Freeport-McMoRan Copper & Gold , riding a wave of high metal prices and lower mining costs, posted a big first-quarter profit Wednesday, beating Wall Street estimates and driving its stock up over 5 per cent in pre-market trading.
The company also declared a supplemental common stock dividend of 50 cents (U.S.) per share and said it expects to sell more copper, gold and molybdenum this year than it previously had targeted.
Net earnings in the first quarter were $1.5-billion, or $1.57 per share, compared with $897-million, or $1 per share in the same quarter of 2010, the Phoenix, Arizona-based mining company said.
Revenue rose 30 per cent to $5.71-billion on a combination of higher gold, copper and molybdenum prices and lower costs for mining the metals.
Analysts on average were expecting earnings of $1.26 and revenue of $5.3 billion, according to Thomson Reuters I/B/E/S.
"It was a great quarter," said analyst Charles Bradford, of Bradford Research, noting the lower average cash cost for copper mining.
"Mines have certain fixed costs and if you get more output it flows straight to the bottom line," he said.
Freeport said consolidated unit cash costs averaged 79 cents per pound of copper for the first quarter, better than the 82 cents per pound for the 2010 first quarter.
It forecast an average cash cost of $1.04 per pound of copper for the full-year 2011 - better than the $1.10 per pound it had estimated in January.
In addition to the improved cost structure, Freeport benefited from higher metal prices. Its average sales price was $4.31 per pound for copper, up from $3.42 a year earlier. Gold fetched an average of $1,399 per ounce, compared with $1,110 in the 2010 quarter and molybdenum rose to an average of $18.10 per pound from $15.09.
Freeport's consolidated sales from mines for the first quarter 2011 totaled 926 million pounds of copper - down from 960 million pounds in the year-ago quarter. But it sold more of the other two metals - 480,000 ounces of gold and 20 million pounds of molybdenum, compared to 478,000 ounces of gold and 17 million pounds of molybdenum for first quarter of 2010.
It said consolidated sales from mines for 2011 are expected to be about 3.9 billion pounds of copper, 1.6 million ounces of gold and 73 million pounds of molybdenum. For the second quarter, it expects 965 million pounds of copper, 365,000 ounces of gold and 17 million pounds of molybdenum.
The 2011 sales target was better than its previous goal of 3.85 billion pounds of copper, 1.4 million ounces of gold and 70 million pounds of molybdenum.
In electronic trading before the New York Stock Exchange opened. Freeport shares were 5.4 per cent higher at $54.54.