Freeport-McMoRan reports 4th-qtr profit on higher copper prices, stronger demand

Freeport-McMoRan has 4Q profit on improved demand

DENVER — Freeport-McMoRan Copper & Gold Inc. on Thursday reported nearly $1 billion in fourth-quarter profit, due to higher copper prices and better conditions in Asia.

The company scaled back production last year after copper prices tumbled late in 2008. Even though fourth-quarter production fell, a strong rebound in copper and gold prices launched results into the black. Strong demand from China helped lift prices.

Although there were some positive economic signs in the United States, western Europe and Japan, questions still remain about a global recovery, Richard C. Adkerson, CEO and president, told analysts on a conference call.

“We still need to wait to see to the fundamental numbers improve in the U.S.,” Adkerson said. “Since mid-September 2008, absent government spending, there has been virtually no new commercial real estate development.”

Freeport-McMoRan posted a profit of $971 million, or $2.15 per share, a significant turnaround from a nearly $14 billion loss in the last quarter of 2008, when copper prices plunged.

Revenue rose to $4.61 billion from $2.07 billion.

Analysts were expecting a profit of $1.72 a share on revenue of about $4.1 billion.

Freeport-McMoRan’s shares fell more than 8 percent. Brian Hicks, a fund manager at U.S. Global Investors specializing in natural resources, said investors appear more focused on the bigger economic picture than the quarterly results. Stocks plunged again Thursday, amid signs that a robust recovery is unlikely until the employment picture improves.

The copper and molybdenum produced by Freeport-McMoRan are used in construction, automobile manufacturing and an array of consumer products. Investors often buy the gold it produces as a safe place to put money during uncertain economic times.

Freeport-McMoRan’s copper prices more than doubled from a year earlier when demand cratered due to the global recession. Consolidated copper sales were 989 million pounds, compared with 1.2 billion in the year-ago quarter.

Although Freeport-McMoRan sold just 6 percent of its copper to China, the country’s appetite for the metal helped boosts prices. China accounted for more than 40 percent of global copper demand in 2009, according to a Barclays Capital research report published Wednesday.

In the past month, China has taken steps to slow the pace of lending and keep its economy growing without fostering inflation.

Adkerson said the moves are a concern but the key for Freeport-McMoran is improving demand in other countries.

Consolidated gold sales totaled 551,000 ounces, up 19 percent from the year-ago quarter. Sales of molybdenum rose 33 percent to 16 million pounds, driven by more sales in Asia.

For 2010, Freeport-McMoran has forecast sales of 3.8 billion pounds of copper, 1.8 million ounces of gold and 60 million pounds of molybdenum.

The company also plans to restart one mine and one mill in Arizona but is waiting for positive signs of returning demand before looking at reopening its major operations in North America.

Shares fell $7.24, or 8.7 percent, to close at $76.28.

For the year, Freeport-McMoRan reported net income of $2.5 billion, or $5.86 a share, which compared with a net loss of $11.3 billion, or $29.72 a share, in 2008. Revenue totaled $15 billion, compared with $17.8 billion in 2009.