Freeport McMoRan Reports Strong Earnings, Shares Pop

Mining giant Freeport-McMoRan Copper and Gold reported fourth quarter earnings this morning beating analyst estimates, sending shares higher. The company has garnered much media attention over the past few months following its $20 billion acquisitions of energy companies McMoRan Exploration MMR and Plains Exploration PXP.

For the fourth quarter, Freeport reported adjusted EPS of $0.74, beating analyst estimates of $0.72 by 2.8 percent. Revenue was also strong coming in at $4.51 billion, topping estimates of revenue of $4.47 billion by $0.04 billion or 0.9 percent. For the full year 2012, Freeport reported adjusted EPS of $3.10 per share, just below analyst estimates of $3.167 per share. Revenue was also slightly weaker for the full year at $18.01 billion, missing analyst estimates of $18.084 billion.

In the press release, Chariman James R. Moffett and CEO and President Richard C. Adkerson said, "Our global team continues to achieve strong and safe production while aggressively managing costs and executing on financially attractive projects to grow our copper production from 3.66 billion pounds in 2012 to over 5 billion pounds per annum in 2015. We are positive about the long-term outlook for our business, the markets we serve and the opportunities that the pending oil and gas acquisitions will provide. We are focused on executing our strategy of developing long-term resources in a cost effective and financially attractive manner to generate long-term value for shareholders."

In the fourth quarter, Freeport sold 972 million pounds of copper, 254,000 ounces of gold, and 21 million pounds of molybdenum. The figures compare to sales of 823 million pounds of copper, 133,000 ounces of gold, and 19 million pounds of molybdenum for the fourth quarter of 2011. For the full year 2012, Freeport sold 3.65 billion pounds of copper, 1.0 million ounces of gold, and 83 million pounds of molybdenum compared to 3.7 billion pounds of copper, 1.4 million ounces of gold, and 79 million pounds of molybdenum. Freeport forecasts for 2013 sales of 4.3 billion pounds of copper, 1.4 million ounces of gold, and 90 million pounds of molybdenum.

Positive signs for investors came in the side of cost cutting. Freeport cut its average unit cost of copper to $1.54 per pound from $1.57 per pound and costs are expected to fall much further to $1.35 per pound in 2013. The drop in costs will serve to boost margins, depending on where metals prices end up in 2013. Investors have become accustomed to fluctuations in commodities prices over the past several years, however reemergent strength in China and Japan should help to boost prices.

Investors await the earnings call, which is set to begin at 10:00 am eastern time, and will look for comments on the recent acquisitions and any changes to guidance following the acquisitions.