Freeport McMoRan quarterly profit up on metal prices
Saturday, 24 Oct 2009
Reuters reported that Freeport McMoRan Copper & Gold Inc’s Q3 profit rose exceeding Wall Street expectations as the company benefited from higher metal prices and cuts in mining costs.
As per report, the USD 2.07 earnings per share trumped Wall Street's average estimate of USD 1.34 and the company's stock rose more than 5% during the day but pared gains later to close 1.4% higher at USD 79.72 on the New York Stock Exchange.
Freeport also increased its copper and gold production targets for full year 2009 and said that its board reinstated an annual cash dividend, with a quarterly payout of 15 cents per share expected next February 1.
Mr Richard Adkerson president and CEO of Freeport said that "If things stay strong in China we'll be in position to significantly increase our dividend. But despite rising copper prices, as well as gold at record highs of over USD 1,000 per ounce, Freeport is not yet ready to restart the production it had curtailed at several mines in the US Southwest during last year's economic downturn.
Mr Adkerson said that "We are likely to make some changes in the near term. But to have a full scale return to maximum production is going to be contingent on our seeing clear evidence of recovery of copper demand in the US and Europe. And we haven't seen that yet."
He said that recent increased Chinese imports indicated the global economy was on the way back and he was optimistic about a recovery. Strong demand in China and the developing world, plus the problems the industry has getting new projects going, gives us a tremendously positive outlook for the markets we are in.
Mr Adkerson said that an unexpected benefit of the recession had been that Freeport was able to reduce its costs dramatically, which contributed to the strong Q3 earnings. Copper mining costs were cut to 50 cents per pound, from USD 1.29 per year earlier while the company sold the metal at an average price of USD 2.75 per pound compared to USD 3.14 in the 2008 quarter.
