Grupo Mexico profit down 19% on sliding metal prices

Revenue for the major global copper producer, which also operates sprawling freight railroads in Mexico, slid nearly 10% to $3.42 billion, the company said in a statement.

Earnings before interest, tax, depreciation and amortization (EBITDA) fell 27% to $1.52 billion.

Grupo Mexico, controlled by billionaire German Larrea, operates major copper and other base metal mines across its home country, as well as in the United States, Peru and Spain.

The firm produced 264,251 metric tons of copper over the quarter, down 2% from a year earlier as its sales slipped 8%. Grupo Mexico also pointed to declining zinc and molybdenum prices, while exploration costs increased.

Grupo Mexico expects to produce 1.058 million tons of copper in 2024, up from 1.03 million tons last year. Full-year 2023 copper production was up 2% year on year, falling short of its prior target of 1.05 million tons.

The firm also confirmed that its Buenavista zinc project in Mexico’s Sonora state should start operations in the first quarter of 2024, adding that the mine should produce some 54,000 tons of zinc and 11,000 tons of copper this year.

“Once we finish the full ramp-up, this will double our production capacity and we will generate over 2,000 jobs on the operating front at year-end,” Leonardo Contreras, the mining division’s finance chief, told analysts in a call.

Contreras added that the start-up had been delayed last year partly due to scant rainfall over northern Mexico.

Meanwhile, the group’s transport arm, which late last year bought majority stakes in two maritime-rail transport freight firms serving US-Mexico trade, saw quarterly sales rise 15%, helped by higher volumes, notably in the automotive sector.

The company said it expects to spend some $490.5 million this year on the division, which last month submitted a proposal at the request of Mexico’s government to adapt some of its freight rail routes for passenger travel.

Analysts at Banorte noted the “negative profitability surprise” weighing on the group’s share price, which was down over 2% in afternoon trading.