April 21, 2010 / 12:32 PM / 10 years ago

UPDATE 4-Miner Freeport's profit soars; dividend doubled

* Q1 profit $2.00/shr vs. Wall St view $1.91/shr

* Revenue $4.36 bln vs. Wall St view $4.49 bln

* Shares down as copper price drops (Recasts; adds CEO comments, stock activity, graphics link)

By Steve James

NEW YORK, April 21 (Reuters) - Miner Freeport-McMoRan Copper & Gold Inc (FCX.N) reported a twentyfold jump in first-quarter profit on Wednesday and said it was doubling its dividend as global demand for metals has soared.

But although the earnings beat Wall Street estimates, the company’s stock fell more than 3 percent on a day when the price of copper dropped more than 1 percent to around $3.50 per pound.

“That’s what the stock trades on,” said analyst Charles Bradford of Affiliated Research Group. “But the numbers are good, and the fact they are doubling the dividend shows they are confident with cash flow.”

While some important parts of its business remain weak, Chief Executive Officer Richard Adkerson told analysts he was seeing enough pockets of improving demand for Freeport to restart southwestern U.S. and South American production it had curtailed during the recession.

“We are taking steps to restore some of that production and invest more aggressively in growth for the future,” he said on a conference call.

Adkerson said China’s economy was providing strong support to the copper market: “The continuing growth in automobiles, air conditioners and the like, the continued building of housing for people and infrastructure indicates how strong this is.”

But he noted there was still weakness in the developed world — the United States, Japan and Europe — particularly in the construction business.


Graphic on Freeport earnings link.reuters.com/vum78j


Adkerson said Freeport’s operating cash flow totaled $1.8 billion for the quarter and estimated it would exceed $6 billion for full-year 2010, based on average prices of $3.50 per pound for copper, $1,100 per ounce for gold and $15 per pound for molybdenum.

As a result, the board had authorized doubling Freeport’s annual common stock dividend to $1.20 from 60 cents.

Freeport, which operates mines in North and South America, Africa and Indonesia, said net earnings jumped to $897 million, or $2.00 per share, from $43 million, or 11 cents per share, a year earlier.

Analysts on average expected $1.91 per share, according to Thomson Reuters I/B/E/S.

Revenue surged to $4.36 billion from $2.60 billion, but missed the analysts’ average estimate of $4.49 billion.

Adkerson said first-quarter results reflected improved pricing as well as lower mining costs. The company’s average realized price for copper was $3.42 per pound — double $1.72 a year earlier. Gold was 20 percent higher, he said.

In fact, sales of copper fell to 960 million pounds from 1.0 billion a year earlier, while gold shipments declined to 478,000 ounces from 545,000. Molybdenum sales, however, rose to 17 million pounds from 10 million.

Freeport said it expected to sell 3.8 billion pounds of copper and 1.8 million ounces of gold in 2010, the same estimate it gave in January. But it raised its forecast for molybdenum sales to 62 million pounds from 60 million.

The company said it expected consolidated sales in the second half of 2010 to be higher than the first half because of mine sequencing at the Grasberg mine in Indonesia.

In afternoon trading on the New York Stock Exchange, Freeport stock was down 3.4 percent at $78.03. (Reporting by Steve James, editing by Dave Zimmerman and Lisa Von Ahn)

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