Freeport Profit Tops Estimates on Higher Metal Prices (Update2)

Jan. 21 (Bloomberg) -- Freeport-McMoRan Copper & Gold Inc., the world's largest publicly traded copper producer, posted a fourth-quarter profit that topped analysts' estimates after the economic recovery boosted metal prices.

Net income was $971 million, or $2.15 a share, compared with a loss of $13.9 billion, or $36.78, a year earlier, Phoenix-based Freeport said today in a statement. Excluding one- time items, the company earned $2.25 a share. Freeport was projected to have a profit of $1.75, the average estimate of 17 analysts surveyed by Bloomberg.

Chief Executive Officer Richard Adkerson is benefiting from copper prices that more than doubled last year as the U.S. economic recovery boosted demand for the metal used in pipes and wires. Industrial production in the U.S. rose 0.6 percent in December, the sixth straight monthly gain. Freeport's fourth- quarter sales more than doubled to $4.61 billion.

"They've gone from being cash constrained by low prices to generating cash, and hopefully it's going to start putting that cash to work," David Radclyffe, a London-based analyst at BMO Capital Markets, said today in a telephone interview.

Freeport fell $1.17, or 1.4 percent, to $82.35 at 9:32 a.m. in New York Stock Exchange composite trading. The shares gained more than threefold last year.

Freeport's share decline "probably has a little bit to do with copper and a little with the broader market," Radclyffe said.

Copper Prices

Copper prices were little changed today on the London Metal Exchange and fell 1.5 percent in the five trading days ended yesterday.

Freeport sold 4.1 billion pounds of copper in 2009, beating an October forecast of 4 billion pounds, and said today it expects to sell 3.8 billion pounds this year. The company sold 4.07 billion pounds in 2008, Freeport said in its 2008 annual report.

Tongling Nonferrous Metals Group Co., China's second- largest copper smelter, Hindalco Industries Ltd., India's second-largest copper producer, and some major Japanese smelters agreed last month to reductions in 2010 processing fees charged to Freeport.

The fees for producing metal from semi-processed ore, known as concentrate, usually drop amid shortages as smelters compete for supplies.

Freeport is investing $1.8 billion in its Tenke Fungurume project in Democratic Republic of Congo, which is set to produce 250 million pounds of copper and 18 million pounds of cobalt a year. Production at the mine began in March.

Freeport's Grasberg mine in Indonesia contains the world's largest recoverable reserves of copper and the biggest single gold reserve.