Yahoo!  My Yahoo!  Mail
				News Home - Help

News Home Top Stories World Asia Pacific Business Technology Entertainment Sports Photos -- News by Country -- Indonesia Malaysia Philippines Singapore Thailand -- Greater Asia -- China Hong Kong Taiwan
	Yahoo! Asia News Search Yahoo! News

		advertisement
Thursday April 26, 2:10 AM Freeport-McMoRan profit surges on metal prices NEW YORK, April 25 (Reuters) - Freeport-McMoRan Copper & Gold Inc. said on Wednesday its first-quarter profit nearly doubled, boosted by soaring metal prices and the acquisition of rival copper miner Phelps Dodge. The company sold twice as much copper and gold as a year earlier, with the average copper price 23.5 percent higher and the price of gold up more than 50 percent. It expects to nearly double its copper output again in the second quarter, but gold production will be lower as a result of mine sequencing at its vast Grasberg pit in Indonesia. "At the time of the Phelps Dodge transaction we took a conscious decision to expose ourselves to the copper market," Chief Executive Officer Richard Adkerson said. "The company is driven by the copper market and the markets are very strong right now." During a conference call with Wall Street analysts, he noted that when Freeport first considered buying Phelps Dodge last year, copper was selling for $2.80 per pound. It rose to $3.10 and then dropped back to $2.40, but this year, it has risen to over $3.55. "The market is still very tight on the strength of the global economy and segments of the U.S. market," Adkerson said. First-quarter net earnings rose to $476.2 million, or $2.02 per share, from $251.7 million, or $1.23 per share, a year earlier. The Phoenix, Arizona-based miner said revenue rose to $2.3 billion from $1.09 billion, with Phelps Dodge contributing $515.7 million. Analysts on average were expecting earnings per share of $2.08 and revenue of $2.5 billion, according to Reuters Estimates. The $25.9 billion acquisition of Phelps Dodge, which made Freeport the world's largest publicly traded copper company, closed on March 19, so Phelps Dodge contributed only 12 days of results to Freeport's quarter. "They (earnings) seemed to be in-line," said analyst Victor Flores, of HSBC Securities, who noted a wide range of Wall Street estimates for the first quarter. "(But) It was obviously going to be a difficult quarter (to forecast), with all the moving parts." He noted that production at Grasberg, which was affected last week by a walkout of native Papuan workers, was "spot-on for copper" and above his estimate for gold. Freeport said it sold 520.3 million pounds of copper, more than double last year's total of 225.2 pounds, in the quarter, with Phelps Dodge contributing 103.2 million pounds. The average copper price was $3 per pound, up 23.5 percent from a year earlier. Freeport sold about 955,900 ounces of gold at $654.63 an ounce, up from about 472,500 ounces at $405.54 an ounce a year earlier. Gold sales included 9,400 ounces from Phelps Dodge. The company projected sales for the second quarter of 970 million pounds of copper and 600,000 ounces of gold, along with 17 million pounds of molybdenum, a by-product of copper mining that is used in specialized steel production. Asked on the conference call if Freeport would sell-off some Phelps Dodge assets, such as the soon-to-be reopened Climax molybdenum mine in Leadville, Colorado, Adkerson said there were "no sacred cows. "Molybdenum is different from the copper industry, so we are going to look at it and understand the potential value for our company," he said. "It's not something we have decided on. We don't have to sell assets to manage our debt." Adkerson said financing to help pay for the Phelps Dodge deal left Freeport with total debt of $12 billion, or $9 billion net of cash. In addition to Grasberg, Freeport now also owns Phelps Dodge mines in the U.S. Southwest and South America and the Tenke Fungurume project in Democratic Congo, believed to be one of the richest copper deposits in the world. Adkerson said the company has budgeted $125 million this year for exploration, with 33 percent of that being spent in North America and 25 percent in Africa. Freeport shares were up 62 cents at $69.98 in afternoon trade on the New York Stock Exchange. (Additional reporting by Michael Erman)