Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Grupo Mexico SAB de CV (GMBXF, Financial) reported double-digit increases in consolidated results for both the first half and the second quarter of 2024.
- The mining division showed outstanding results, contributing significantly to the overall performance.
- The Fenicias wind farm has started commercial operations, expected to reduce 250,000 tons of CO2 emissions annually.
- The Buenavista mines received multiple certifications for responsible production, enhancing the company's ESG credentials.
- The company maintains a solid balance sheet with low leverage and a net debt to EBITDA ratio of 0.2 times.
Negative Points
- Higher costs were incurred due to an unprecedented number of migrants entering Mexico, affecting the transportation division.
- The transportation division's EBITDA margin decreased to 43.3%, impacted by the immigration crisis.
- The company faces challenges in the copper market, including production cuts and weakness in China's real estate market.
- Molybdenum and zinc prices decreased by 23% and 7%, respectively, during the first half of the year.
- The company has not yet implemented a share buyback program, despite strong cash flows and a robust balance sheet, leading to investor frustration.
Q & A Highlights
Q: Is the infrastructure division interested in the (inaudible) process?
A: There are no specific comments on that transaction. We continuously evaluate growth opportunities in our infrastructure division, including real estate, but no specific comments on that process. - Francisco Zinser Gonzalez, Chief Executive Officer - Infrastructure
Q: What are the plans for the company's strong cash flow and robust balance sheet?
A: We review the quarterly dividend based on cash generation, needs, and CapEx. We prioritize growth projects like TÃa Maria. Dividends have increased by 22% in the first half of the year compared to last year. - Marlene Finny de la Torre, Chief Financial and Administrative Officer
Q: Why is the company not buying back shares given the big discount to the sum of the parts?
A: We have analyzed and done share buybacks in the past. We are looking into the fine details and tax implications to avoid any problems. - Marlene Finny de la Torre, Chief Financial and Administrative Officer
Q: What is the absolute number of shares held by AMC of Southern Copper at the end of the quarter?
A: AMC holds 694.5 million shares of Southern Copper, representing an 88.91% ownership. - Marlene Finny de la Torre, Chief Financial and Administrative Officer
Q: What is the absolute number of treasury shares held by Grupo México Transportes at the end of the quarter?
A: GMXT has repurchased 940,000 shares this year. We will provide the exact number of treasury shares later. - Marlene Finny de la Torre, Chief Financial and Administrative Officer
Q: How sustainable are the EBITDA and EBITDA margin of the infrastructure division?
A: EBITDA margins are sustainable between 50% and 55%. The second quarter had a one-off impact due to exchange rate fluctuations, but other factors like Fenicias coming online and higher tariffs in oil rigs are sustainable. - Francisco Zinser Gonzalez, Chief Executive Officer - Infrastructure
Q: Can you provide guidance for ASARCO for the rest of the year and forward?
A: For the rest of the year, ASARCO should produce around 57,000 tons of copper, and for next year, around 116,000 tons. - Leonardo Contreras Lerdo De Tejada, Chief Executive Officer of ASARCO and Chief Financial Officer of AMC
Q: What are the company's plans to address the discount to the sum of the parts?
A: We are continuously analyzing share buybacks and other alternatives, considering tax implications and other fine details. - Marlene Finny de la Torre, Chief Financial and Administrative Officer
Q: What is the impact of the immigration crisis on the transportation division?
A: The immigration crisis caused high levels of congestion, higher costs, and impacted operating metrics and financials. We are in constant dialogue with authorities to address this issue. - Alberto Vergara, Chief Financial Officer, GMXT
Q: Can you elaborate on the financial highlights of the infrastructure division?
A: Sales reached $388 million, a 16% increase. EBITDA totaled $229 million, a 41.5% increase. The division's strong performance is due to the start of commercial operations in the Fenicias wind farm and higher tariffs in oil rigs. - Francisco Zinser Gonzalez, Chief Executive Officer - Infrastructure
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
