<Result Analysis>: Strong 4Q23 operating results, 2024 earnings to grow.
- Strong operating result thanks to sales volume growth in copper and gold, in-line with consensus.
- 2024 earnings to growth backed by production volume growth of copper & gold and higher gold prices.
- Retain BUY and TP of US$50 given expectations of higher earnings in 2024 onwards.
Strong operating result thanks to sales volume growth in copper and gold, in-line with consensus. Freeport McMoRan’s operating profit rose by 12.5% y-o-y and 15.4% q-o-q to US$1.7bn in 4Q23, above the street’s forecast. The growth was mainly attributed to an increase in revenue (2.6% y-o-y and 1.4% q-o-q) amid growth in sales volume of copper and gold (7.1% and 19.9% y-o-y) and higher ASP for two metals (1.1% y-o-y and 13.7% y-o-y). respectively. The net profit declined by 44.3% y-o-y and 14.5% q-o-q to US$388m in 4Q23 due to higher provision of income taxes and minority interest. Despite this, its net profit was in-line with the street’s estimates.
2024 earnings to grow backed by production volume growth of copper & gold and higher gold prices. 1Q24 earnings is likely to be flattish as higher gold prices and a guided 4.7% q-o-q gold sales volume growth are likely to mitigate the negative impact of a guided 10.4% q-o-q copper sales volume decline. However, we anticipate earnings to grow in 2024 given the management guidance of 0.3% and 16.8% y-o-y sales volume growth of copper and gold, respectively, and higher gold prices. After reaching the targeted run rate of American Leach Innovation Initiatives in 4Q23. it aims to produce 200mm Ibs in 2024 based on copper content, which is 39% higher than in 2023 and c 5% of 2024 output. It expects double its copper production in 2-3 years by the technology, contributing to its earnings growth in the long term. BUY, TP US$50.