Freeport-McMoRan 4Q Profit Falls 3 Pct

PHOENIX — Freeport-McMoRan Copper & Gold Inc., one of the world's biggest copper miners, said Wednesday its fourth-quarter earnings fell 3 percent from a slew of one-time charges and higher costs, despite surging revenue.

Its shares tumbled 5.2 percent, or $4.22, to $77.30 Wednesday. The stock recovered from a session low of $68.96.

The company earned $414 million, or $1.05 per share, compared with a year-ago profit of $426 million, or $1.99 per share.

The miner recorded one-time charges of $120 million, or 29 cents per share, including accounting-related adjustments on the price of copper, higher property and equipment costs and debt reduction.

Revenue soared to $4.18 billion, from $1.64 billion in the prior-year period. The company said revenue was lifted by strength in its large-scale copper and molybdenum operations in the Americas.

Analysts expected a profit of $1.68 per share on revenue of $4.43 billion, according to a poll by Thomson Financial. Analyst forecasts typically exclude one-time charges.

CEO Richard Adkerson said profits came in below Wall Street projections because copper prices were lower at the end of the quarter than at the beginning. Half of sales in any quarter are recorded at the price at the conclusion of the period, he said.

"Here we had a quarter in which we met our production guidance, our costs were in line with expectations and the financial results simply reflect the pricing of the marketplace," Adkerson said in a conference call with analysts.

HSBC Securities analyst Victor Flores said the company would have had more favorable earnings in the fourth quarter had it not faced the price adjustments cited by Adkerson.

Flores said it was difficult to say whether the drop in Freeport-McMoRan's stock on Wednesday was a reaction to its earnings report or a reflection of an already difficult stock market.

The slowing residential housing market in the United States and the use of plastic plumbing piping in homes could have more on a negative effect on demand for copper, but the U.S. is only a piece of the picture, Flores said.

"The future for Freeport in terms of pricing will depend more on China and the rest of the developing countries and less to do with what is happening in the U.S.," Flores said.

Adkerson said Freeport is positioned to supply China, India and other countries with copper for their growth. He also sees strong prospects in supplying copper for energy efficient products as the world focuses more on using less energy.

"Every application where that comes into play requires more copper," Adkerson said.

Freeport acquired copper miner Phelps Dodge in March for $25.9 billion. During the fourth quarter, Freeport-McMoRan finished paying off the $10 billion in debt from the purchase.

The company began producing copper in December at a new mine in Safford, Ariz. The project, located about 130 miles southeast of Phoenix, had been announced by Phelps Dodge in early 2006. Freeport-McMoRan plans to ramp up production at the mine to 240 million pounds of copper per year by mid-2008.

Company executives said they expect to continue development of mines in the Democratic Republic of Congo, the Americas and Indonesia in the coming year.

The company expects consolidated 2008 sales from mines of about 4.3 billion pounds of copper, 1.3 million ounces of gold and 75 million pounds of molybdenum.

___

Associated Press business writer Samantha Bomkamp in New York contributed to this report.

___

http://www.fcx.com/

Back To Top