10-QPeriod: Q2 FY2011

FREEPORT-MCMORAN INC Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 5, 2011For Securities:FCX

Summary

Freeport-McMoRan Inc. (FCX) reported strong financial results for the second quarter and first six months of 2011, driven by higher commodity prices, particularly for copper and gold, and increased sales volumes. The company saw significant year-over-year revenue growth, with net income attributable to common stockholders more than doubling in the second quarter and increasing substantially in the first six months. This performance was supported by robust operational execution across its diverse mining segments, including North America, South America, Indonesia, Africa, and Molybdenum. FCX also demonstrated proactive financial management by repaying a substantial amount of debt, strengthening its balance sheet and improving its liquidity position. The company ended the period with a healthy cash balance. Looking ahead, FCX expressed a positive long-term outlook for copper demand and supply dynamics, signaling continued focus on operational efficiency and strategic growth opportunities.

Financial Highlights

43 data points
Beta

Net Income

$1.37B

EPS (Diluted)

$1.43

Total Assets

$30.58B

Cash & Equivalents

$4.38B

Free Cash Flow

$1.68B

Financial Statements
Beta
Cost of Revenue$2.82B
SG&A Expenses$107.00M
Operating Expenses$3.06B
Operating Income$2.76B
Interest Expense$74.00M
Net Income$1.37B
EPS (Basic)$1.44
EPS (Diluted)$1.43
Shares Outstanding (Basic)947.00M
Shares Outstanding (Diluted)956.00M

Key Highlights

  • 1Revenue increased significantly, with Q2 2011 at $5.81 billion compared to $3.86 billion in Q2 2010, and YTD 2011 at $11.52 billion compared to $8.23 billion in YTD 2010.
  • 2Net income attributable to FCX common stockholders more than doubled in Q2 2011 to $1.37 billion ($1.43/share) from $649 million ($0.70/share) in Q2 2010.
  • 3The company repaid $1.2 billion in debt during Q2 2011, including the redemption of $1.1 billion in Senior Notes.
  • 4Consolidated cash and cash equivalents increased to $4.38 billion as of June 30, 2011, from $3.74 billion as of December 31, 2010.
  • 5Sales volumes for copper, gold, and molybdenum all increased in the first six months of 2011 compared to the same period in 2010.
  • 6The company is advancing several development projects, including expansions at Morenci, Cerro Verde, and continued underground development at Grasberg.
  • 7FCX declared and paid significant dividends to common stockholders, including regular and supplemental dividends.

Frequently Asked Questions

The substantial increase in revenue was primarily driven by higher realized prices for copper and gold, coupled with increased sales volumes across key commodities. Specifically, average realized copper prices rose to $4.22 per pound in Q2 2011 from $3.06 per pound in Q2 2010, and average realized gold prices increased to $1,509 per ounce from $1,234 per ounce over the same period.

FCX demonstrated strong financial management by repaying $1.2 billion in debt during the second quarter of 2011, including the redemption of $1.1 billion in 8.25% Senior Notes. This proactive debt reduction, combined with robust operating cash flows, resulted in an increase in consolidated cash and cash equivalents to $4.38 billion as of June 30, 2011.

FCX is seeing increased production from various mines, including the ramp-up at Morenci and restart of the Chino mine in North America. Significant development efforts are underway, such as the expansion studies at Cerro Verde in South America and the ongoing underground development at the Grasberg mine in Indonesia. The company also highlighted progress on the Climax molybdenum mine construction, expected to commence production in 2012.

FCX views the long-term outlook for copper positively, driven by supply limitations and economic demand. While acknowledging that commodity prices can fluctuate significantly, the company focuses on sales volumes, unit net cash costs, and operating cash flow. Based on projected sales volumes and estimated commodity prices for the remainder of 2011, FCX anticipates strong operating cash flows exceeding $8 billion for the full year.