BLBG:Freeport Beats Estimates as Copper Sales Exceed Forecast
Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, reported fourth-quarter profit and revenue that beat analysts’ estimates after sales of the metal surpassed expectations.
Net income fell 59 percent to $640 million, or 67 cents a share, from $1.55 billion, or $1.63 a share, a year earlier, the Phoenix-based company said in a statement today. The average of 19 estimates compiled by Bloomberg was for profit of 61 cents a share. Revenue slid 26 percent to $4.16 billion from $5.6 billion. The average of 11 estimates was for $3.84 billion.
Freeport fell 0.2 percent to $44.37 at the close in New York. The shares have declined 23 percent in the past 12 months.
Copper for March delivery rose 1.3 percent to settle at $3.8005 a pound on the Comex in New York. Prices earlier reached $3.8215, the highest since Sept. 20.
“Copper markets are tight worldwide,” Freeport Chief Executive Officer Richard C. Adkerson said on the company’s fourth-quarter earnings conference call. Chinese demand remains strong and Freeport is seeing a “fairly positive” outlook from downstream customers in the U.S., he said.
Freeport’s fourth-quarter copper sales were 823 million pounds, compared with the company’s December forecast of 800 million pounds. Output at the strike-hit Grasberg mine in Indonesia was better than expected and the company was also helped in the quarter by the timing of shipments, it said.
Grasberg Mine
About 8,000 workers at the mine, which has the world’s largest recoverable reserves of copper, began a strike for higher wages on Sept. 15 and signed a wage deal three months later. Grasberg is expected to resume full operations during the first quarter, Freeport said. It said yesterday that shipments of copper concentrates, a form of ore that’s processed by smelters, had restarted.
Freeport’s cost to produce copper, gold and molybdenum in the fourth quarter on a copper-equivalent basis was $1.57 a pound, up from 53 cents a year earlier. That exceeded the $1.49 estimate of Jorge Beristain, a mining analyst at Deutsche Bank AG in Greenwich, Connecticut.
Costs may average $1.38 a pound in 2012 as higher labor, energy and material expenses offset increased sales volumes, Freeport said.
“There doesn’t appear to be a whole lot of easing on the cost front,” Daniel Rohr, an analyst at Morningstar Investment Services Inc. in Chicago, said today in a telephone interview. “On the volume side, it looks pretty good.”
Sales Forecasts
Freeport forecast 2012 sales of 3.8 billion pounds of copper and 1.2 million ounces of gold, compared with a November projection of 3.9 billion pounds and 1.2 million ounces.
The company also operates mines in the Americas and Africa. Expansions in Peru, the Democratic Republic of Congo and Arizona may add 1 billion pounds of annual copper production at a cost of $6 billion, Adkerson said. Freeport is increasing U.S. copper production after curbing output and halting expansions during the global economic recession in 2008 and 2009.
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
