American copper producer Phelps Dodge (pd-n) reported earnings of US$40.4 million (or 69cents per share) for the second quarter, compared with US$134.8 million (US$2.16 per share) in the corresponding period last year.
The company saw its copper production increase by 9% between the two periods, to 218,000 from 200,000 tons, despite a 30% fall in copper revenues, to US$440.4 million from US$603.8 million.
The copper price on the New York Commodity Exchange reached an 11-year low of 78cents per lb. during the quarter, compared with US$1.14 in the year-ago period.
To compensate for its weaker performance, Phelps Dodge has turned to other sectors for expansion and growth. In June, the major announced plans to acquire a Brazilian carbon black unit, hoping to capitalize on that expanding market.
“The South American market for carbon black is one of the fastest-growing in the world,” says company chairman Douglas Yearley. “This acquisition is an important step in establishing a greater presence in that region.” On another positive note, the wheel-and-rim division, part of Phelps Dodge Industries, performed well during the second quarter, accounting for 62% of operating income for the period, compared with only 31% a year ago.
Meanwhile, Phelps Dodge has set out to acquire the remaining 49% interest in a magnetic wire manufacturing plant in Austria; the company already owns 51%. Manuel Iraola, president of Phelps Dodge Industries, describes the move as “the next step in the company’s strategy to achieve a significant presence in Europe.”
For the first six months of 1998, the company earned US$204.1 million (or $3.49 per share), compared with US$272.3 million ($4.32 per share) in the first half of last year.
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