Shares of Freeport-McMoRan (FCX -6.11%) sank nearly 10% by 10:45 a.m. EDT on Thursday after the copper- and gold-mining company reported disappointing first-quarter results.
Freeport-McMoRan reported $67 million, or $0.05 per share, of adjusted net income during the first quarter, which was $0.03 per share below the consensus estimate. The main issue was weaker-than-expected production. The company forecast that it will sell 825 million pounds of copper but only tallied 784 million pounds during the quarter. Gold sales of 242,000 ounces, likewise, fell short of its 255,000-ounce forecast. Several headwinds weighed on production, including weather events at its El Abra mine, unscheduled maintenance in North America, and the timing of shipments from Indonesia.
On a more positive note, Freeport-McMoRan raised its full-year estimate for operating cash flow. The mining company now expects to haul in $2.3 billion in cash, up from $1.8 billion. Driving the improvement is the company's view that copper will average $3.00 a pound this year, up from its initial forecast that it would be around $2.75 per pound.
Freeport-McMoRan went up against several temporary headwinds during the first quarter, which negatively impacted production and profitability. However, the company sees those issues abating, which, when combined with the anticipation of higher copper prices, should enable it to generate strong cash flow this year. If that happens, shares of the copper giant could quickly bounce back from today's sell-off.