By Jim Jelter
SAN FRANCISCO (Dow Jones) - Freeport McMoRan Copper & Gold
Inc. reported Monday a fourth-quarter loss, reflecting the downward
spiral in metals prices and hefty writedowns of its inventory and
assets.
But the stock rallied as much as 12% in early trade as investors
looked past the writedowns and other one-time charges to focus on a
surprise profit from its ongoing operations, which show the company
is making headway balancing costs and output to reflect the much
weaker global marketplace.
For the three months ended Dec. 31, Phoenix-based Freeport (FCX)
reported a loss of $13.9 billion, or $36.78 a share. It posted a
net profit of $414 million, or $1.05 a share, a year earlier.
The results were weighed down by special items totaling $14
billion, or $36.84 per share. Excluding those items, the company
would have reported a profit of $23 million, or 6 cents a
share.
Analysts polled by FactSet had expected Freeport company to post
a loss of 94 cents a share on $3.28 billion in revenue. Their
estimates typically exclude one-time items.
The $14 billion worth of writedowns include marking down the
value of the company's existing inventories, some of its long-lived
assets, and goodwill tied to its 2007 acquisition of copper miner
Phelps Dodge.
Fourth-quarter sales were down sharply at $2.07 billion, half of
the $4.18 billion it reported a year ago and less than the $3.28
billion analysts had been looking for.
Behind the drop is a sharp fall in metals prices. Copper prices
fell to a four-year low in December of $1.26 a pound on the London
Metals Exchange. Copper had traded as high as $4 a pound earlier in
the year, and averaged $3.61 a pound on the LME for the first three
quarters of 2008.
The steep drop in commodity prices prompted Freeport to suspend
its dividend in December. At the same time, the company announced
plans to slow copper production and cut capital spending to bring
its operations more closely in line with a much weaker
marketplace.
"We are taking decisive actions to respond to the currently weak
global economic conditions so that our company is positioned to
operate on a lean, efficient and low cost basis while preserving
our valuable resources and growth opportunities for the future,"
President and Chief Executive Richard Adkerson said in a statement
accompanying the results.
The company said that because of slumping demand and its own
production cutbacks, it expects to sell 3.9 billion pounds of
copper in 2009, or 9% less than it estimated in October, while it
sees molybdenum sales falling to 60 million pound this year, down
25% from October estimates.
Gold sales, on the other hand, are not likely to feel the impact
of production cuts, and are expected to average about 2.2 million
ounces in 2009 and 2010, the company said.
Freeport shares were last trading at $25.46, up 11.4% from
Friday. They are down about 37% from their 52-week highs in May and
down 70% from where they were trading a year ago.
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