Freeport-McMoRan Copper and Gold (NYSE: FCX ) , the world's largest publicly traded copper producer, took a 96% hit in the March quarter vis-a-vis last year's earnings. Nevertheless, the company continues to ride improving copper prices to higher share values.
On Wednesday, Freeport reported earnings for the quarter of $43 million, or $0.11 a share. That's not even in the vicinity of last year's $1.1 billion in income -- $2.64 a share -- when copper was above $3.50 a pound. But it was better than if the red metal had remained in the vicinity of the $1.40 at which it began the year. (It's currently trading near $2 a pound.)
For the quarter, copper and gold volumes were generally higher than had been anticipated. Copper sales reached 1 billion pounds, up from 911 million pounds a year ago. And sales of 545 thousand ounces of gold far outstripped the 280 thousand ounces sold in the first quarter of 2008.
But economic conditions chopped molybdenum volumes to 10 million pounds, down from last year's 20 million pounds. Along with the volume decline, the company's average realized molybdenum price plummeted to $11.52 a pound, from the $31.67 in the first quarter of 2008.
During his conference call with analysts, Freeport CEO Richard Adkerson expressed confidence that demand for copper from China was "clearly sustainable." As he noted, China is building a new infrastructure, including transportation and power facilities and housing, all of which create a demand for copper.
Like other metals companies, including Alcoa (NYSE: AA ) , and along with Rio Tinto (NYSE: RTP ) , Vale (NYSE: RIO ) , and, of course, Southern Copper (NYSE: PCU ) , Freeport's share price has fluctuated dramatically during the past year. Specifically, it slid from about $125 in May to below $20 in December, only to rise to its current level near $40.
My feeling, however, is that, with its geographic diversity and strong asset base, Freeport is an unusually solid company. As such, I'm convinced that commodities demand from the developing nations and ultimately a general economic recovery will benefit it substantially. For those reasons, I believe it deserves continued monitoring by Fools with a yen for metals and mining.
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