents a share, the average estimate of nine analysts in a Bloomberg survey.
Sales increased 54 percent to $1.8 billion from $1.17 billion as New York-traded copper futures averaged 30 percent higher in the quarter than a year ago and silver prices doubled. Southern also benefited from the restart of its Buenavista copper mine in Mexico, following a three-year strike. The mine was formerly known as Cananea.
"It was a strong quarter thanks to both higher prices and production," Daniel Mori, a mining analyst at Lima-based brokerage Inteligo SAB, said in a phone interview before the report was released. "But the company isn't getting the full benefit of prices due to its conservative hedging policy."
Southern hedged 32 percent of its 2011 copper output at $4.08 per pound and 30 percent with an average floor price of $3.02 a pound and a maximum price of $4.84 a pound. The remaining 38 percent isn't hedged.
Mori, who rates the stock a "buy," doesn't own any.
Copper for September delivery rose 1 cent to $4.4795 a pound yesterday on the Comex division of the New York Mercantile Exchange.
(Southern Copper will hold its quarterly conference call Aug. 2 at 11 a.m. New York time. To call from outside the U.S.: 1-631-813-4732, Code: 85153941. For U.S. participants: 1-866- 371-3858.)