FCX Freeport McMoRan Inc

Freeport-McMoRan Copper & Gold Inc. (FCX) reported a profit of $1.37 billion or $1.43 per share in the second quarter of 2011, which more than doubled from $649 million or 70 cents per share in the same quarter of 2011. The profit exceeded the Zacks Consensus Estimate by 9 cents per share.

Revenues in the quarter surged 50% to $5.81 billion, surpassing the Zacks Consensus Estimate of $5.63 billion. Consolidated sales from mines totaled 1.0 billion pounds of copper, 356,000 ounces of gold and 21 million pounds of molybdenum compared with 914 million pounds of copper, 298,000 ounces of gold and 16 million pounds of molybdenum in the second quarter of 2010.

Consolidated unit net cash costs (net of by-product credits) averaged 93 cents per pound of copper compared with 97 cents per pound for the second quarter of 2010.  Operating income almost doubled to $2.76 billion from $1.42 billion a year ago.

Freeport-McMoRan had cash and cash equivalents of $4.38 billion as of June 30, 2011 compared with $3.74 billion as of December 31, 2010. As of June 30, 2011, the company’s long-term debt stood at $3.5 billion, translating into a long-term debt-to-capital ratio of 19.6%.

Freeport-McMoRan had $43 million of letters of credit issued under its revolving credit facility resulting in total availability of approximately $1.5 billion as of June 30, 2011. Since January 1, 2009, the company has repaid $3.8 billion in debt resulting in estimated annual interest savings of approximately $270 million based on current interest rates.

In the first half of 2011, Freeport-McMoRan’s operating cash flows increased to $4.04 billion from $2.88 billion in the year-ago period, mainly driven by higher income. Capital expenditures, including capitalized interest, increased to $1.03 billion from $527 million a year ago.

Guidance

Freeport-McMoRan’s consolidated unit net cash costs (net of by-product credits) are estimated to average $1.01 per pound of copper for 2011 based on average prices of $1,500 per ounce for gold and $15 per pound for molybdenum for the second half of 2011.

Based on the same parameters and assuming average prices of $4.25 per pound of copper, the company’s consolidated operating cash flows are estimated to exceed $8 billion for the year 2011.

The company’s capital expenditures are expected to reach $2.6 billion for 2011, including $1.4 billion for major projects and $1.2 billion for sustaining capital. Major projects for 2011 primarily include underground development activities at Grasberg, construction activities at the Climax molybdenum mine and completion of the initial phase of the sulfide ore project at El Abra.

Headquartered in Phoenix, Arizona, Freeport-McMoRan Copper & Gold Inc. is engaged in mineral exploration and development; mining and milling of copper, gold, molybdenum and silver; as well as the smelting and refining of copper concentrates.

The company conducts its operations primarily through its principal operating subsidiaries, PT Freeport Indonesia, Freeport-McMoRan Corporation (formerly Phelps Dodge) and Atlantic Copper. Its major competitors include Newmont Mining Corp. (NEM) and Southern Copper Corp. (SCCO). It currently retains Zacks #3 Rank on its stock, which translates to short-term rating of “Hold”.

 
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