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Freeport (FCX) Beats Q2 Earnings, Trails Sales Estimates

Zacks Equity Research

Freeport-McMoRan Inc. FCX reported net loss (attributable to common stock) of $72 million or 5 cents per share in second-quarter 2019, against net profit of $869 million or 59 cents in the year-ago quarter. The bottom line in the reported quarter was hurt by lower copper prices and production.

Barring one-time items, adjusted loss came in at 4 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 5 cents.

Revenues declined around 31.4% year over year to $3,546 million. Also, the figure trailed the Zacks Consensus Estimate of $3,591.1 million.

Freeport-McMoRan Inc. Price, Consensus and EPS Surprise

 

Freeport-McMoRan Inc. Price, Consensus and EPS Surprise

Freeport-McMoRan Inc. price-consensus-eps-surprise-chart | Freeport-McMoRan Inc. Quote

 

Operational Update

Copper production fell nearly 23.5% year over year to 776 million pounds in the reported quarter.

Consolidated sales from mines were 807 million pounds of copper, 189,000 ounces of gold and 24 million pounds of molybdenum. Copper sales volume fell 18.4% year over year.

Consolidated average unit net cash costs per pound of copper for was of $1.92, up from 96 cents reported in the year-ago quarter.

Average realized price for copper was $2.75 per pound, down around 10.7% from $3.08 in the prior-year quarter. Average realized price per ounce for gold rose nearly 6% to $1,351 from $1,274 in the year-ago quarter. Average realized price per pound for molybdenum was $13.15, up 2% year over year.

Financial Position

Cash and cash equivalents at the end of the quarter were $2,623 million, down roughly 32.6% year over year. The company had long-term debt of $9.9 billion, down around 10.9% year over year.

Freeport’s operating cash flows were $554 million in the quarter.

Guidance

Freeport anticipates consolidated sales volumes for 2019 are expected to be roughly 3.3 billion pounds of copper, 0.8 million ounces of gold and 94 million pounds of molybdenum. This projection also includes 830 million pounds of copper, 230,000 ounces of gold and 25 million pounds of molybdenum for third-quarter 2019.

For 2019, the company expects operating cash flows at nearly $1.9 billion. Capital expenditures are expected to be around $2.6 billion, which includes $1.6 billion for major mining projects that are related to underground development in Grasberg, Indonesia and development of the Lone Star copper leach project.

Price Performance

Freeport’s shares have lost 26.6% in the past year compared with the industry’s 18.1% decline.



Zacks Rank & Key Picks

Freeport currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are SSR Mining Inc SSRM, Kinross Gold Corporation KGC and Arconic Inc. ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of 69.6% for 2019. The company’s shares have rallied 48.2% in the past year.

Kinross has projected earnings growth rate of 80% for the current year. The company’s shares have gained 14.1% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the current year. Its shares have moved up 30.7% in the past year.

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