* WHAT: Grupo Mexico Q1 earnings results
* WHEN: Friday, April 23
* REUTERS FORECAST: Net profit seen soaring year-on-year
By Mica Rosenberg
MEXICO CITY, April 20 (Reuters) - Grupo Mexico, the nation’s biggest copper miner, is set to report a sharp jump in quarterly results as it benefits from its acquisition of Arizona’s Asarco and metal prices recover, a Reuters poll showed.
Seven analysts consulted by Reuters estimated the company’s (GMEXICOB.MX) first-quarter net profit at $383 million, about 20 times year-earlier earnings of $19 million.
Grupo Mexico won back control of Asarco in December, pulling the U.S. copper miner out of bankruptcy by winning a drawn-out court battle and outbidding India’s Sterlite Industries Ltd STRL.BO.
Asarco is now suing Sterlite for backing out of a $2.6 billion deal to end the bankruptcy in 2008.
“In the first quarter that Asarco’s results are fully consolidated, we estimate that Grupo Mexico’s total copper sales volumes should be propelled 43 percent year-on-year,” brokerage Grupo Bursatil Mexicano said in a report.
Asarco produces between 159,000 tonnes (350 million pounds) and 181,000 tonnes (400 million pounds) of copper a year, according to its website.
The poll of analysts showed revenue more than doubling to $1.8 billion from $824 million in the first quarter of 2009. Grupo Mexico also has mines in Peru run by its listed company, Southern Copper (SCCO.N)SPC.LM, which recently sold $1.5 billion of debt in a two-part sale.
Also seen boosting results are copper and molybdenum prices, which have steadily recovered from lows reached during the financial crisis.
“Every metal produced by the company experienced a major recovery during the quarter, with copper and molybdenum up 111 and 82 percent year-on-year respectively,” Grupo Bursatil Mexicano said.
While analysts had a positive outlook for Grupo Mexico this year, the company is still working to resolve a nearly three-year strike that has paralyzed its largest Mexican mine, Cananea.
A court ruled in favor of the company earlier this year, allowing them to fire workers and reopen the mine, but the union has refused to back down and is blocking the entrance to the giant pit in northern Mexico. [ID:nN18198161]
“The increase in copper prices could be offset by a reduction in our volume of sales estimate due to the uncertainty that hangs over the start of production at Cananea,” IXE analyst Rodrigo Heredia said in a report.
IXE had expected Cananea to reopen in the third quarter of this year, but Grupo Mexico said there was no clear date when the union will give up control of the installations.
Cananea has the capacity to produce 190,000 tonnes of copper a year, but billions of dollars in investments to expand output there and at the El Arco project in Baja California have been put on hold because of the strike. [ID: nN07133911]
Following is a table with the expected results, according to the poll. All figures are in dollars. =============================================================
JAN-MARCH JAN-MARCH PERCENTAGE
2010 2009 CHANGE ——————————————————————————————- Revenue $1.811 bln $824 mln + 120 pct EBITDA* $ 926 mln $277 mln + 234 pct Net profit $ 383 mln $ 19 mln +1,916 pct =============================================================
* Earnings before interest, tax, depreciation and amortization
($1=12.3870 pesos at end March) (Reporting by Mica Rosenberg; Editing by Lisa Von Ahn)