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Slumping Commodity Prices Tarnish Freeport-McMoRan's Fourth-Quarter Earnings

By Matthew DiLallo – Jan 22, 2014 at 9:45AM

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Freeport-McMoRan misses earnings estimates as both revenue and profits fall amid slumping copper and gold prices.

The world's second-largest copper miner, Freeport-McMoRan Copper & Gold (FCX -2.34%)released its fourth-quarter results before the market opened today. The company delivered net income of $707 million, or $0.68 per share, on $5.89 billion in revenue. Both numbers missed average analysts' estimates of $6.37 billion in revenue leading to $0.80 per share in net income.

Impacting Freeport-McMoRan's earnings were $166 million, or $0.16 per share, in net charges on the quarter. Unrealized losses on oil and gas hedging contracts contributed to $73 million, or $0.07 per share, of those charges, while updated mine plans and employment contracts contributed to the balance of the charges.

However, the real tarnish to earnings on the quarter were the prices that Freeport-McMoRan realized for its copper and gold. On the quarter, the company realized $3.31 per pound for copper and just $1,220 per ounce for gold. That's down from last year's fourth quarter of $3.60 per ounce of copper and $1,681 per ounce of gold.

Despite the slumping numbers, it still delivered strong operating performance that positions the company to deliver value to investors in 2014 and beyond, according to management. In a joint statement, Chairman James Moffett, CEO Richard Adkerson, and Vice Chairman James Flores noted:

As we enter 2014, we are positive about our large and diverse portfolio of assets and resources, which provide attractive near-term and longer term growth opportunities. We remain focused on building value for shareholders through strong operations, investing prudently in our financially attractive projects, achievement of our debt reduction initiatives and providing cash returns to shareholders.

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Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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