Freeport-McMoRan Inc (NYSE:FCX) recently posted its quarterly report in which it confirmed another loss while earnings were short of analysts’ projections. The highlights
Although the company’s financial performance received a setback due to the declining copper prices, it should be noted that there are other aspects where Freeport-McMoRan is making a considerable progress. The company has been functioning under massive debt that has obstinately stayed more than $20 billion. It is huge for a firm whose market capitalization is still less than $16.5 billion, though its stock price has jumped by over 90% this year.
The performance
Going by the recent updates, it is not wrong to say that gradually, Freeport-McMoRan is progressing in the right direction. In 2Q2016, the total debt declined to $19.3 billion from total debt of $20.9 billion in the comparable period, a year earlier. While the decline isn’t noteworthy, less than 8% YoY, the debt has still declined below the big psychological level of $20 billion.
The future plans
Freeport-McMoRan intends to strengthen its balance sheet using asset sales. Recently, the firm has sold 6 assets for over $4 billion, including 13% stake sale in Morenci mine in Arizona for $1 billion and a major cobalt and copper mine in Democratic Republic of Congo for $2.65 billion. In this year, the firm projects to complete of all its divestiture, indicating that it can use a part of funds to pay off its debt.
With the recent asset sales, Freeport-McMoRan has demonstrated that it is prepared to sell stake in its core assets, in case the offered price is decent. The company has a portfolio of 2 mines in South America, 2 molybdenum mines and 7 copper mines in North America, and an asset in Indonesia. With support from FCF and asset sales, the company’s debt should decline in the coming period.
