Freeport-McMoRan 1st-quarter profit plunges
Wednesday April 22, 4:38 pm ET
By Sandy Shore, AP Business Writer
ca.us.biz.yahoo.com
Freeport-McMoRan 1st-quarter profit, revenue tumble on metals price, demand weakness
DENVER (AP) -- Freeport-McMoRan Copper & Gold Inc. on Wednesday reported a 96 percent drop in first-quarter net income as the global recession drove down demand and prices for its metals, used in everything from construction to steel.
The effects on the mining giant's performance were partially offset by increased gold and copper sales, provisional pricing adjustments that boosted copper revenue and lower operating costs.
In addition, the Phoenix-based company benefited from a 50 percent increase in prices credited to China's copper purchases at the end of the first quarter.
The world's largest publicly traded copper mining company reported net income applicable to common stock of $43 million, or 11 cents per share, down from $1.1 billion, or $2.64 per share during the same period last year.
Revenue plunged 54 percent to $2.60 billion from $5.67 billion.
Analysts projected profit of 13 cents per share on revenue of $2.69 billion.
Stifel, Nicolaus & Co. analyst Paul Forward told clients in a research note that the operating results were solid, noting stronger-than-expected gold and copper volumes and better-than-expected prices for copper and molybdenum.
Freeport-McMoRan said consolidated copper sales rose to 1 billion pounds up from 911 million pounds, although the average realized price fell to $1.72 a pound from $3.69 per pound.
Consolidated gold sales totaled 545,000 ounces, nearly double the year-ago quarter although the average realized price dipped to $904 per ounce from $933 an ounce.
Consolidated sales of molybdenum, used in strengthening steel, fell to 10 million pounds from 20 million pounds in the year-ago quarter. The average realized price also plunged to $11.52 a pound from $31.67 a pound.
In the copper business, it is typical for a company to set provisional prices when it ships concentrate to a buyer. Freeport-McMoRan records the sale when it is shipped but the price is subject to a final adjustment one to four months after the product is shipped.
When the global recession intensified last fall, Freeport-McMoRan cut production, postponed projects and laid off thousands of miners in Arizona, New Mexico and Colorado. It also limited investment when credit markets tightened.
Richard Adkerson, the company's president and chief executive officer, told analysts during a conference call that Freeport-McMoRan has seen lower prices for electricity, acid for processing and fuel but it continues to curb costs.
"We've idled equipment, we're mining higher grades, we're doing what we need to do to make that operation and other operations cash-flow positive," he said.
Before any decision is made to reopen U.S. operations, there will have to be signs of a recovery in the United States, Europe and Japan, he said.
"We think a lot of the activity in China will be clearly sustainable," Adkerson added. "Their buying practices will create volatility in the near-term but underlying that is economic growth, infrastructure development that involves real consumption of copper."
For the full year, Freeport-McMoRan estimated its 2009 consolidated sales from its mines will total 3.9 billion pounds of copper, 2.3 million ounces of gold and 50 million pounds of molybdenum.
Shares of the company rose during much of the session, but closed down 28 cents at $40.45. The stock has ranged from $15.70 to $127.24 over the past year.
AP Business Writer Deborah Jian Lee in New York contributed to this report. |
