Freeport-McMoRan delivered a better-than-expected second quarter, with stronger realised commodity prices and solid copper volumes offsetting lower production from Grasberg.
Adjusted EPS came in at US74c, ahead of consensus near US60c, while revenue of US$7.03 billion also beat expectations. Copper production fell 18% year-on-year to 786Mlb, but realised pricing increased 36% to US$6.17/lb.
Key highlights included:
- Adjusted EPS of US74c, ahead of expectations.
- Copper production of 786Mlb.
- Copper unit cash costs of US$1.97/lb.
- Gold production of 192,000oz.
- Capital expenditure of US$1.1 billion.
- FY26 copper sales guidance maintained at 3.1Blb.
- FY26 cash-cost guidance improved to US$1.90/lb.
The main concern is timing. Grasberg continues to ramp up, but more copper and gold sales are now weighted to the fourth quarter, increasing execution risk. The Bagdad expansion is another watchpoint, with project costs now expected to be around 30% above the previous US$3.5 billion estimate, a common trait in the mining space of late.
Overall, the quarter was strong, with earnings, copper volumes and pricing all ahead of expectations. However, the timing of the Grasberg ramp-up and rising capital costs at Bagdad were two negatives. We continue to like FCX for its leverage to copper, but delivery through the second half will be critical. We own FCX in the International Equities Portfolio.
MM remains long & bullish FCX US
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