Freeport-McMoRan beats expectations in 3Q with strong copper sales
Freeport-McMoRan Inc (NYSE:FCX)[1] delivered another solid quarter with earnings that exceeded expectations due to higher-than-anticipated copper sales volumes.
The US miner outperformed expectations with reported earnings per share (EPS) of $0.39, compared to an estimate and consensus of $0.34.
Revenue was 8% higher than consensus expectations, and EBITDA reached $2.2 billion, surpassing consensus estimates.
However, net cash costs of $1.73 per pound were higher than expected, primarily due to a $0.13 per pound impact from disputed export duties in Indonesia.
In terms of the outlook, Freeport adjusted its guidance for 4Q copper sales from 1.13 billion pounds to 1.09 billion pounds, but the full-year sales guidance of 4.06 billion pounds remained higher than the previous guidance of 4.02 billion pounds due to the strong third-quarter performance. Gold sales volume guidance for 4Q increased from 565 thousand ounces to 580 thousand ounces.
The company raised full-year cash cost guidance from $1.55 per pound to $1.63 per pound, primarily due to the ongoing dispute over a 7.5% export duty for Grasberg.
While cash costs were slightly higher than expected due to a dispute over Indonesian export duties, analysts at Jefferies were impressed with Freeport’s operational performance.
“Freeport continues to be one of our top picks in the sector, especially over the longer term, as we believe the company is very well positioned for what will likely be a multi-year period of high copper prices,” analysts wrote.
“We are more cautious in the near-term due to cyclical risks in copper, and we prefer iron ore and met coal miners over copper miners - including Freeport - for a three-month horizon, but Freeport is one of our top picks in the sector for the long run.”
Shares of Freeport-McMoran fell slightly to the tune of 0.4% in early Thursday trading, changing hands at $35.45.
References
- ^ Freeport-McMoRan Inc (NYSE:FCX) (www.proactiveinvestors.co.uk)