Good afternoon. Thank you for holding, and welcome to Grupo México's fourth quarter 2021 earnings conference call. With us this afternoon are all of Grupo México's top executives, who will discuss the fourth quarter and 2021 financial performance of the company, giving you a summary of the latest news, and address any questions you might 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 México undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. All results are expressed in full U.S. GAAP.
The presentation may be followed through our webcast, but if you wish to ask a question during the Q&A session, you need to do so via phone call by pressing star one. 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 question and answer session. Now, we will begin with Ms. Marlene Finny.
Thank you so much, Carmen. I say good evening, everybody, and thank you all for joining us today for Grupo México's fourth quarter earnings conference call. Joining us today are the top executives from our three divisions. During our call, as Carmen was mentioning before, we will be following a presentation that can be downloaded from our website or followed by accessing the webcast, whichever works better for you. On today's call, we will be following the program found on slide number three. I said I will start with Grupo México's main highlights, going through our ESG achievements and scorecard and our financial highlights for the quarter and the year. Then Mr. Xavier García de Quevedo will provide detailed information regarding our mining division, commenting on the industry's economic environment and the division's financial highlights and project updates, as well.
He will then be followed by Mr. Fernando Lopez, who will go through the transportation division's financial and operational highlights. Finally, Mr. Francisco Zinser will comment on the financial highlights and relevant events that occurred during the quarter and the year in our infrastructure division. At the end, the line will be open for question and answer. Before starting with our results, I want to highlight we are excited and optimistic about our future. We are seeing a positive environment of copper prices, and we have top tier growth projects in our mining division. Our transportation division continues to see volume growth, while our infrastructure division continues to expand. Now let's start with our main ESG highlights in slide number five. Okay.
Southern Copper, our mining company listed in the New York Stock Exchange and Lima, in charge of our Mexican and Peruvian operations, achieved a 22% increase in the S&P's corporate sustainability assessment rating during 2021. This performance exceeds the metal and mining industry average by 79 percentage points. Sorry if I was a little bit confused in there. I am very excited to announce Southern Copper Corporation is committed to the Copper Mark, a voluntary assurance scheme assuring responsible production practices and contributing to the UN's sustainable development goals. As you all know, this constitutes a milestone in our ESG progress for our company, and we are very happy to have joined such an important initiative in the industry worldwide. This continues to be in line with our commitment to working towards best practices.
Our mining division has specific goals and objectives in several areas to make sure we have a responsible production, and this is also an essential topic in our sustainable development strategy. Regarding our commitment to fight against the pandemic, Southern Copper and the Peruvian Ministry of Health reached an agreement which allowed the application of over 1 million doses of COVID-19 vaccines throughout the five regions in which we operate. These achievements are just some examples of the effort we are doing to continue improving ESG matters, but you will be able to find more detailed information in our annual ESG report. In slide number six, our scorecard show outstanding results for the quarter and the year.
As you can see, we achieved record sales during 2021, netting almost $14.8 billion, an increase of more than 35% versus 2020 and 17% versus the same period of 2020. This is during the fourth quarter. This was mainly driven by favorable metal prices and a recovery in transported volume, offsetting a reduction of roughly 4% in copper production, which Mr. Xavier García de Quevedo, Ingeniero, will comment on during our mining division highlights. Our EBITDA total is $8.9 billion, almost nine, during 2021. An increase of over 66% versus the previous year. Now setting our EBITDA margin at 60.4%, an increase of over 11 percentage points versus 2020.
Our operating income netted $7.5 billion, an increase of 88.7% versus 2020, and 40% versus the same quarter of that year. Very important to mention that our board approved to maintain a dividend of MXN 1.75 per share, reinforcing a strong dividend program, which translates into the approximate or a little bit above 8% dividend yield, which is the highest in Mexico. I would also like to highlight our net cash costs which averaged $0.84 per pound of copper, an improvement of 1.9% versus 2020, reaffirming our spot as the industry leaders in this matter. Finally, I would like to comment on our CapEx for the year, that total almost $1.4 billion for 2021.
Our investment program for 2022 is set to reach almost $2.3 billion at a consolidated level in different projects that will be sources of economic growth, job creation and wellbeing for the communities where we operate. Okay. Moving forward to slide seven. You can find a brief summary of our financial highlights for the quarter and the year 2020 and 2021. Then you can see all the difference. In case you need to, at any point of the presentation, you have there all our main SM, top line and then P&L. As you can see, difference in growth we have had this year. I think here the paid dividend really during 2021 really stands out as it was more than double versus the previous year. I think it's important to see it.
On slide number eight, Grupo México continues to have a solid balance sheet with low leverage and a net debt to EBITDA ratio of 0.3x. Our debt is mainly issued in U.S. dollars that accounts for roughly 81% of the total debt, while the rest is denominated in Mexican pesos. On this slide, you can also see the dividend space from 2019 to 2021 and respective annual and quarterly implied dividend yield. I think, going back a little bit to the debt part, it is important to mention that we normally what we try to do, and I think we have mentioned this before, is, in our mining division, in which we have our income, our revenues in U.S. dollars, we have the debt in U.S. dollars.
In our operations for transportation that has part of the revenues in pesos, that we try to have like a natural hedge and natural match between our revenues and the debt, and in the different divisions or the assets that we have. Just to highlight that. As our debt maturity profile pictured in slide number nine, we continue to have a comfortable maturity schedule with no payments of over $1 billion until 2035. Our cash flow shows a significant increase of 60% this year, totaling to $6.4 billion at the end of 2021. This is significant. Now, I will let Mr. Xavier García de Quevedo comment on our mining division's performance.
Thank you, Marlene. Good afternoon, everyone, and thank you again for joining us. Today, I will start with a couple of quick remarks on the current copper market that you can follow on slide 11. We saw an increase of over 35% in the LME copper price when comparing the four quarters of 2020 versus 2021 from $3.25 per pound to $4.40. Currently, prices range between $4.4 and $4.5 per pound, remaining higher than last year average of $4.23. For this year outlook, more relevant market intelligence houses expect a balanced market, assuming a 3% demand growth with an uncertainty in the side of the offer.
Some of the factors that we believe are influencing the market are an economic slowdown is expected in China due to real estate challenge and Omicron's impact in the country. Remember that China consume over 45% of the copper worldwide, and this slowdown is a slight one because it's from 5.14% increase to 5.1%. Peruvian and Chilean future production uncertainty, which together represent about 40% of the world's supply. 12% is from Peru and 38% from Chile. Combined inventories of the LME, Comex, Shanghai, and bonded warehouses remain at a very low level, falling from 569,000 tons in September to 369,000 tons in December 2021. A 35% reduction. These inventories represent a weak copper consumption in a more balanced market.
We expect inventories to be around three to four weeks of consumption. On the right-hand side, you can see a line chart of the copper price performance during last year, which remained in an average of around $4.20 and increased significantly. Now let me move forward to the mining division operating and financial highlights on slide 12. As Marlene mentioned, during 2021, we saw a decrease in production of 3.9% when compared to 2020, given the optimized mining plan for 2020 and 2021 that suggested mining to areas with lower ore grades that will increase in the following years. As a side note, copper sales were lower than production in 2021 due to the absence of third-party concentrate purchases, as well as some delayed shipments as a consequence of the pandemic.
For 2022, we expect to produce 1,048,000 tons of copper, out of which 922,000 will come from Southern Copper and around 125,000 tons from the site. Production will continue to be affected by a temporary reduction in ore grade and recovery of the Peruvian operation. We expect copper production to bounce back in 2023 and reach 1.11 million tons as we get Peruvian production back on track and generate new production through our [inaudible] and Buenavista streams. However, I mentioned on by-product production, we managed to keep the production of molybdenum, our main by growth, stable and slightly increase our gold production. Despite the decrease in production in 2021, we're able to achieve annual sales of over $12 billion, a historic record for our division.
This result is 41% higher than 2020's result due to higher copper and by-product prices. On a quarterly basis, sales increased 17.8% year over year, totaling more than $3 billion during the fourth quarter of 2021. Our EBITDA increased over 82% during 2021, making $7.58 billion, which translates to a 62.7% EBITDA margin. Along these increases, our net income surpassed $3.5 billion during 2021 and $78.8 million for the last quarter of the year. Our cash costs net of by-products for the year ended at $0.84 per pound, an improvement of roughly 2% versus 2020, supported by higher by-product credits along with an effective cost control to reinforce our position as cost leaders in the industry worldwide, even in an inflationary cost environment.
The mining division CapEx totaled $935 million during 2021 and $214 million during the fourth quarter of the year. As we move forward to slides 13 and 14, I would like to share our projects updates and highlights. Let's first talk about our short-term projects. In Buenavista we soon expect to be operating by the second half of 2022. We have already deployed 48% of investment in the construction of the road for mining trucks between the open pit and the primary crusher is complete. Now our Buenavista concentrator has been completed and has all the required permits. The performance has 96% progress and deployed CapEx reached $270 million last year. As for El Pilar, the results and the leaching pads confirm that there is suitable copper recovery.
The basic engineering is already completed, and we continue developing projects and carrying the environmental activities. It's important to mention that all the environmental permits for El Pilar has been granted. Lastly, our new lime plant project in Sonora, which is expected to be operational by the second quarter of 2022, will have a capacity of 1,200 daily metric tons of lime, becoming the largest lime plant. This project will cause an approximate reduction of 50% in our current lime price. 68% of the total investment for the lime plant has already been deployed to date. If you have additional questions on this project, please feel free to ask during the Q&A session.
Coming to our long-term project, I would like to talk about the transaction with CPI and Minera . 2021 means great progress for Los Chancas. We engaged in social and environmental improvements for local communities and the environmental impact assessment of our 130,000 tons per annum open pit mine project. Last year also marked a positive year for the Michiquillay project, as we were able to sign a social agreement with the Michiquillay and La Encañada community, providing an opportunity to improve the residents' life quality through strong social programs, all supported by a solid framework at the project level. All of this, along with the Peruvian Ministry of Energy and Mines approval of the semi-detailed environmental impact study back in October 2021, are important steps that will allow us to initiate an exploration program by the first quarter of this year.
As for El Arco, our project located in Baja California, Mexico, we have completed the baseline study and are reviewing the basic engineering analysis to request environmental impact permit. In slide 15, you can see a graph of our robust pipeline of upcoming projects and their impact to production as we continue our journey to reach 2 million tons of copper produced per year. That would be all from our mining division highlights. If you happen to have any follow-up question, we will be pleased to address them during the Q&A session. Now, I will let Fernando comment on our transportation division. Thank you.
Thank you, Xavier, and good afternoon, everyone. Let me start with the transportation division's financial highlights for the quarter and the year shown on slide 17. First, I am pleased to announce that most of our segments showed positive variations in revenue, carloads, and ton-kilometers during 2021. By most, I mean all of our segments except the automotive segment, which has been impacted by the microchip shortage that the world is going through. This is the only segment that is still below pre-COVID levels, but we're very encouraged that demand is there for new cars and from for our services as well. Our sales continued this positive trend and showed a 16.5% recovery during the fourth quarter of 2021 when compared to the same period of 2020.
They totaled $2.5 billion for the year at 16.9% versus 2020. This was mainly driven by higher volumes that we moved during the year, gaining market share versus over-the-road. Not only recuperating from COVID, but gaining market share versus over the road and the other railroads. Our EBITDA also saw a significant improvement of 18.9% versus 2020, ending the year in $1.1 billion with an EBITDA margin of 44.5%, translating this into an 80 basis point improvement. The division's net income totaled $369 million during 2021, of which $90 million were generated during the fourth quarter, an increase of 34.4% and 36.6% respectively, versus 2020.
Following the trend, our volume and carloads increased 10.2% and 9% respectively during 2021 versus the same period of the previous year, with a total of 1.9 million carloads hauled during 2021. These improvements were also seen during the fourth quarter of 2021, with the net ton kilometers improving 7.8% and carloads 5.1%. As we move forward to slide 18, you can see our main highlights. Volumes have returned stronger than pre-COVID levels in most of the business segments.
Both the fourth quarter and the full year set a new financial record with revenues increasing 17.2% in Mexican pesos, driven by market share gains, as I commented before, and a 17.5% increase in EBITDA, which totaled MXN 5,668 million. It is also important to highlight that we have gotten an extension of our exclusivity rights in our Mexican subsidiary for building a bypass in the Bajío region for the government. This I believe shows with facts that this government is happy with how its railroads are operating and that no changes will come as we move forward. Continuing with the main variations of our revenue on slide 19.
As I previously mentioned, almost all of our segments saw revenue growth during the fourth quarter, with the automotive segment being the only segment showing a decrease of 13% in revenue due to the global microchip shortage. In relative terms, this quarter's top performer was the energy segment, which saw an increase of 53% due to increase in movements of refined products, coal and fuel oil. Other segments which saw revenue growth of 20% or above were, to start with industrials, where we had a revenue increase with market share gain in consumption product. Chemicals were basic chemicals and Mexican imports of plastics, saw also an increase in volume and in overall share. In agricultural products, we achieved an increase in market share of the imports in grain into Mexico.
In minerals, the iron ore industry has reactivated in most of the mines that we serve. In metals, we continue to gain share from the ports, moving raw materials and finished products into and out of Mexico. With medium growth and showing also double-digit growth, we had the cement segment increasing 14% due to increased Mexican exports to the U.S., and also a steady growth or substantial growth in U.S. domestic volumes as a result of the U.S. recovery of its construction industry. Intermodal, we saw an increase of 13%, propelled by market share gains from truck to rail conversions and an increase in demand in the U.S. Specifically, in this segment, we ran out of capacity.
Our Board has approved a substantial investment in new containers and also in terminals, in intermodal terminals enhancement, in equipment and in growth of them as well. In slide number 20, we show our operating metrics for the year from 2019 to 2021, and we can see that most of our indicators show overall progress since then. Thanks to our efforts to optimize our service master plan and the continuous effort from our operating team down to the field. We're very happy since starting February of this year, we are now live with our new operating system. This will enable us to become way more productive and to have all of our decisions implemented faster and to be able to see everything live from all of the terminals.
This is a major change for us. Average train speed dropped 5.2% during the year. This was mainly due to weather conditions and a steady and very heavy track maintenance program that we have put in place. Dwell time increased from 22 hours to about 28. We held certain trains to be able to run longer and heavier trains that you can see translated below in the improvement of gross tons per train. Car velocity dropped as a result of the combination of the average train speed and the dwell time. The average train length improved 4.3%, and gross tons per train improved 5.5% for the year. As a result of this, the average crew starts increased only 2.3%.
Bear in mind that our traffic has grown 10%, so this is where the productivity starts to show. In 2022, we will focus on preserving the levels of the remaining indicators and maintaining the efficiency of all their processes. As for our CapEx in 2022 shown on slide 21, we expect to invest around $450 million, where $294 million will be invested in maintenance projects, which is not only maintenance for us, it's the capacity of the track itself. The better track we have, the faster we move. The faster we move, the more trains we can get, the more competitive we become against trucks, no?
MXN 104 million and MXN 19 million will be invested in growth projects such as the intermodal terminals that I just spoke of, and increasing also the capabilities and the capacity that we have at the Mexican ports and the American ports to be able to increase volumes. You'll also see there our Celaya bypass that I mentioned before, that, where we got an extension and exclusivity rights from the Mexican government. The Monterrey bypass, which the first stage will be ready for this year, giving us access to Pesquería, which is Nuevo León, Nuevo León's newest and most up-and-coming industrial area. We also have 36 million that will be invested in efficiency programs, including the LNG conversions, the LNG locomotive conversion plan. With this, we conclude the general overview of the transportation division.
I will now let the call to Francisco Zinser so that he can comment on the infrastructure division.
Thank you very much, Fernando, and good afternoon, everyone. I'll continue today's call by going through the financial highlights of the infrastructure division, which are depicted on slide number 23. Our annual revenues totaled $558 million, a 6% increase when compared to 2020. While our quarterly revenues totaled $148 million, an increase of 8.7% when compared to the fourth quarter of 2020. Finally, our net income totaled $17.5 million. Increasing sales was led by our energy business unit, followed by an excellent performance of both our toll road and the engineering business unit. Our EBITDA for the year totaled $228 million, 14.3% below the previous year's result, with the yearly EBITDA margin ending in 41%.
The EBITDA for the fourth quarter of 2021 netted $55 million, a decrease of 13.7% when compared to the same period of 2020. These results were mainly driven due to an adjustment in our tariffs beyond grids projects mismatch in our construction company, and lower foreign exchange rates. As we continue into slide 24, I will go through the most relevant events of the division and a brief project update. Our engineering service business unit had a record year for a third year straight in a row, with increases in sales and EBITDA versus 2020 of 19% and 8% respectively. This was achieved by expanding the total number of third-party contracted projects and the execution of our EPC projects, which totaled almost $10 million.
Through our main project updates, the construction of our 168 MW wind farm, which is located in the state of Nuevo León, is complete and has already concluded its testing phase. To date, 95% of the total cost has been invested, and we expect its commercial operation to start in April 1, 2022. The Maya Train construction is in progress. The Mexican government recently decided to change the outline or route of the location, moving it a few kilometers to the west. This will significantly reduce the impact to the local community during the construction, as the original route was going to be in the highway, and will eliminate the need to build two overpasses, which were initially planned to be located in Playa del Carmen, 7 km, and in Puerto Aventuras, almost 2 km, among other advantages.
This concludes the infrastructure division highlight. I will let Marlene to proceed with her closing remarks. Thank you.
Thank you, Francisco, Fernando, and Mr. Xavier. I just wanna thank everybody again for their time and attention and for joining us today. Now, we will open the line for the Q&A session, and wishing you all the best as well for this year.
Thank you. As a reminder, ladies and gentlemen, if you have a question at this time, simply press star one on your telephone. To withdraw the question, press the pound or hash key. We have a question from the line of Carlos de Alba with Morgan Stanley. Your question please.
Yes. Hello, everyone. Good afternoon. Thank you very much. First question, if I may, Marlene, maybe. You have a very strong balance sheet. Copper prices are doing quite well. You already pay a very good dividend yield, but what are you planning on doing with the increasing or the very healthy cash flow generation that you are, you know, that you are having every single quarter? Is it possible to maybe increase dividends even more? Or are you or the company planning on perhaps investing in other businesses outside of where you already play?
Then my other question, if I may, can you add any colors, any color on the outlook for Asarco in terms of production and cost in 2022? And perhaps Francisco, the same for the infrastructure businesses. How do you see revenues and EBITDA this year? Thank you.
Thank you, Carlos. Sure. If you want, I will answer the first question, and I will let Leonardo or Oscar answer the Asarco question, and Francisco the infrastructure. Regarding the cash generation, yes, we are generating a lot of cash. It was a record high year in terms of cash generation. As you have probably seen, our dividends in the transportation division was $0.50 per share. This has increased as well, increased last quarter, and we had the same one. It was up from $0.35 before that. Our dividend for Southern Copper has also increased to $1, in line with last quarter. During the first quarter or two, three quarters ago, it was $0.70, and then $0.90, something like three quarters ago.
We have been increasing our dividends as well as Grupo México now with MXN 1.75. Going forward, we definitely still wanna hold cash, as you know. We have a higher CapEx plan for this year than last year. We're gonna invest in our projects and to continue with the expansions and to continue improving our operating efficiencies. That's our priority. Then also analyzing on a quarterly basis possible increase in our dividends, which could happen. We have seen this over the past two quarters, and this could continue to be a trend. So as you know, I cannot assure you this is something that we have to review on a quarterly basis with our board, depending on our cash generation and CapEx needs and everything. This could be a trend going forward.
I know, as for investing in other businesses in which we don't have presence, I don't think that is our, like, intention. As you know, we have a very strong M&A team in all of the three divisions, the mining, the transportation and the infrastructure division, and we analyze the opportunities that are out there. We also do in our mining division, we invest in exploration, so we can have more projects in the pipeline. That's an interesting part as well. I don't think, like, going to a new business is something that we are looking forward. We analyze everything that makes sense with reasonable valuations and that makes sense with what we currently have. As for Asarco?
Hello, Marlene, this is Leonardo. Good afternoon, Carlos. In regard to the Asarco production we're expecting for 2022, we're expecting similar production last year, around 127,000 metric tons. The cash cost after byproducts around $235, primarily driven by the increase in consumables and the price of acid. If there's any additional comment or not, I'll give the word to Francisco.
Yes, sure. Thank you, Leonardo. Regarding the outlook for the infrastructure division, for 2022, we are expecting our sales to increase roughly 10%. However, our EBITDA should be growing by roughly 20%. We see growth in all of our business lines. Mostly the most important growth will come from the energy division because as we said before, Fenicias should come online on April 1, so we will have the impact of the new wind farm. We also expect growth coming from the construction company because of different projects that were delayed last year and most significantly because of the Maya Train. As you know, construction will happen between this year and next, and that will have a significant impact in our EBITDA.
We also see growth in the rest of our business lines, in the oil rigs, because of a potential increase in tariffs with Pemex now that the oil prices are again high. In the highway division because at least inflation will be recognized in the tariff. We expect also the number of cars to increase as the pandemic eases. Finally, in the engineering division, as I said before, we have been growing into historical numbers for three years in a row. And the Maya Train engineering division also has an important role to play there. And we have been able to increase our clients from outside our third-party companies. So we expect 2022 to be a better year for the infrastructure division. Thank you, Carlos.
Thank you very much, Francisco, Leonardo and Marlene. All the best.
Thank you. Our next question comes from Isabella Vasconcelos with Bradesco BBI. Your line is open.
Thank you. Good afternoon to all. I have two questions also here on my side. The first one on the transportation division, if you could share also some guidance in terms of expected volume growth and also the cost outlook for the transportation division. The second question on still on capital allocation. Marlene, you mentioned that you are conducting exploration studies in other countries in the Americas, if I'm not mistaken, Argentina, Ecuador. So do you have any updates in terms of potential projects or is it still too early to say here? Thank you.
Thank you. If you like, I'll start with the transportation division. We see our volume growth between 5%-7%. Price increases across the board should come in between 7%-8%. That gives you revenue. On margin, we see an improvement between 100-200 basis points for the year. Between the next 12-18 months, these 200 basis points.
Yes, Isabella, I will let Mr. Xavier give you further information on our exploration and give you a more detailed update. Yes, we do exploration in Argentina, Chile, Ecuador, which I think is the most important one right now, as well Mexico, Peru and the USA. I will let Mr. Xavier give you more detail.
Well, in Ecuador we have Ruta del Cobre. It's an open pit copper project. We have finished all the drilling, and we are in the process to finish the feasibility study to start the negotiations with the Ecuador government. For this project, for the participation. We're participating with a 70% partnership. We have other important projects in Chile, for example, we have Proyecto Montonero. This is the region of Atacama. Yes. It's a copper gold project. We have an advanced conceptual study with an 80% progress. We have considered there the process to process in the concentration 10,000 tons per day. An important project in Argentina is Cañadón del Moro. It's probably the most important one.
These are an underground gold and silver projects with veins. These are 70.6 km in length. Yes. With a width of up to 7 m. Yes. The resource that we have measured there is approximately 9.2 million tons with 0.6 ounces of silver, sorry, and 0.5 ounces of gold. Another important project in Argentina is Esperanza. It's also in the Río Negro, Argentina, province. We have 100% this property of Southern Copper. Here we have also. It's also a gold and silver project with a good potential. Yes. With values of 2.2-8.5 grams of gold and 100 grams of silver. Yes. We are expecting also to explore La Olada. Yes.
This is a copper porphyry deposit, copper and gold. We are just starting. The potential of La Olada, probably 600 million tons with 0.5% of copper and 0.2 grams per ton of gold. These are our main projects that we have in South America. As you know, we are continuing with our company in Spain.
We are progressing, and we expect to have the final environmental license of Aznalcóllar by the middle of this year.
Great. Thank you.
Thank you. Again, ladies and gentlemen, if you have a question, simply press star one on your telephone to get in the queue. Miss Finny, I'm not showing any further questions. You may continue.
Well, thank you, everybody. If further on you have any questions, please reach out to us. We're here to answer any questions you might have. Thank you so much for your time and all the best for this year. Thank you, Carmen, as well, for everything.
Thank you. My pleasure. Ladies and gentlemen, this concludes our program. You may now disconnect. Have a wonderful day.