FreePort-McMoran 1Q21 Earnings Analysis


FreePort-McMoran Stock Analysis

Business Description:

  • 3.2 billion lbs of Copper, 0.9 billion lbs of Gold and 80 million lbs of Molybdenum produced in 2020

  • Expected unit cash cost of $1.33 per lbs of Copper in 2021


FreePort-McMoran Stock Analysis

Catalysts:

  • Copper inventories are about 158 000 metric tons, less than when Copper prices peaked to $4.58/lbs in January 2011 and Copper prices still about 4% down from peak

  • Demand for Copper still rising with EV and Renewables in the West and China; and electrification and construction in the developing world

  • When economy gets out of recession, demand expected to rise

  • Supply still low → Possible supply gap

  • Shifting business in cheaper markets such as Indonesia

  • FY20 Cash cost per lbs in Indonesia $0.43 vs $1.81 in North America

  • 25% of sales from Indonesia in FY20, expected to be 34% in FY21

  • Restarted to pay dividends, intends to return more cash to shareholders in the future


Risks:

  • Shift from North America to Indonesia and Peru poses more political risks

  • Copper prices are very volatile


Financial Analysis:

  • 825 mm lbs of Copper sold in 1Q21 (vs 729 mm lbs for 1Q20) at $3.94 (vs $2.34 in 1Q20) with cost of $1.86 (vs $2.19 in 1Q20)

  • Revenues of $4.9 billion vs $2.8 billion for 1Q20

  • Net income of $0.7 billion vs $0.5 billion net loss for 1Q20

  • $9.8 billion in debt with no payment due in 2021 and 71% of it due after 2025

  • $4.6 billion in cash vs $3.8 Billion last quarter


Read the Full Analysis on my Investment Research Partnership: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/32013337


FreePort-McMoran Stock Analysis

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