Q2 2025 Grupo Mexico SAB de CV Earnings Call
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Okay.
Yeah.
Good afternoon, and thank you for holding welcome to Grupo Mexico's second quarter earnings Conference call with US. This afternoon are all off Grupo Mexico stops executives, who will discuss the financial performance of the company during the second quarter 2025, or so giving you a summary.
Many of the latest news and addressing any questions you may have at the end of the call.
Before we begin I would like to remind you that information discussed on today's call may include forward looking statements regarding the company's results and prospects, which are subject to risks and uncertainties actual results may differ materially and the company cautions not to place undue reliance on these.
Forward looking statements Grupo Mexico undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise.
Carmen: All results are expressed in full US GAAP. The presentation may be followed through our webcast, but if you wish to ask a question during the Q&A session, you will need to do so via phone call by pressing star 11. A copy of the slides that the company will be reviewing today is available on the website at grupomexico.com. At this moment, I would like to remind everyone that your lines must be in listen-only mode until the Q&A session. Now, it's my pleasure to turn the call to Ms. Marlene Fini.
All results are expressed in full U S GAAP they.
The presentation may be followed through our webcast, but if you wish to ask a question during the Q&A session you will need to do so via phone call by pressing star one one.
A copy of the slides that the company will be reviewing today is available on the website at Grupo Mexico Dotcom.
At this moment I would like to remind everyone that your lines must be in listen only mode until the Q&A session.
Now, it's my pleasure to turn the call to Ms. Marlene Finny.
Marlene Finis: Thank you so much, Carmen. And good afternoon. Thank you, everybody, for joining us today for Grupo Mexico's second quarter earnings conference call. In a very, let's say, interesting day to be having this call with the recent news just published like an hour ago. So it's an interesting day. With me today are the top executives from our three divisions. So we can comment all of the three. During our call, as usual, we will be following a presentation that can be downloaded from our website or followed by accessing the webcast. But as Carmen was mentioning before, if you want to make a question, you have to do it through the phone. So today's detailed program can be found on slide number three. And I'll kick off with Grupo Mexico's ESG highlights, followed by the quarter's core guidance and so highlights.
Thank you so much.
Good afternoon, and thank you everybody for joining us today.
Second quarter earnings conference call in a very let's say interesting they could be having this call with the recent news just always like an hour ago. So it's an interesting day.
With me today are the top executives from R&D Division.
During our call as usual, we will be following a presentation that can be downloaded from our website and followed by accessing the webcast, but as Kevin was mentioning before if you want to make a question that has to do with it.
The result.
So today the third program can be found on slide number three.
Hum and I'll kick off with Grupo Mickey Kaus ESG highlights followed by the poor score.
Marlene Finis: Then Leonardo Contreras will provide detailed information regarding our mining division's main highlights, project updates, and comments on the industry's economic environment. That's going to be interesting, Leonardo. He will then be followed by Alberto Vergara, who will go through the financial results and main events of our transportation division. Lastly, Francisco Sintia will comment on the infrastructure division's relevant events and financial results. As usual, at the end, the line will be open for questions and answers. With that being said, let's go to our main ESG highlights on slide number five. If Grupo Mexico was recognized for its inclusion in one of the most relevant evaluations in ESG performance, it was very important for us. The 2025 S&P Global Sustainability Yearbook. This recognition places us within the top 15% of companies in the metals and mining as the best companies within the metals and mining sector.
Some highlights then none of them will provide detailed information regarding our mining Division main highlight project update and comment on the industry economic environment, that's going to be interesting.
No.
He will then be followed by <unk>.
Who will go through the financial results and main events of our Transportation Division Lastly, discussing Jeff will comment on the infrastructure division's relevant events and financial results as usual at the end of the line will be opened for questions and answers.
That means it let's go through our main ESG highlights on slide number five.
It grew up on what you call was recognized for its inclusion in one of the most relevant evaluation ESG performance. It was very important for us.
The 2025.
Nobel sustainability yearbook difficult lesion places us within the top 15% of the company into myself in mining that.
Company within.
Metals and mining sector.
Marlene Finis: So it was like very relevant for the company. In line with our commitment to responsible management, in 2024, we recorded a 30% reduction in lost time injury rate over the past seven years. We also reached a 35% of our electricity consumption from renewable sources and a 7% increase in the participation of women across the organization. With another highlight, which is also very important to us and significant both to within the ESG and in the operations in the mining division, as the construction of Tierra Marea progresses in Arequipa in Peru, we continue to promote the development of neighboring communities through job creation and engagement of local suppliers. The new jobs generated so far represent 11% of the economically active population of the Tambo Valley near the project site.
Wasn't like.
They've done the one floor for the company in line with our commitment to responsible management in 'twenty 'twenty. One we recorded a 30% reduction in lost time injury rate over the past seven years.
We also reached a 35% of our electricity consumption from renewable sources and that 7% increase in the participation of women across to you guys.
Yeah.
Uh huh.
Highlight.
Which is also very important to us and significant both too.
Within the energy and the operations in the mining Division.
Construction of the Amaya progressive genetic keep buying through we continue to promote the development of neighboring communities job creation and engagement with local suppliers.
New jobs generate so far generated too far.
11% of the economically.
Creation of the Tambo Valley Muesli project site.
Marlene Finis: Additionally, 50 local suppliers have been contracted for transportation, general services, and equipment rental, improving life quality for more than 300 families. Now, let's go to slide number six to continue with the ESG highlights. And here, we can see that in addition to the master classes offered to all students and teachers participating in our youth orchestras and inquiries, programs, two scholarships have been awarded to outstanding students to pursue higher education in orchestral conducting and pedagogia at the Instituto Superior de Música in Puebla, Mexico, reaffirming the company's commitment to cultural and educational development. And lastly, for the ESG highlights, the doctor vagons serve almost 6,000 patients, of which 58% were women and were provided with eyeglasses, free medications, hearing aids, mammograms, among other services. Additionally, a cinemagon, which is part of a doctor vagon, welcomed more than almost 3,000 attendees in across 14 screenings.
Additionally.
Local suppliers have been contracted for transportation general services and equipment rental improving life quality for more than $300.
Now, let's go to slide number six we continue would you highlight.
And here, we can see that in addition to the master classes offered for students and teachers participating in our youth orchestra and.
[laughter].
Inquiries.
Program scholarships.
Outstanding students to pursue higher education in our kitchen comes up.
<unk> ability to surface.
Importantly, we are affirming the company's commitment to cultural and educational.
Right.
Yeah.
And lastly for the ESG highlights.
What about on a surf.
Sure.
6000 stations of which 58% were women and prevent and were provided with eyeglasses three medications human nature.
Mammogram among others.
Additionally.
I've gone to which is part of the sort of Avalon welcome more than.
No.
The 3000 attendees in across 14 screening.
Marlene Finis: Now, let's continue with our scorecard on slide number seven. Our revenues for the first half of the year total $8.4 billion, almost 3% higher than 2024. Our community EBITDA falls just short of $4.6 billion. This is 6.5% above 2024. Our copper production reached almost 533,000 tons of copper during the first half of the year. This is a 1% decrease when compared to the first to last year's first half. Our net cash cost totals $98 per pound, cents of dollars per pound during the first half of this year. This is 15% lower than the first half of 2024. And this is a reaffirming that we continue to have the best cash cost in the copper industry worldwide. Lastly, our board-approved dividend of $1.30 per share during this quarter, which translates into a 4.4 dividend yield.
Now, let's continue with our scorecard on slide number seven.
[laughter].
Revenues for the first half of the year totaled $8 $4 billion, almost 30% higher than 2024.
Community EBITDA totaled just short of $4 $6 billion is six 5% above 'twenty 'twenty four.
Our copper production reached almost 533000 tons of copper during the first half of the year is this a 1% decrease when compared to the first to last year's first half.
Our net cash.
$98 for Bob.
During the first half of the year.
Is it 10% lower than the first half of 'twenty 'twenty four.
And this is we are feeling that we continue to have the best cash cost in the copper industry worldwide.
Lastly, our board I feel about dividends, a one bedroom 30 cents per share doing good quarter, which translates into a four <unk> dividend yield.
Marlene Finis: As usual, you can find a summary of our financial highlights on slide number eight, which is there for you to have in case you need at any point during the presentation. Let me continue with slide number nine. Number nine, I'm sorry. Grupo Mexico continues to have a solid balance sheet with low leverage and net debt to EBITDA ratio of 0.1 times. As you might already know, our debt is mainly issued in US dollars, representing 79% of the total debt, while the rest is denominated in Mexican pesos. And 91% of our total debt was issued with a fixed rate. On this slide, you can also see the dividend paid from 2023 to 2025 and the implied dividend yield, including the $1.30 dividend approved for the quarter, which will be paid on September 5th, 2025.
As usual you can find the summary of our financial highlights on slide number eight eight.
Therefore, you can have engaged you need at any point during the presentation.
Okay.
Let me continue with slide number nine number.
Sorry.
Right.
Grupo Mexico continues to have a solid balance sheet with low leverage and net debt to EBITDA ratio of 0.1 right.
As you might already know our executive mainly issue.
Representing 79% of the total debt while the rest is denominated in Mexican peso.
And 91% of total debt was issued at a fixed rate.
On this slide you can also see the dividend from 2023 to 2025 and in flight you didn't you each of them the 130% dividend payout for.
For the quarter, which will be paid on September.
2025.
Marlene Finis: On the next slide, number 10, we show that we continue to have a comfortable debt maturity profile with no payments of over $1 billion until 2022, while our cash position ended the quarter at $9 billion. Now, I would let Leonardo comment on our mining division's performance.
On the next slide number 10, we show that we continue to have a comfortable debt maturity profile with no Cleveland well over $1 billion until 2032.
Our cash position ended the quarter at $9 billion.
Now I will let no not at all I'll comment on our mining Division performance.
Leonardo Contreras: Thank you, Marlene. Good afternoon, everyone, and thank you again for joining us today. I will start today with a brief remark on the copper current market on slide 12. The LME copper price decreased 2% from an average of $4.42 per pound to $4.32 this past quarter. Based on current supply and demand dynamics, we estimate that the deficit at the year-end will stand at around 65,000 metric tons. Copper inventories worldwide have dropped 28%, going from 627,000 tons at the end of March to 450,000 tons at the end of June 2025. We estimate that this inventory currently covers approximately five days of global demand. Then, as was the case in the first quarter of the year, the copper market registered a significant arbitrage difference between COMEX and LME prices.
Yeah.
Thank you Marilyn.
Good afternoon, everyone and thank you again for joining us today.
I will start today with a brief remark in the copper current market on slide 12.
Yeah, let me copper price decreased 2% from Manav $4 from 42 cents per pound.
Two $4.32 this past quarter.
Based on current supply and demand dynamics.
We estimate that the deficit DRAM will turn that around 65000 metric tons.
Copper inventories worldwide have dropped 28% going from 627000 tons at the end of March to 450000 tons at the end of June 2025.
We estimate that this inventory currently covers approximately five days of global demand.
And as was the case in the first quarter of the year the corporate market.
Registered a significant arbitrage the difference between comex and <unk> prices.
Leonardo Contreras: At its peak on, I believe, July 11th, the COMEX price was 27% above the LME price, around $1.20 per pound above the LME. This reflected the strong possibility that a 50% tariff would be imposed on US copper imports. But as we have seen in the previous and the last hour, there have been recent developments, and apparently, that arbitrage is almost back to zero. We will continue to monitor it and adapt to the ongoing circumstances, as we have been doing it for the rest of the year. Then, although we maintain a very positive long-term outlook for copper, with growth in Asia, new energy technologies, and artificial intelligence, we believe, once again, this intentional commercial war between the US and China could affect economic growth worldwide, and consequently, it could impact the copper demand. Now, let's dive into the mining division's financial highlights on slide 13.
I think I believe July 11th the Comex price was 27% above let me price.
$1 20 per pound above let me.
Okay.
This reflected the strong possibility that a 50% type would be imposed on us copper imports, but as we have seen in the previous in the last hour there have been recent developments on our privately.
Trust is almost back to zero.
We'll continue to monitor it.
Yeah.
How about two two.
The ongoing circumstances.
As we have been.
Doing it.
For the rest of the year.
Although we maintain a very positive long term outlook for copper with growth in Asia, and new energy technologies.
<unk> intelligence.
We believe once again decent potential commercial war between the U S and China.
Could affect economic growth worldwide and consequently, it could impact the copper demand.
Now, let's dive into the mining division's financial highlights on slide 13.
Leonardo Contreras: Our accumulated sales reached US $6.7 billion, a 7.3% increase versus the first half of 2024, mainly due to an increase in metal prices and byproducts. Our EBITDA totaled close to $3.7 billion for the first half of the year, 9.4% higher than the first half of 2024, with a margin of 55%. Now, moving on to production, our production totaled just shy of 533,000 tons, a decrease of 1.1% versus the first half of 2024, mainly due to a production decrease in Mexico of 1.7% related to the decision of benefiting zinc concealer production at our Buenavista zinc plant, thus impacting the copper production that we produced the last semester of last year. Our net cash cost showed a 15% improvement compared to the first half of 2024, standing at 98 cents, mainly due to higher byproduct credits.
Our accumulated sales reached USD six $7 billion seven.
Seven 2% increase versus the first half of 2024.
Mainly due to an increase in metal prices.
Byproducts.
Our EBITDA total close to $3 7 billion for the first half of the year nine 4% higher than the first half of 2024 with a margin of 55%.
Now moving on to production our production totaled just shy of 533000 tons, a decrease of one 1% versus the first half of 2024.
Mainly due to a production decrease in.
In Mexico, one 7% related.
So the decision of benefiting sync consider production.
We're gonna be starting plant.
Thus impacting there.
Copper production.
We produced the last semester of last year.
Okay.
Our net cash cost showed a 15% improvement compared to the first half of 'twenty 'twenty four suddenly got 98, mainly due to higher byproduct credits.
Leonardo Contreras: Now, regarding CAPEX, we invested $618 million during the first half of this year. And then I would like to continue about our projects and their progress in slides 14 and 15. Starting with our Peruvian projects, Tierra María, as of June 30, the company has generated more than 1,376 new jobs, of which 800 positions were filled by local candidates, as we tried to fill the 3,500 jobs needed during the construction of Tierra María, with workers from the Islay province. Once operations begin in 2027, the project will generate 764 direct jobs and 5,900 indirect jobs. We're currently in the early construction phase, with 90% progress on access roads and platform stands. To date, we have installed 60 kilometers of live fence to delimit the property.
Now regarding Capex, we invested $619 million during the first half of this year.
And then I would like to continue about.
Our projects and their progress in slides 14, and 15, starting with our Peruvian projects.
As of June 30, the company has generated more than.
1376, new jobs of which 800.
800 positions were fueled by local candidates as we've tried to build the three.
<unk> 3500 jobs, neither during the construction of Tia Maria with workers from the slight province.
Once operations to begin in 2027.
We'll generate 764 direct jobs and 5900 indirect jobs.
We're currently in the early construction phase with 90% progress on access roads and platforms.
To date, we have installed.
60 kilometers of life fence to the limit that property.
Leonardo Contreras: Now, moving to Los Chancas in Apurímac, Peru, on June 6th, 2025, the framework agreement for the development of the Tiapato Piece and Community and the Los Chancas Mining Project was signed with the community of Tiapato. This agreement will be in effect throughout the construction and operation phases of the project. Now, lastly, Michoquilla, located in Cajamarca, Peru, as of June 30, 2025, the exploration project's progress was 45%. We have drilled almost 146,000 meters and obtained 59,000 drill core samples for chemical analysis. Diamond drilling has provided the information necessary to interpret the distribution of mineralization in geological sections and for geological modeling. The geometallurgical studies have been successfully completed, and the hydrological, hydrogeological, and geotechnical studies for the project are about to begin. Now, moving on to Mexico, we have El Arco, located in Baja California, Mexico.
Now moving to last chunk asking are putting <unk> on June six 2025, the framework agreement for the development of the apparel decent community under law chunks mining project was signed with the community of the apparel.
Agreement will be in effect throughout the construction and operation phases of the project.
Now lastly image guidance.
Okay didn't come out of capital as of June 30 to 25, the exploration projects progress was 45% we have drilled almost 146000 meters on obtained 59000 drill core samples for chemical analysis.
Diamond drilling has provided the information necessary to interpret the distribution of mineralization.
Geological sections.
Geological model.
The Geo metallurgical studies have been successfully completed and the hydrological Hydrogeological and geotechnical studies for the project are about to begin.
Now moving on to Mexico, we have a large co located in California, and Mexico. The environmentally the environmental baseline studies for the mine has been completed and detailed engineering is still underway.
Leonardo Contreras: The environmental baseline study for the mine has been completed, and detailed engineering is still underway for the concentrator, SXCW plant, water diesel plant, logistics infrastructure, and power delivery. And with our project, El Pilar, located in Sonora, approximately 45 kilometers from our Buenavista mine, it will operate as a conventional open pit mine with an annual production capacity of 36,000 tons of copper cathodes. This operation will use highly cost-efficient and environmentally friendly SXCW technology. Now, if you happen to have any follow-up questions, I'd be pleased to address them during the Q&A session. Now, I will let Alberto comment from the transportation division.
For the concentrate or Sx EW plant water diesel pump logistics infrastructure and power delivery.
And we our brake LP lateral get in Sonora.
Approximately 45 kilometers from our point of Vista mine.
It will operate as a conventional open pit mine with an annual production capacity of 36000 tons of copper cathodes. This operation will use highly cost efficient and environmentally friendly Sx EW technology.
Now if you happen to have any follow up questions I'd be pleased to address them during the Q&A session.
Now I will let Alberto comment on the transportation Division.
Yeah.
Alberto Vergara: Thank you, Leonardo, and good afternoon, everyone. Continuing with the transportation division, we saw on slide 17, I would like to talk about our financial highlights for this quarter. Our sales reached $5.6 billion at 7.8% decrease versus the first half of 2024, mainly driven by a 6.6% decrease in car loads. Our accumulated EBITDA by the end of the quarter totaled $712 million, 6.8% lower than the first half of 2024. The EBITDA margin stood at 43.7% at the end of the first half of 2025. As for our net income, it totaled $255 million during the first half of the year, 8.4% lower than 2024. Lastly, as you might already know, a dividend of 50 cents of pesos per share was approved by our board.
Thank you Danielle and good afternoon.
Everyone. Thanks.
And then with the Chesapeake Bay shouldn't you be shrink results on slide 17, I would like to talk about our financial highlights for this quarter.
Our sales reach.
Six daily.
Right.
Great rest of the first half of 2024, mainly driven.
Six 6% decrease in cargos.
Yes.
Hey, good day by the end of the quarter.
Seven.
Thanks.
8% lower than the first half of 2024.
Margin stood at.
43, 7%.
First Scott.
2025.
As for our net income.
Thank you Scott.
Dan the first to call that yet.
Great.
Christian.
24.
Lastly, touching market Randall I think again with SaaS peso.
Well said.
Alberto Vergara: Continuing with the main variation of our revenue on slide 18, as a reminder, these variations are considering results in Mexican pesos, so this might vary using a different currency. I will start with the segment that delivered the strongest revenue growth. The automotive segment led with a 24% increase, driven by improved network fluidity that allowed us to gain market share in export to the US, outperforming maritime routes and other rail alternatives. Following that, the mineral segment grew by 19%, supported by higher import volumes and more consistent, longer haul shipments. Agriculture also performed well, with a 12% increase in revenue, mainly due to the higher imports of wind shuttle trains that helped offset the impact of winter local drops and the low volumes we experienced in the first quarter due to adverse weather conditions.
Yes.
Continuing with variation.
Revenue on slide 18.
Thanks, everybody.
Narcolepsy rituals and Mexican peso. So this library.
You have seen a different currency.
Okay.
I will start with segment that delivered a strong thank you Anthony.
Okay.
Yes.
4% increase driven by improved network fluidity.
To gain market share in excess of the units.
Performing well.
Fair enough fair enough.
Hollywood that.
Segments grew by 19% supported by higher volumes and more coffee think longer haul shipments.
Agriculture also performed well.
So any increase in revenue.
A link to a target.
The ratio of trains.
Impacting local local drops and the low volumes, we experienced in the first quarter due to adverse weather conditions.
Alberto Vergara: Intermodal posted an 11% increase, reflecting a strong cross-border and domestic volume in both Mexico and Florida. In the mid-growth range, the chemical segment grew by 4%, supported by increased ethanol shipment in the US and a higher resin imports into Mexico. This was partially offset by maintenance-related shutdowns at flooring plants in Mexico. The energy segment saw a 2% increase in revenue compared to the same period last year. On the other hand, we saw revenue declines in a few segments. The industrial segment decreased by 3%, mainly due to the lower volumes resulting from a reduced demand in the new rail car market and a softer gear shipment into the US. Salmon and metals experienced declines of 6% and 9%, respectively, probably to a slowdown in infrastructure projects in Mexico compared to the previous year. Now, let's take a look at our operating metrics shown on slide 19.
Also an 11% increase reflecting our strong cross border and domestic volume in both Mexico absolutely.
Is it maybe the growth range the chemical segment grew by three 4%.
Chris ethanol shipments in the U S.
We're seeing imports into Mexico.
Partially.
Thanks related shutdowns at flooring plants in Mexico.
Okay.
The energy segment.
Four 2% increase in revenue compared to the same period last year.
On the other fab, we saw revenue decline and a few statements.
The truck segment decreased by three.
3%, mainly to the lower interest will be in front of reducing that in the new railcar market.
Sure.
So the U S.
Shannon.
Thats experienced declines of six and 9% respectively.
A link to a slowdown in infrastructure projects in Mexico compared to compared with previous year.
Now, let's take a look.
Operating metrics shown on slide 19.
Alberto Vergara: In general, metrics show consistent improvement in performance during the quarter, as we saw an 11% decrease in dual tanks that results in an improvement of over 25% in car velocity, settling at 311 kilometers per day and a 15% improvement in the average in train speed. As for the rest of the metrics, a 2% increase in average train length reaching 1.8 kilometers and a few to start with a 1% reduction. On slide 21, we can see an expected CAPEX for the 2025. GMXT bought approved and to increase the CAPEX for the year to over $580 million for maintenance, growth, efficiency, and special projects. The additional CAPEX will be spent in new locomotives, allowing GMXT to continue growing and improving to sustain investment in infrastructure and increase efficiency.
In general metrics show consistent improvement in performance throughout the quarter as.
As we saw.
Or in percent decreasing dwell time that results in an improvement of cohort five.
5% of capital.
Certainly at 311 kilometers per day.
And if it didn't prevent endeavors.
Steve.
For the rest of the metrics.
A 2% increase in direct train length, reaching one eight.
Kilometers and.
So with that with a 1% reduction.
On slide 21.
Capex for the 2025.
Geo mix people up.
The capex for the year to.
All right.
<unk> million dollars for maintenance, though.
Efficiency.
Perfect.
<unk> capex will be spending new locomotives.
<unk> to continue growing and improving.
The investment in <unk>.
First Richard and increase efficiency.
Alberto Vergara: Approximately 70% of our annual CAPEX will be dedicated to rail infrastructure, covering investment in tracks, tires, bridges, the acquisition of 60 locomotives, as well as overhauls and other critical equipment. $82 million will be deployed for jobs on reconfiguration, siding enlargement, and a new intermodal terminal. An investment of $84 million is planned for special progress targeting key infrastructure and safety initiatives, including the safety program, the Salaya bypass, and the rehabilitation of the Mexican Republic. This concludes the general overview of the transportation division. I will now let Francisco Sintia comment on the infrastructure division.
Approximately.
So we're kind of look at that.
Really great to rail infrastructure covered invest any tracks. Thanks rich.
Bridge deck, a CTO and a 60 locomotives has won a silver false another critical equipment.
2 million, so that we can deploy for JAKKS configuration.
And Dr Smith, and Andrew Intermodal terminal.
An investment of 84.
As planned towards patient.
Targeting key.
The initiatives include a 50 program.
And they don't have allocation ultimate you cannot believe.
This concludes the general overview.
Kitchen Division I will note that this call CFO commencement shortly.
Sure.
Francisco Sintia: Thank you very much, Alberto, and good afternoon, everyone. I will start by going through the financial highlights of the infrastructure division shown in slide number 22. Our sales reached $342 million for the first half of this year, a 12% decrease when compared to the first half of 2024. This was due to the impact of a four oil rigs suspension and the negative exchange rate effects. This was partially offset by the operation of the Fenicias wind farm and the integration of the new Cabochon at Puebla portfolio. As it is well known, Pemex is currently going through a restructuring period with significant financial debt and debt to suppliers. Given the suspension of our four Jacobs, we have mobilized them to shore to reduce costs and keep them under temporary shutdown.
Okay.
Thank you very much Alberto and good afternoon, everyone.
I will start by going through the financial highlights of the infrastructure Division shown in slide number 22.
Our sales reached $342 million for the first half of this year.
Percent decrease when compared to the first half of 2024.
It was geared to the impact of a forum for oil rig suspension and the negative exchange rate effects.
This was partially offset by the operation of the <unk> wind farm and the integration of the new Guy with drill enough wells in our portfolio.
As it is well known Delek is going through going through a restructuring period with significant financial debt and debt to suppliers.
Given the suspension of our four Jackups, we have mobilized two short to reduce costs and keep them on the temporary shutdown.
Francisco Sintia: Our EBITDA totaled $161 million, a decrease of 30% versus the first half of 2024, with the EBITDA margin standing at 47%. It is important to mention that aside from Perforadora México, all of our business units are growing in sales and EBITDA in their functional currency. Lastly, net income totaled $30 million, a decrease of 55% when compared to the first half of 2024. To close the infrastructure division highlights, I would like to go through some of our most relevant events depicted on slide number 23 and 24. Our energy segment posted solid growth in the quarter, with cumulative net sales of $157 million, an increase of 17.3% versus 2024, and EBITDA of $181 million, 4% higher year over year.
Our EBITDA totaled $161 million a.
A decrease of 30% versus the first half of 'twenty 'twenty four with EBITDA margin standing at 47%.
It is important to mention that outside from.
All of our business units are growing in sales and EBITDA in their functional currency.
Lastly, net income totaled $30 million, a decrease of 55% when compared to the first half of 2024.
To close the infrastructure Division highlights I would like to go over some of our most relevant events depicted on slide number 23 on 24.
Our energy segment posted solid growth in the quarter.
Net sales of $157 million, an increase of 17, 3% versus 2024, and EBITDA of $181 million, 4% higher year over year.
Francisco Sintia: This was largely driven by higher revenues at the La Caridad Combined Cycle Power Plant and strong performance at the Fenicias wind farm, which generated 390 gigawatt hours of clean energy. Since August 2024, Fenicias has been supplying power to insert mining and metallurgical operations, further advancing our commitment to energy diversification and sustainable industrial development. Our real estate division continues to post strong results, ending the quarter with net sales of $46 million and EBITDA of $30 million, which translate into increases of 22% and 26% year over year, respectively, primarily driven by the incorporation of the Cabochon at Puebla portfolio, which added nine power centers to our operations, as well as stronger lease performance. This reinforces the effectiveness of our acquisition-led growth strategy and our ability to generate long-term value across our real estate platform. Revenues and EBITDA in Mexican pesos grew 42% versus last year.
This was largely driven by higher revenues at the luxury that's combined cycle power plant and strong performance at the <unk> wind farm, which generated 390 gigawatt hours of clean energy.
Since August 2024, and Etfs been supplying fabric leaves us mining in metallurgical operations further advancing our commitment to energy diversification and sustainable industrial development.
Our real estate Division continues to post strong results ending the quarter with net sales of $46 million and EBITDA of $30 million, which translate into increases of 22 or 26% year over year, respectively.
Primarily driven by the incorporation of the Gallagher chairman of boiler portfolio, which added nine power centers to our operations as well as stronger lease performance.
This reinforces the effectiveness of our acquisition led growth strategy and our ability to generate long term value across our real estate platform.
Revenues and EBITDA compared to a loss grew 42% versus last year.
Francisco Sintia: Our construction and engineering division maintains stable operations throughout the second quarter, showcasing disciplined execution and operational continuity across multiple infrastructure fronts. Cumulative revenues reached $64 million, and EBITDA stood at $13 million, a decrease of 0.7% and 5.3%, respectively, year over year. These variations reflect the natural cycle of project completions and the phased start of new contracts. Revenues and EBITDA in Mexican pesos grew 14% and 2.7%, respectively, versus last year. Our toll roads business continued to show operational strength, with average daily traffic increasing by 3% year over year to 22,623 equivalent vehicles, reflecting steady demand and consistent network usage. However, results were impacted by adverse exchange rate movements, leading to net sales of $34 million and EBITDA of $23 million, a 7.6% and 5.7% lower versus the same period of 2024.
Our construction and engineering division maintained stable operations throughout the second quarter showcasing disciplined execution on the operational continuity across multiple infrastructure fronts.
Revenues reached $64 million and EBITDA stood at $13 million a.
A decrease of 7% and five 3% respectively year over year.
Valuations reflect the natural cycle of project completions and the feedstock of your contractors.
Revenues and EBITDA in Mexican pesos grew 14% and two 7% respectively versus last year.
Our toll road business continued to show operational strength with average daily traffic increased by 3% year over year to 22633 at prevailing vehicles, reflecting steady demand in consistent network usage. However results were impacted by adverse exchange rate movements, leading to net sales of <unk>.
$34 million and EBITDA of $23 million a <unk>.
Seven six and five 7% lower versus the same period of 2024.
Francisco Sintia: While these FX fluctuations affected reported figures, the sustained growth in traffic underlines the segment's resilient fundamentals and long-term value potential. Revenues and EBITDA in Mexican pesos grew 8.4% and 11% versus the same period of last year. With this, I conclude the review of the main highlights of the infrastructure division. Now, I will let Marlene give her closing remarks. Thank you.
While these FX fluctuations affected reported figures the sustained growth in traffic on their lines of segments resilient fundamentals and long term value potential.
Revenues and EBITDA in Mexican pesos grew eight four and 11% versus the same period of last year.
With this I conclude the review of the main highlights of the infrastructure Division now I will let Marilyn you've heard closing remarks. Thank you.
Speaker 6: Thank you, Francisco, and thank you, Leonardo and Alberto, for your comments. And thank you, everyone, again, for your time and attention. Now, we will open the lines for the Q&A session.
Thank you Glenn Thank you.
So for your comments and thank you everyone again for your time and attention now we will open the lines for the Q&A session.
Carmen: Thank you so much. And as a reminder to our audience, if you do have a question, press star 11 to get in the queue and wait for your name to be announced. To withdraw yourself, simply press star 11 again. One moment for our first question. And it comes from Alejandro de Michelis with Jeffries. Please proceed.
Thank you so much and as a reminder to our audience. If you do have a question press star one one to get in the queue and wait for your name to be announced soon.
So withdraw yourself simply press star one again.
And for our first question.
And he comes from Alejandro Demichelis with Jefferies. Please proceed.
Speaker 7: Yes. Good morning. Thank you very much for taking my questions. A couple of questions, if I may, please. First one, Leonardo, maybe you can comment on how you see the situation for the smelters in the US, particularly given the news that happened over the past hour or so, meaning what kind of spread do you need for these projects to be attractive enough on economic terms? That's the first question. And then on the group in general, maybe you can comment on how you see opportunities for inorganic investment and the uses of your cash balance, if you may, please.
Yes. Good morning. Thank you very much for taking my questions. A couple of questions. If I may please.
But maybe you can comment on how you see the situation for the.
Smelters in the U S, particularly given the new that's happened over the past hour or so, meaning what kind of spread do you need.
Need for these projects to be.
Attracting enough on economic terms the first question and then.
On the group in General maybe you can comment on how you see opportunities for inorganic investment.
Usage of your of your cash balance.
You may please.
Speaker 8: Hello, Alejandro. I will probably answer the first question in regards to the smelters in the US. I do believe that where we were before the announcement today, the amount of arbitrage that was out there, it was worth taking a look and seeing any alternatives to push for additional smelting capacity in the US. Obviously, our main concern there was the time horizon. But now, with the recent developments, I mean, we're continuously evaluating if we should or we should not restart our hidden operation. I think we will continue to monitor on how these global changes happen on a daily basis. But for now, we're just keeping our options open.
Hello, Ella Continental I would probably answer the first question in regards to the smelters in the U S.
I do believe that we're at.
We were before the announcement today.
The amount of arbitrage that what's out there.
It was worth taking a look and seeing any any alternatives to to push for additional smelting capacity in the U S.
Obviously, the our main concern there was the time horizon.
But now with the recent.
Developments.
We are continuously evaluating them.
If we should.
Or we should not research, though where Hayden operation I think we will continue to monitor on how.
These global changes happen on a daily basis, but for now we are just keeping our options open.
Speaker 7: That's very clear. Thank you.
Okay, that's very clear thank you.
Carmen: Thank you.
Marlene Finis: Leonardo, thank you, Alejandro, for your question. And for the second question regarding our cash, I couldn't hear you well, but I think it was regarding how we're going to use the cash that we have in general as a group. So regarding that, as you can see, we increased our dividend this quarter. So we now have a $1.30 per share. And you could also see that, as Leonardo was mentioning, and we also mentioned in our press release, we are analyzing different different investments that we could do in our three divisions. So there are ones that we are going to do definitely, such as Tierra María, and other investments that there are a lot of moving parts. So it's a difficult time to answer everything because it's just a lot of recent events.
Thank you.
Andre for your questions before the second question regarding our guidance.
Youre welcome.
I think it was regarding how we are going to use the cash that would not be as general as a group.
So regarding that.
You can see we increased our dividend this quarter.
Now have a 130 basis.
That's for sure.
You can also see that no matter what.
As I've mentioned and then we also mentioned in our press release.
I think different than investments that we could do it.
Our three divisions.
So that would warrant that one we are going through definitely such as <unk> and other investors that there aren't a lot of moving parts. So it's a difficult time to answer everything because it just recently.
Marlene Finis: But we are analyzing different opportunities of investment to grow within our three divisions, our mining, transportation, and infrastructure division.
Recent events, but we are analyzing different opportunities to grow within our three division, our mining transportation and infrastructure Division.
Speaker 7: Okay. Just as a small follow-up, just to be very clear, so you are not looking for opportunities outside of those three divisions?
Okay.
As a small follow up just to be very clear. So you are not looking for opportunities outside of those three divisions.
Marlene Finis: We are not actively looking for opportunities outside our three divisions. We want to maintain the focus on what we know how to do.
We are not actively looking for opportunities outside.
The vision, we want to maintain the focus on on what we know how to do.
Speaker 7: Okay. That's clear. Thank you.
Okay. That's clear thank you.
Carmen: Thank you so much. One moment for our next question. It comes from Emerson Avellera with Goldman Sachs. Please proceed.
Thank you so much one moment for our next question.
It goes from Emerson <unk> with Goldman Sachs. Please proceed.
Speaker 7: Good afternoon, gentlemen. So I have two questions. The first one is on the mismatch that we have been perceiving in the past quarters regarding the dividends GMX has received from its subsidiaries and the amount the holding is paying. So can you guys elaborate on the reasons for this mismatch and if we can expect dividends received by subsidiaries to be fully paid to GMX shareholders? So this is question number one. And question number two is on the infrastructure business. So in this quarter, you guys mentioned the operation was impacted by a temporary suspension of four rigs. So I wanted to understand better when this should normalize and if this is expected for this year already or is more longer term. That's it. Thank you.
Good afternoon, gentlemen, so I have two questions. The first one.
<unk>.
David mentioned that we have been perceiving in the first quarters regarding the receipt.
And <unk>.
<unk> has received from its subsidiaries and the amount.
The holding is being so can you guys elaborate on the reasons.
Does the mismatch and if we can expect.
Dividends received.
By subsidiaries to be fully paid to <unk> shareholders. So this is question number one and question number two is on.
The infrastructure business. So in this quarter you guys mentioned.
The operation was impacted by a temporary suspension of four rigs so wanted to understand better when this should normalize.
And if that is expected for this year already or if more longer term.
Thank you.
Marlene Finis: For the first question, I don't know if it's off, but I couldn't hear everything very, very clearly. But if it's regarding the dividends, we increased our dividends. And as you can see, we have that in our presentation. We have kept our dividends or we have been very consistent with our dividends for many years now at the Grupo México level. And Southern Copper, the board of Southern Copper, decided to give a dividend that was part in cash and part in shares. So I don't know if you were referring to that. We, as Grupo México, the board of Grupo México, decided to give a cash dividend of $1.30, which is a 4.4 dividend yield in line with what we have had through the past years. I don't know if that answers your question. Sorry.
Sure the first question.
I don't know if at all but I couldn't hear everything very very poorly but.
Is it regarding the dividends, we increased our dividend and as you can see.
We have got in our presentation, we have kept our dividend.
Sure.
Have been very consistent dividends for many years now the Grupo Mexico level and southern copper decided the board of southern copper decided to give a dividend that was part in cash and buy in shares.
So I don't know if you were referring to that.
We agreed upon with the broader Gordon started to give.
Cash dividend of $1, there is better which is a $4 four given yield in line with what we have had two plus years.
I don't know if that answers your question sorry.
Yeah.
Francisco Sintia: So if there's no follow-up question on the dividend, regarding the second question of the four oil rig suspension, I mean, it's hard to say when they will be back operating. As you know, Pemex has had significant budget reductions in its exploration and production division from $25 billion a couple of years ago to $9 billion now. So this is not a problem that is only of us. There have been many suspensions to different oil rig owners here in Mexico, more than half of the of the total oil rigs that there are in the country. We have been having conversations with Pemex, obviously, trying to let them know that our oil rigs operating mean an increase in production, which, of course, is one of the main goals of Pemex. And they are aware of that, but unfortunately, they have these constraints on budget.
So if there's no follow up question on the dividend regarding the second question of <unk>.
For ordinary suspension.
It's hard to say when they will be back operating as you know.
No that makes sense.
You can't budget reductions.
Exploration and production division from $75 million, a couple of years ago to $9 billion now. So this is not a problem.
All of us.
There have been many suspensions to be trained on rig owners are doing in Mexico more than half.
Of the total, albeit that they are in the country.
We have been having conversations with Pemex, obviously trying to let them know that.
Oh, Thanks, operator didn't mean and increasing production, which of course is one of the main goals of Pemex and they are aware of that but unfortunately, they have these constrains on budget. So it's hard to say exactly when what we have done as I mentioned in my.
Francisco Sintia: So it's hard to say exactly when. What we have done, as I mentioned in my participation during the call, is that we have moved the four oil rigs from the open waters into into not land, but into one of the ports in Campeche. And we have been connecting them and reducing costs significantly, more than 85% of the cost of an oil rig operating, so that we can be at least cash neutral and not having an impact on our cash flows, which we were having before also because, as you know, Pemex has not been consistently paying suppliers. So we think that the position where we are at right now allows us to wait in terms of cash. And hopefully, you know Pemex, with all this restructuring, will have either more budget or do some changes so that our oil rigs will continue to operate.
Participation during the call is that we have moved before the rates from the open waters.
Well not land put into one of our Paul I think on page eight and we have been connecting them in reducing cost significantly more than 85% of the cost of our 93 of operating so that we can be at least cash neutral and not having an impact on our cash flows, which we were having before also because.
As you know Pemex has not been consistently paying suppliers. So so we think that the.
The position, where we are at right now allows us to wait in terms of cash.
And hopefully you know Pemex with all of these restructuring will have either more budget or have been some changes or that of our oil rigs will continue to operate but again. This is an industry wide problem is not something that is on the FX.
Francisco Sintia: But again, this is an industry-wide problem. It's not something that is only affecting us.
Carmen: We have one moment for our next question, please. And it comes from the line of Alfonso Salazar with ScotiaBank. Please proceed.
Alright, one moment for our next question. Please.
Comes from the line of Alfonso Salazar with Scotiabank. Please proceed.
Speaker 7: Thank you. Quick question, Marlene. From Grupo México, the holding company perspective, what are the rationales behind the decision to release Grupo México transport? So if you can give us some call on that. And then for the for the platform for the oil rigs, is there any plan B? I mean, can you elaborate on what other options you have, whether to sell the assets, to operate them elsewhere? Any comment on that would be very appreciated. Thank you.
Thank you.
Quick question Marilyn.
From Grupo Mexico, as a holding company perspective, what are the rationale behind the decision to the lease group on the Eco transport. This so if you can give us some color on that and then for the full.
The platform for the whole week.
Any plan B I mean.
Can you.
What are the options you have.
Whether to sell the assets to operate them elsewhere any comment on that would be very appreciated. Thank you.
Marlene Finis: Yes, Alfonso. I would let Francisco answer because it's the same thing he was mentioning before.
So I would look at San Francisco Arthur because.
The same thing he was mentioning before.
Speaker 7: Actually, no.
Marlene Finis: Sí, you wanted to.
Speaker 7: perfect. Yeah, sorry. Yes. So, of course, this situation obliges us to look at all the different alternatives. Right now, worldwide, there are approximately 430 oil rigs, and about 100 of those are not being utilized. So it's not a market right now, perhaps, to sell them, although we have contacted over 90 different potential buyers. But again, the market's perhaps not there. And that's why we think we're in a good position to wait either for Pemex to reactivate platforms or the market in general worldwide to improve. We have also been looking at potentially having them working in other countries. But again, it's related to how the market is right now. The platform market worldwide is very cyclical. And as you know, the consumption of oil worldwide has been actually increasing rather than decreasing, as some experts thought a couple of years ago.
Okay great.
Yes, sorry, yes.
So of course this situation obliges us to look at all the different alternatives right.
Right now.
Worldwide.
Approximately 430 oil rates and about 100 of those are not being utilized so it is not.
Our market right now, perhaps sell them, although we are contacted over 90 different potential buyers.
The market is perhaps not there and that's why we think we're in a good position to wait for Pemex to reactivate platforms or the market in general worldwide to improve.
We have also been looking at potentially having been working another one of our countries, but again, it's related to how the market is right now.
Platform market worldwide is very cyclical and as you know.
The consumption of oil.
<unk> has been actually increasing rather than decreasing by some experts.
Speaker 7: So what this tells us is that this will come around. And perhaps, at that time, we find an interesting play to sell the assets, we will, of course, evaluate it. It's not the time right now, again, but we are constantly looking for options given the circumstances where we're at.
Got a couple of years ago. So what this tells US that this will come around and perhaps at that time, we will find an uninteresting.
Play to sell the assets, we will of course evaluated.
It's not the same right now again, but we are constantly looking for options given the circumstances, where we're at.
Marlene Finis: And answering your first question, Alfonso, I think this is something we have discussed previously. And this is a question we always get. We don't think right now the value of our transportation division is reflected. So we did a very thorough strategic review, and we decided that in order to to gain flexibility and to think, and because of this reason, it was better to make this decision of the listing from the Mexican Stock Exchange. While we recognize the value of public markets, we believe that operating as a private entity right now is better aligned with our current business objectives and growth strategy for GMXT. And we remain fully committed to transparency and to delivering value to our stakeholders. So that is a commitment that we have.
And then to your first question Joe.
I think this is something we have discussed previously.
A question you always get.
We don't think right now the value of our.
Our transportation Division as we expected. So we did a very thorough strategic review and we decided.
In order to gain flexibility and zynga and because of this region.
Yeah.
Make this decision of delisting from the Mexican stock exchange.
While we recognize the value of public markets, we believe that operating as a private entity right now.
Better aligned with our current business objectives, and build strategy for <unk>, and we remain fully committed to transparency and to delivering value to our stakeholders well that is a convenient way we have but I think that mainly foundation given.
Marlene Finis: But I think that maybe valuation and giving more value to our shareholders, our Grupo México shareholders, was part of the reasoning behind this decision.
More value to our shareholders.
Our deep domain shareholder shareholders is was part of the reasoning behind this decision.
Speaker 7: Okay. Thank you very much, Marlene.
Okay. Thank you very much.
Marlene Finis: And thank you, Lizzy, as well. Sorry. Sorry for that. Thank you.
And David Young well, sorry, sorry for that.
Carmen: Thank you so much. And as a reminder, if you do have a question, press star 11 to get in the queue. Our next question comes from the line of Rafael Barcelos with Bradesco PBI. Please proceed.
Thank you. Thank you so much and as a reminder, you do if you do have a question press star one one to get in the queue.
Our next question comes from the line of Rafael <unk> with Bradesco PPI. Please proceed.
Speaker 7: Hey, hello. Good afternoon. Thanks for taking my questions. I just have a follow-up on the theory. So in your release, you detailed some opportunities to invest in the US. So could you please elaborate on the timing of these investments? And I understand that the situation is very fluid, but I mean, which of these initiatives that you pointed out in the release still make sense after the recent update on.
Okay.
Good afternoon. Thanks for taking my questions I just have a follow up on the on the tariffs. So in your release you detailed some opportunities to invest in the U S. So so could you. Please elaborate on the timing of these investments and I understand that the situation is very fluid, but but I mean, which of these initiatives that your point.
It out.
It relieves still makes sense.
After the recent update on.
Carmen: And we lost our analyst.
And we.
We lost our.
Analysts.
Okay.
Speaker 8: Well, I mean, I don't know if he's still on the call, but probably I can answer the question in regards to US investment opportunities that were released on the press release. Basically, I think that we have been talking about them before. But what we've been doing is we've been accelerating the expansion at Ray Mine and the transition to Saltforce at Silver Belt Mine. And then we already talked about the smelter and the refineries, but we're looking at a timeframe within the next three to five years.
But I mean.
I don't know if he is still on the call with books. He's brought American I'm sure I can answer the question.
In regards to U S investment opportunities.
Were released on the press release, basically I think that we have been talking about them before but we've been doing is we've been accelerating.
The expansion at re mind.
And the transition to sell portions of tunable mind.
And then we already talked about the smelter in the refineries, but we're looking at a timeframe within the next.
Three to five years.
Carmen: Thank you so much. And as I am not showing any further questions in the queue, I will turn the call back to Marlene Finis for any final comments.
Thank you so much and I am not showing any further questions in the queue I will turn the call back to Martin <unk> for any final comments.
Marlene Finis: Thank you so much, everybody. And we'll keep in touch. If you have any further questions, let us know, and we'll try to answer everything. And thank you. See you next quarter.
Thank you so much everybody and we will keep in touch if you have any further questions let us know.
So everything and thank you and see you next quarter.
Carmen: All right. Thank you, ladies and gentlemen. This concludes our program for today. Thank you all for participating, and you may now disconnect.
Alright, Thank you ladies and gentlemen, this concludes our program for today. Thank you all for participating and you may now disconnect.
Okay.
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Okay.
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Okay.