| Freeport-McMoRan’s 3Q15 Margins Fall on Lower Commodity Prices | |
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A Closer Look at Freeport-McMoRan’s 3Q15 Earnings (Continued from Prior Part) Margins
Previously in this series, we’ve explored the trend in Freeport-McMoRan’s (FCX) sales profile and unit production costs. We’ve also noted that the company’s average selling prices dropped in 3Q15 on falling commodity (COMT) prices. In this part, we’ll look at the trend in Freeport-McMoRan’s cash operating margins. Cash operating margins are a key metric for mining companies, including Teck Resources (TCK) and Turquoise hill Resources (TRQ).
Currently, Freeport-McMoRan forms 0.08% of the SPDR S&P 500 ETF (SPY).
Energy margins drop
- Freeport-McMoRan recorded a cash operating margin of $24.15 per BOE (barrel of oil equivalent) in its energy business. In 2Q15, the company had a cash operating margin of $31 per BOE.
- Although Freeport-McMoRan has been able to bring down its unit cash costs in the energy business, its average realized prices fell at an even steeper pace. This fall resulted in lower operating margin per BOE.
- The energy business generated an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $304 million in 3Q15 compared to $368 million in the previous quarter.
- On a consolidated basis, Freeport-McMoRan generated an adjusted EBITDA of $937 million. In 2Q15, Freeport-McMoRan had posted an adjusted EBITDA of $1.2 billion.
Outlook
- Freeport-McMoRan expects to cut its unit cost costs in its copper operations by more than 20% next year. If copper prices don’t fall, the company’s operating margins in copper could expand next year.
- According to Freeport-McMoRan, it’s reviewing its copper operations with an assumption of $2-per-pound copper prices. The company wants to ensure that it can be cash-flow-profitable at $2-per-pound copper prices.
Freeport-McMoRan’s surging debt levels and falling operating cash flow have been a concern for investors. In the next part of this series, we’ll discuss Freeport-McMoRan’s 3Q15 performance on these metrics.
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VanEck Vectors Global Alternative Energy ETF
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PRODUCER |
CODE : FCX |
ISIN : US35671D8570 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Freeport McMoran is a copper and gold producing company based in United states of america. Freeport McMoran produces copper, gold, cobalt, molybdenum and silver in Chile, in Congo Dem. Rep. of, in Indonesia and in Peru, develops copper in Peru, and holds various exploration projects in Chile. Its main assets in production are CANDELARIA, EL ABRA, CHINO - MILL, HENDERSON, MIAMI - ROM LEACH, MORENCI - MILL, OJOS DEL SALADO, MORENCI and MORENCI - ROM LEACH in Chile, GRASBERG, SIERRITA and BAGDAD in Indonesia, TENKE FUNGURUME and TYRONE in Congo Dem. Rep. of and CERRO VERDE in Peru, its main asset in development is SAFFORD in Peru and its main exploration properties are BAGDAD - ROM LEACH and CHINO - ROM LEACH in Peru and CERRO VERDE - MILL, CERRO VERDE - CRUSHED LEACH, CERRO VERDE - ROM LEACH, EL ABRA - ROM LEACH and CLIMAX in Chile. Freeport McMoran is listed in Germany and in United States of America. Its market capitalisation is 2.1 billions as of today (€ 1.9 billions). Its stock quote reached its lowest recent point on March 06, 2020 at 10.00, and its highest recent level on September 19, 2024 at 45.14. Freeport McMoran has 47 442 200 shares outstanding. |