Freeport-McMoRan: Q4 Earnings Miss, Prices and Production Down

Includes: FCX, PD
by: SA Editors

Freeport-McMoRan reports Q4 net income of $426 million, or $1.99/share, an 8% y-o-y decline, which missed the average Street estimate of $2.12/share. Revenue grew 10% to $1.64b, but missed the consensus estimate of $1.72b. Three issues negatively impacted earnings: adjustments to metal sales from prior quarters, higher Q4 y-o-y copper and gold prices but 36% and 15% respectively off calendar intra-year highs and lower production at its Grasberg mine in Indonesia (copper -8.1% and gold -54%). Freeport-McMoRan-FCX-1yr-chart-01-16-07 Net income for the year totaled $1.4b, or $6.63/share on revenue of $5.79b, compared to $935m, or $4.67/share on revenue of $4.18b in '05. Freeport expects to sell 1.1 billion pounds of copper and 1.8m ounces of gold in '07 -- versus 1.2b and 1.7m, respectively in '06 -- of which Q1 sales are expected to be the highest. Shares of Freeport lost nearly 3% yesterday to close at $53.40. Its $25.9 billion stock and cash deal to acquire Phelps Dodge announced last Nov. is set to close this March.

• Sources: Earnings press release [pdf], Bloomberg, MarketWatch
• Related commentary: Steve Cohen Will Vote Against Phelps Dodge/Freeport McMoRan Merger, An Analysis on Freeport-McMoRan's Bid for Phelps Dodge, Freeport Stock Jumps On BHP Takeover Rumors, Does Freeport-McMoRan's Phelps Dodge Acquisition Signal a Top in Metal Prices?,
• Potentially impacted stocks and ETFs: Freeport-McMoRan Copper & Gold (NYSE:FCX), Phelps Dodge (PD). Competitors: Cabot (NYSE:CBT), Southern Copper (PCU), Newmont Mining (NYSE:NEM), Rio Tinto (RTP). ETFs: SPDR Metals and Mining ETF (NYSEARCA:XME), Market Vectors Gold Miners ETF (NYSEARCA:GDX)

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