By Sarah Morland
MEXICO CITY (Reuters) -Mining and transportation conglomerate Grupo Mexico reported net profit rose 10% in the second quarter, helped by lower mining costs and a good performance from its copper byproducts business even as copper production edged down.
Net profit for the group, a leading copper producer, came in at $1.23 billion from revenues that fell 4% to $4.24 billion, according to a filing dated late Monday, the latter above a $4.22 billion estimate of analysts polled by LSEG.
Earnings before interest, taxes, depreciation, and amortization for the three months through end June rose 1.4% to $2.36 billion. Analysts polled by LSEG had expected EBITDA to land at $2.22 billion.
Grupo Mexico, controlled by billionaire German Larrea, ranks among the world’s largest copper producers by volume. At midday in Mexico City, its shares were trading up 1.3%.
It maintained forecasts for an expected annual output of 1.08 million metric tons of copper, as output of the red metal over the quarter reached 267,325 tons, 1.3% less than the same period a year earlier, due to lower output at its Buenavista mine in Mexico’s northern Sonora state.
Although copper sales fell 2.9% from a year earlier, sales of molybdenum – a metal used to strengthen steel and speed petroleum refining – along with zinc and silver, rose.
The mining division’s cash cost for its primary metal, meanwhile, fell 10% from a year earlier, hitting $0.93 per pound of copper versus an average price of $4.55 per pound.
Analysts at JPMorgan pointed to “a strategic decision to prioritize zinc and silver production at Buenavista Zinc, impacting copper production,” and noted that Grupo Mexico had touted “the lowest cash costs in the copper industry, benefiting from higher byproduct credits.”
Byproduct credits refer to revenue generated from secondary metals extracted alongside a miner’s main product.
Santander analysts highlighted the lower metal extraction costs net of byproducts. “Grupo Mexico’s balance sheet remains strong,” they said.
‘OPPORTUNITY TO INVEST’
Earlier this month, U.S. President Donald Trump announced a 50% tariff on copper shipments starting August 1 in a bid to promote domestic development.
The U.S., however, depends on imports for nearly half of its refined copper needs, and homegrown projects often take years to get off the ground. Chile, Canada and Mexico are currently its main suppliers.
“There is an opportunity to invest up to $6.2 billion in the reopening and expansion of projects that align with the new mining and industrial policies of President Trump’s administration,” Grupo Mexico said in a report.