UPDATE 2-Grupo Mexico Q4 profit flat on metals prices
* Sales in fourth quarter, year, up on copper production
* Profit in dollar terms flat due to metals prices in Q4
* Capex increases in mining and infrastructure in 2012
MEXICO CITY, Feb 9 (Reuters) - Mexican copper miner and railroad operator Grupo Mexico posted a flat profit in dollar terms in the fourth quarter due to lower metals prices, although sales rose on increased production at its flagship copper mine.
Net profit in dollars - the currency in which the company makes most of its sales - was $559 million in the quarter, only a 0.2 percent increase from the same period a year ago using an exchange rate calculated by the company.
"Copper prices, and those for most commodities, experienced significant lows, when compared with (the fourth quarter of 2010)," the company said in a report. "This was a result of low expectations for demand due mainly to the European debt crisis and also lower global growth expectations."
But Grupo Mexico expects copper prices to recover on strong demand from China.
A weak peso could also have hit the company's bottom line.
Sales in the fourth quarter reached $2.49 million, a 7.6 percent increase from 2010, as output at the massive Cananea mine in northern Mexico - now renamed Buenavista - ramped up after a three-year labor stoppage.
That led to a 25 percent increase in 2011 revenue.
Buenavista produced 172,488 tons of copper last year, soaring from the 20,696 tons of output in 2010, when Grupo Mexico retook control of the historic pit with the help of federal police and began work again with contractors.
The national miners union went on strike in July 2007 costing the company around 530,000 tonnes of production, or some $3.5 billion. After a bitter court battle, the walkout was ruled illegal, a claim the union still contests.
This year, copper production is expected to return to full capacity at the mine, reaching 180,000 tons, and the company plans to reassign equipment from its Tia Maria operations in Peru to expand the SX/EW plant from 88,000 to 120,000 tons.
Grupo Mexico also runs mines in Peru and the United States.
The Peruvian Tia Maria mine has been put on hold because of protests about the project's environmental impact.
Moving equipment from Tia Maria to Buenavista would cut delivery time by up to 18 months, Grupo Mexico said.
"This expansion program will increase the current capacity of the plant at Buenavista from 180,000 tons of copper per year to 488,000 tons by 2015, instead of the 455,000 tons that would have been the case without the Tia Maria equipment," the statement said.
Quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) were $1.24 million, a 3.3 percent rise from the fourth quarter in 2010.
Grupo Mexico reports its earnings in peso terms first to the Mexican stock exchange, showing a quarterly profit of 7.9 billion pesos, a rise of some 33.5 percent on the previous year, and revenues of 34.3 billion pesos in the fourth quarter.
The company plans $1.746 billion in capital expenditures for its mining division this year, mostly on expansions at Buenavista, and sees record investment in its infrastructure division of $636 million in 2012 on increased spending on oil platforms, power plants and highway construction.
In a new foray into the oil business, the company announced it will acquire two offshore oil platforms - built in the United Arab Emirates - to drill at depths of up to 30,000 feet under the ocean floor.
The first platform is expected to start operations in June this year and the second in October, with an expected investment of $355 million, Grupo Mexico said.
The company this year will also invest $231 million in the transportation division for the maintenance, improvement, and expansion of the railroad system in Mexico.
- Tweet this
- Share this
- Digg this