Freeport-McMoRan Faces Challenging Q4 Despite Long-Term Copper Demand

Freeport-McMoRan (NYSE: FCX), a leading copper producer, has reported disappointing financial results for the fourth quarter of 2024. Revenue decreased by 3.1% year-over-year, totaling $5.72 billion, while earnings per share fell 42% to $0.19. Following the announcement, the stock dropped nearly 12%, although it has partially rebounded since. Despite challenges in the short term, Freeport’s long-term forecast remains positive due to robust copper demand. The current valuation of FCX is estimated at $46 per share, 19% higher than its price at present.

Q4 Performance Highlights

FCX’s performance in the fourth quarter indicates a struggle to maintain growth. While demand surged from electrification trends and AI infrastructure investments, traditional sectors, including residential construction and automotive, showed weakness that affected sales. The Grasberg mine in Indonesia produced 376 million pounds of copper—short of expectations—due to operational impediments, notably ongoing issues with the smelter. Regulatory delays further hindered copper exports, resulting in shipments suffering from late approvals in Q4 2024.

On the macroeconomic front, elements such as a strong U.S. dollar, trade uncertainties, and slower growth in China presented additional challenges. For the entire year of 2024, freeport reported revenues of $25.5 billion, an 11% increase from the previous year. However, net income only rose by 2.6% to $1.89 billion, and profit margins decreased from 8.1% to 7.4%. Higher costs in regions particularly impacted profitability, with unit net cash costs in North America amounting to $3.04 per pound, compared to $1.66 per pound in Indonesia.

Image by Łukasz Klepaczewski from Pixabay

Implications for FCX Stock

Over the past four years, FCX stock’s performance has shown significant volatility compared to the S&P 500. The annual returns for the stock have fluctuated, showing a 61% increase in 2021, followed by a decline of 7% in 2022, a recovery of 14% in 2023, and a drop of 10% in 2024. In contrast, the Trefis High Quality (HQ) Portfolio—a collection of 30 resilient stocks—has demonstrated less volatility and consistently outperformed the S&P 500 during this same period.

What contributes to this difference? HQ Portfolio stocks have delivered stronger returns while mitigating risks in comparison to the benchmark index, leading to a more stable investment experience. Given the current economic uncertainties involving rate fluctuations and geopolitical tensions, it’s crucial to consider if FCX might once again underperform the S&P over the next year.

Despite the current challenges, FCX is optimistic about long-term copper demand growth. The global push toward energy transition and increased infrastructure investments continue to heighten copper consumption. The company anticipates resuming production at its Indonesian smelter by mid-2025. Looking ahead to 2025, FCX expects to produce 4.0 billion pounds of copper, 1.6 million ounces of gold, and 88 million pounds of molybdenum, with projected operating cash flows reaching $6.2 billion. Additionally, an 8% rise in U.S. copper production for 2025 is anticipated, with growth continuing into 2026 and 2027. Despite facing recent setbacks in Q4 2024 due to declining ore grades and shipping delays, FCX continues to prioritize cost management and capital efficiency for sustained growth.

[1] Returns as of 2/20/2025
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.