Freeport-McMoRan Inc, the world’s largest publicly traded copper miner, posted a lower-than-expected quarterly profit on Thursday as prices for the red metal slumped amid global recession fears and covid-19 lockdowns in China.
Richard Adkerson, the company’s chief executive, said it was “striking” how quickly copper market sentiment shifted during the second quarter, with the “sudden and unexpected significant decline in copper prices” coming despite what he described as resilient demand for the red metal, which is seen as a key indicator of economic health.
“There has been, to date, no significant impact in physical demand (for copper). Today’s market is tight,” Adkerson told investors on a conference call.
Freeport’s stock fell more than 2% on Thursday morning before reversing course. The stock was down about 0.7% in midday trading.
Benchmark copper prices fell around 20.4% over the April-to-June quarter, their biggest quarterly slump since 2011, sparking worries about the industry’s economic health.
Freeport reported average realized copper prices of $4.03 per pound, from last year’s $4.34 per pound.
The company said it believes its balance sheet is strong enough to weather the economic storm and that it does not need to raise capital.
“This is not our first rodeo. We have our playbook. We’ve dealt with this before,” said Adkerson.
The company noted that current prices of copper are insufficient to support new mines, which is expected to worsen a tight global supply of copper.
Copper production in the second quarter rose 17.7% to 1.08 billion pounds.
The Phoenix, Arizona-based firm reported net income of $840 million, or 57 cents a share, for the quarter ended June 30, from $1.08 billion, or 73 cents per share, a year ago.
Excluding items, the company earned 58 cents per share, missing analysts’ estimates of 61 cents per share, as per Refinitiv data.
Revenue fell 5.8% to $5.42 billion, also falling short of market expectations of $6.13 billion.
(By Ruhi Soni and Peter Hobson; Editing by Shailesh Kuber and Marguerita Choy)