Industrias Peñoles (PE&OLES) Q4 2024 earnings summary

Executive summary

• Achieved US$6.7 billion in FY2024 sales, up 12.2% year-over-year, driven by higher prices for gold, silver, zinc, and copper, and increased sales volumes of gold, zinc, lead, concentrates, and chemicals.

• EBITDA rose 139.7% to US$1,841.1 million, and operating profit more than doubled to US$2,061.3 million, reflecting improved margins and cost controls.

• Net income attributable to controlling interest fell 50.2% to US$73.3 million, mainly due to a significant increase in income tax expense from peso depreciation.

• Precious metals prices surged in 4Q24: gold up 37.3%, silver up 35.2% year-over-year, driven by geopolitical uncertainty and US election results.

• Ore processed increased 8.2% due to higher volumes at Herradura, San Julián (Veins), and Saucito, offsetting declines at other mines.

Financial highlights

• FY2024 gross profit increased 117.3% to US$1,756.5 million, with cost of sales down 4.4% due to lower production costs and peso appreciation.

• Cash flow from operations surged 173% to US$1,300.3 million; cash and equivalents at year-end reached US$1.7 billion, up 61%.

• Net leverage ratio improved to ~0.6x, and coverage ratio stood at 11.5x.

• Total assets increased 2.9% to US$10.3 billion; total equity rose 2.3% to US$5.6 billion.

• 4Q24 net sales were US$1,886.9 million (+28.2% YoY); EBITDA US$653.6 million (+219.1% YoY); net income from controlling interest US$95.4 million (-9.8% YoY).

Outlook and guidance

• Management notes ongoing transformation to strengthen performance, with continued focus on cost control and operational efficiency.

• Market outlook remains positive, supported by strong metals prices and structural demand, though risks from currency volatility and tax impacts persist.

• Ongoing exploration in five priority projects in Mexico, Peru, and Chile, with resource upgrades and new targets identified for 2025.

• Focus on increasing resource estimates and advancing economic studies for new projects.