Nexa Resources ((NEXA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Nexa Resources’ Earnings Call: Cautious Optimism Amid Operational Challenges
The latest earnings call from Nexa Resources conveyed a sentiment of cautious optimism. The company reported strong quarterly financial performance and progress in strategic projects, which were tempered by operational challenges at key assets and increased costs. Despite these hurdles, there is a hopeful outlook for future improvements.
Solid Quarterly Performance
Nexa Resources reported net revenues of $708 million, marking a 13% increase compared to the first quarter of 2025. The adjusted EBITDA also saw a significant rise, reaching $161 million, a 28% sequential increase. This robust performance was driven by higher sales volumes and stronger byproduct prices.
Improved Free Cash Flow
The company achieved a free cash flow of $17 million, an improvement over the previous quarter. This was supported by better working capital management, showcasing Nexa’s ability to optimize its financial operations effectively.
Progress in Cerro Pasco Integration Project
Nexa made significant strides in the Cerro Pasco integration project, achieving key milestones in Phase 1. These included final engineering, permitting, and contractor mobilization, setting a solid foundation for future developments.
Aripuana and Vazante Recovery
The mining segment produced 74,000 tonnes of zinc, a 9% increase quarter-over-quarter, as both Aripuana and Vazante recovered from disruptions experienced in the first quarter.
Healthy Liquidity Position
Nexa maintained a healthy liquidity position with approximately $738 million available. This includes an undrawn $320 million revolving credit facility, reflecting successful liability management efforts and financial flexibility.
Operational Challenges at Aripuana
Aripuana faced increased downtime due to heavy rainfall, affecting tailings filter capacity. This led to revised production and cost guidance, highlighting the operational challenges that need addressing.
Vazante Geotechnical Issues
Vazante continued to face geotechnical challenges, limiting access to higher-grade zones and impacting production. This remains a critical area for Nexa to address moving forward.
Increased Smelting Costs
Consolidated smelting conversion costs rose to $0.39 per pound, a 19% increase quarter-over-quarter. This was attributed to higher maintenance expenses and input costs, presenting a challenge for cost management.
Decline in Net Revenues Year-Over-Year
Compared to the second quarter of 2024, net revenues declined by 4%, primarily due to lower zinc, copper, and lead prices. This decline underscores the volatility in commodity prices impacting Nexa’s financials.
Downgrade in Production Guidance
Nexa revised its full-year production and cost guidance due to operational challenges at Aripuana and Vazante. This adjustment reflects the company’s proactive approach to managing unforeseen disruptions.
Forward-Looking Guidance
Looking ahead, Nexa Resources remains focused on extending debt maturities and enhancing financial flexibility. Despite operational challenges, the company maintains a solid liquidity position with approximately $738 million available. The revised full-year production and cost guidance aims to accommodate the first-quarter challenges, particularly at Aripuana and Vazante.
In summary, Nexa Resources’ earnings call highlighted a blend of strong financial performance and strategic progress, alongside notable operational challenges. The sentiment remains cautiously optimistic, with a focus on overcoming current hurdles and capitalizing on future opportunities.