Freeport-McMoRan’s earnings estimates

According to consensus estimates compiled by Thomson Reuters, Freeport-McMoRan (FCX) is expected to generate adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] of ~$1.4 billion in 3Q17 and ~$1.6 billion in 4Q17.

Freeport-McMoRan posted generated adjusted EBITDA of ~$2.2 billion in 1H17. Analysts expect the company’s earnings to rise in the coming quarters.

Inside Freeport-McMoRan’s Earnings Estimates

Copper prices

Freeport-McMoRan’s earnings are expected to rise further in 2018. The company is expected to post adjusted EBITDA of $6.6 billion in 2018. To put this in context, consider that Freeport-McMoRan is expected to generate EBITDA of $5.1 billion this year. Analysts expect Freeport’s EBITDA to rise ~30% in 2018.

Analysts’ optimism over Freeport-McMoRan’s 2018 earnings outlook appears to be driven by several factors. Primarily, copper prices have been strong, which could have prompted some analysts to model higher copper prices.

Freeport-McMoRan expects its 2018 EBITDA to rise or fall by $360 million for every rise or fall in copper prices of $0.10 per pound. Other copper miners like Glencore International (GLNCY) and Teck Resources (TECK) also have varying sensitivities to copper prices (RIO).


Secondly, we’ve seen upward price action in gold. Freeport-McMoRan’s gold volumes are expected to spike next year as it finishes open pit mining operations in its Grasberg operations. Notably, Freeport-McMoRan’s Grasberg operations were hit by a labor action as well as an export ban this year that negatively impacted its 1Q17 earnings.

Now, Freeport-McMoRan has reached a framework with Indonesia to extend its long-term mining rights in the country. You can read Freeport-McMoRan Investors: Hold the Celebration for a detailed analysis of FCX’s framework with Indonesia (EIDO).

In the final article, we’ll see how markets are valuing Freeport-McMoRan.

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