In late June, the company anticipated earnings of US2 to US5 per share, before non-recurring items totalling nearly US$60 million.
The recent quarter also represents an improvement over year-ago earnings of US$1.2 million (2 per share) before non-recurring items of US$84.7 million.
Restructuring charges and non-recurring items in 2000 included the curtailing of operations at the Miami copper mine in Arizona and closure of the Henderson molybdenum mine in Colorado. The company also shut two wire and cable operations in Venezuela, and it expects to close a telephone cable operation in El Salvador while taking impairment charges for wire and cable operations in Austria and the Philippines.
After the non-recurring items, Phelps Dodge posted a net loss of US$37.8 million (48 per share) for the recent second quarter, and a net loss of US$18.4 million (23 per share) for the first six months of 2000. In the second quarter of 1999 (again, after non-recurring items), the company reported a net loss of US$57.5 million, or 99 per share), whereas, for the first six months of last year, the net loss was US$60.5 million ($1.04 per share).
Higher electric power and diesel fuel costs, along with difficulties at the El Abra mine in Chile, decreased the recent quarter’s performance by 12 per share. The mine is expected to return to full production by the fourth quarter.
Despite the difficulties, operations showed improvements in cash flow of US$40.2 million in the second quarter and US$164.5 million in the first six months of 2000, compared with US$21.8 million and US$46 million in the corresponding periods of 1999. The company attributes the increases to higher copper sales and higher average copper prices.
Copper output climbed to 302,500 tons in the second quarter and 606,900 tons for the first six months on the strength of added production resulting from the 1999 acquisition of Cyprus Amax Minerals. The company remains on-track to achieve annual savings of US$135 million related to the Cyprus acquisition.
Phelps Dodge’s total second-quarter copper sales jumped to 416,400 tons, including 307,800 tons from its own mines, from 262,700 tons in last year’s second quarter. For the first half of 2000, copper sales were 830,800 tons, compared with 536,600 tons in the year-ago period.
As a result of higher production, mining revenues climbed to US$753.9 million on a copper price of US80 per lb., compared with revenues of US$351.3 million on a copper price of US67 per lb. in the second quarter of 1999. Revenues for the first six months of 2000 were US$1.51 billion on an average copper price of US81 per lb., compared with US$695.4 million on US65-copper.
Capital expenditures and investments were US$114.6 million during the first six months of 2000. Phelps Dodge expects to spend another US$350 million during the rest of the year, including US$132 million to shift all production at the Morenci copper mine in Arizona to heap leaching.
The company’s total debt at the end of the second quarter was US$2.7 billion, compared with US$2.76 billion at the end of 1999.
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