Bloomberg News

Freeport Earnings Beat Estimates on Higher Copper Sales

January 22, 2013

Freeport-McMoRan Copper & Gold Inc. (FCX:US), which agreed in December to buy two energy companies for $9 billion, reported fourth-quarter earnings that beat analysts’ estimates as copper sales rose more than expected and costs fell.

Profit excluding an environmental expense and an insurance gain was 74 cents a share, beating the 72-cent average of 20 estimates (FCX:US) compiled by Bloomberg. Copper sales rose 18 percent to 972 million pounds, the Phoenix-based company said today in a statement. That beat Freeport’s Oct. 22 forecast of 930 million pounds.

Metal volumes were better than expected because of higher production in North and South America, Freeport said. Copper and gold sales increased from a year earlier when the company’s Grasberg mine in Indonesia, its biggest operation, was affected by a strike. The company’s net cash costs declined to $1.54 a pound of copper from $1.57 a year earlier. Jorge Beristain, an analyst at Deutsche Bank AG in Stamford, Connecticut, had estimated costs of $1.63.

Freeport, the world’s biggest publicly traded copper producer, fell 16 percent on Dec. 15, the day it announced an agreement to buy Plains Exploration & Production Co. (PXP:US) and McMoRan Exploration Co. (MMR:US) for cash and stock. Freeport said at the time it couldn’t find a suitable copper acquisition.

Gold Increase

“The fourth-quarter volumes and fourth-quarter costs were slightly better than management had guided on its third-quarter earnings call, but the eventual ramifications of the Plains and McMoRan deals obviously overwhelm any incremental good news or bad news from a single quarter,” Daniel Rohr, an analyst with Morningstar Inc. (MORN:US) in Chicago, said in a telephone interview.

Freeport rose 4.6 percent to $35.19 at the close in New York.

Fourth-quarter net income increased to $743 million, or 78 cents a share, from $640 million, or 67 cents, a year earlier. Revenue climbed 8.4 percent to $4.51 billion.

Gold sales were 254,000 ounces in the period, up from 133,000 ounces in the fourth quarter of 2011.

Copper for delivery in three months on the London Metal Exchange averaged $7,924 a metric ton in the quarter, 5.2 percent more than a year earlier.

Cobalt Deal

Freeport, which also operates in Africa, repeated its 2013 copper sales forecast of 4.3 billion pounds. The company plans to increase copper output from 3.66 billion pounds in 2012 to more than 5 billion pounds a year in 2015, it said in the statement.

Freeport and Lundin Mining Corp. (LUN), its partner in the Tenke Fungurume copper and cobalt mine in the Democratic Republic of Congo, agreed yesterday to buy OM Group Inc. (OMG:US)’s cobalt unit for as much as $435 million.

Freeport will own 56 percent and Lundin 24 percent of a joint venture acquiring the cobalt chemical refinery and sales business in Kokkola, Finland, and La Generale des Carrieres et des Mines, the Congolese state mining company, will own the remainder.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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Companies Mentioned

  • FCX
    (Freeport-McMoRan Copper & Gold Inc)
    • $39.22 USD
    • 0.17
    • 0.45%
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