Grupo México SAB de CV on Feb. 2 reported a net profit of US$125.3 million for the fourth quarter of 2017, down 4% from US$130.5 million a year earlier.
Net sales rose 32.7% year over year to US$2.74 billion from US$2.06 billion, with EBITDA increasing 49.8% to US$1.36 billion from US$909.5 million. Results for the quarter also included a US$243.4 million gain on investments compared to a US$21.2 million gain booked in the fourth quarter of 2016.
However, taxes took out US$1.01 billion from the company's fourth-quarter earnings, compared to a US$351.3 million charge the year before. This included nearly US$529 million due to the U.S. tax reform legislation.
On a yearly basis, Grupo México's quarterly copper production decreased 2% to 258,408 tonnes, zinc fell 18.9% to 13,876 tonnes, silver fell 18.9% to 3.1 million ounces and gold dropped 64.3% to 11,969 ounces.
For the full year, copper production fell 4.2% year over year to 1.01 million tonnes, zinc fell 7.2% to 68,665 tonnes, silver fell 9.9% to 13.7 million ounces and gold dropped 69.2% to 50,835 ounces.
Operating cash costs for the full year came in at US$1.11/lb of copper, compared to US$1.09/lb in 2016, due to rising fuel and electricity costs as well as foreign exchange appreciation.
Profits increased by 26.5% year over year to US$1.39 billion for 2017 from US$1.10 billion, despite the US$529 million charge related to U.S. tax reform.
CapEx in 2017 totaled US$3.58 billion, with US$1.17 billion spent on the group's mining segment.
In 2018, Grupo México plans US$2.58 billion in CapEx, including the completion of an expansion of its Toquepala mine in Peru which is expected to increase annual production by 100,000 tonnes to 245,000 tonnes of copper.
In a note released the same day, GBM Research analysts Rodrigo Garcilazo and Guillermo Estrada said the quarterly results were the strongest since the first quarter of 2012, thanks to increasing copper prices while costs remained under control.
The analysts wrote that Grupo México's stock price was not taking into account a long-term copper price of US$2.65/lb and maintained a "market outperformer" rating on the company.
The company's NYSE-listed Southern Copper Corp. unit swung to net loss of US$287.5 million, or 37 U.S. cents per share, for the fourth quarter of 2017, from a profit of US$171.9 million, or 22 cents per share, recorded in 2016.
The quarterly loss was attributed to a one-time, noncash income tax adjustment of US$743.3 million stemming from the U.S. tax reform legislation that resulted in cancellation of foreign tax credit carry forwards that were previously generated by taxes paid in Peru and Mexico.
Excluding this one-time adjustment, the company's quarterly net income would have been US$455.8 million, a 165.2% jump from the fourth quarter of 2016.
Southern Copper booked a 33.3% year-over-year rise in net sales in the final quarter of 2017 to US$1.86 billion, thanks to higher sales of copper and zinc, as well as due to better prices for copper, molybdenum and zinc.
"We are confident that because of the mentioned strengths of our company, we will reach 1.5 million copper tonnes by 2023, as we have presented in our 2017 strategic expansion plan," Southern Copper Chairman German Larrea said in the statement.
The unit declared a dividend of 30 U.S. cents per share for the fourth quarter of 2017, higher than the 25 cents per share reported in the third quarter.
