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Copper miner Grupo Mexico first-quarter profit rises 35 percent
MEXICO CITY |
MEXICO CITY (Reuters) - Mexican copper miner and railroad operator Grupo Mexico (GMEXICOB.MX) reported on Wednesday a 35 percent jump in first-quarter profit compared to the same period a year ago, helped in part by higher production.
Grupo Mexico said quarterly profit was about $709 million, up from $524 million in the first quarter of 2011.
The company said revenues for the January-March period reached a record $2.75 billion, up around 9 percent from the first quarter of 2011, according to a filing with the Mexican stock exchange.
The jump in sales came from higher production at Grupo Mexico's mines and an increase in cargo shipments after record investments in the transportation division last year, the company said in the report.
Grupo Mexico, which runs mines in Mexico, Peru and the southwestern United States, reported metals production surged in the quarter, with gold output up 37 percent, copper production up 20 percent and silver production up 17 percent.
Copper prices will stay strong due to supply pressures this year from increased global growth expected in the second half of this year, the company said.
"We expect China's demand to increase in the second quarter and to hold steady through to 2013 due to the strong investments needed in infrastructure and energy," the report said.
Quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) were $1.395 billion, a 22 percent jump over the first quarter of 2011.
Grupo Mexico's EBITDA margin improved from 46 percent to 51 percent, quarter-on-quarter. The measure eliminates the effects of financing and accounting decisions, allowing for simplified profitability comparisons between companies.
Grupo Mexico also said that its massive Buenavista mine in northern Mexico -- formerly known as Cananea -- is operating at full capacity after the end of a prolonged labor dispute.
The national miners union went on strike for nearly three years starting 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 and Grupo Mexico took back control of the installations with the help of federal police, a move the union still contests.
Buenavista and the company's Cuajone mine in Peru benefited from the bulk of $199 million in capital investments in the quarter, the company said.
The Angangueo mine located in southwest Mexico, a new $131 million project scheduled to begin operations in 2014, is expected to add 36,000 tons of copper concentrates, and 4.5 million ounces of silver, the company said.
The Peruvian Tia Maria mine has been put on hold until 2015 because of protests about the project's environmental impact.
Earlier this year Grupo Mexico pulled back from an offer to take over airport operator GAP after the bid was bogged down in legal challenges, but the failed deal was not mentioned in the quarterly report.
(Reporting by Mica Rosenberg and David Alire Garcia; Editing by Gary Hill, Bernard Orr)
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