Freeport-McMoRan 2nd-qtr earnings rise 10 percent on higher-than-expected sales

Freeport-McMoRan 2Q earnings rise 10 percent

DENVER — Freeport-McMoRan Copper & Gold Inc. says global copper demand is robust despite the uneven economic recovery, prompting it to push ahead with plans to restart some operations curtailed during the recession.

The world’s biggest publicly traded copper producer said its second-quarter earnings rose 10 percent as it capitalized on higher prices for copper and gold despite fewer sales.

The copper market was strong in northern Europe, China and in the U.S. even though there were pockets of economic weakness, said Richard Adkerson, president and CEO.

“We see our order books filling more strongly than we have in some time,” he told analysts during a conference call.

In the April-June quarter, the company earned $649 million, or $1.40 per share. That compared with $588 million, or $1.38 per share a year ago.

Revenue rose 5 percent to $3.86 billion from $3.68 billion.

Although sales of copper and gold fell in a year-over-year comparison, average prices rose. Analysts said the decline in sales was expected because lower grades of ore being mined at Freeport-McMoRan’s massive Indonesia mine.

The company also credited cost-cutting measures implemented during the recession. It ended the quarter with cash and cash equivalents totaling $3 billion, compared with $1.3 billion in the year-ago quarter.

Freeport-McMoRan produces key metals for industrial production. Copper is used in construction materials and consumer electronics while molybdenum is a steel-strengthening material.

The price producers receive for industrial metals can provide some insight into economic health. Copper at $3 a pound or higher is a key factor in the industry’s growth, Adkerson said.

Freeport-McMoRan is taking steps to restart or ramp up operations that were curtailed when demand plummeted during the recession, including some mining facilities in Arizona.

It added about 300 U.S. employees in the second quarter. Adkerson told analysts the company will hire more workers as needed.

Argus Research analyst Bill Selesky said the key question will be whether the demand can be sustained in the months ahead, particularly in China, a huge importer of copper.

China’s economic growth slowed to 10.3 percent in the second quarter, compared with 11.0 percent in the previous quarter as its government stimulus program was winding down.

Freeport-McMoRan has forecast third-quarter sales of 970 million pounds of copper, 410,000 ounces of gold and 15 million pounds of molybdenum.

For the year, it expects to sell 3.8 billion pounds of copper, 1.8 million ounces of gold and 63 million pounds of molybdenum.

Shares of Freeport-McMoRan rose $1.74, or 2.7 percent, to $66.06.

____

Business reporter Samantha Bomkamp in New York contributed to this report.