Freeport-McMoRan Copper & Gold said Wednesday that third-quarter profit soared, trouncing Wall Street expectations as the mining company benefited from higher metal prices and cost savings.
Freeport [FCX 80.65 2.02 (+2.57%) ] also increased its copper and gold production targets for full-year 2009 and said its board reinstated an annual cash dividend, with a quarterly dividend of 15 cents per share expected to be paid next Feb. 1.
"It looks like a great quarter," said analyst Charles Bradford, of Affiliated Research Group. "It has to be the copper (higher) prices, plus they brought costs down."
Net earnings were $925 million, or $2.07 per share, compared with $523 million, or $1.31 per share, a year earlier. the Phoenix-based mining company said. Revenue slipped to $4.14 billion from $4.62 billion.
Analysts were expecting earnings of $1.34 per share and revenue of $4.053 billion, according to Thomson Reuters I/B/E/S.
The results easily beat Wall Street estimates and the company's stock rose in early trading on the New York Stock Exchange.
Freeport operates the world's biggest gold mine, Grasberg, in Indonesia, which has been hit by violent protests and isolated shootings in recent years. It also recently began mining at a huge copper/cobalt deposit, Tenke Fungurume, in Democratic Congo, and produces metal at mines in South America and the southwestern United States.
"Our third-quarter results reflect strong operating performance, high volumes from our Grasberg mine and improved commodity prices for our products — copper, gold and molybdenum," Chairman James Moffett and President and Chief Executive Officer Richard Adkerson said in a statement.
They said the company also benefited from cost structure improvements, particularly at its mines in the United States. Freeport, like most miners, curtailed production and idled some operations this year as the economic downturn cut into demand, driving down prices and cutting already slim margins.
But the copper price rose 24 percent in the quarter from $2.25 per pound to $2.81 on the Comex in New York. And gold has recently hit record highs over $1,000 per ounce. Freeport said it recorded an average price of $2.75 per pound for sales during the third quarter.
Looking ahead, Freeport projected sales volumes for 2009 of about 4.0 billion pounds of copper and 2.5 million ounces of gold. That was higher than the forecast it gave in July for 3.9 billion pounds of copper and 2.4 million ounces of gold.
Akderson told Reuters in June there was no sign of recovery in the developed world that would lead to a restart of its idled U.S. copper operations.
