Freeport-McMoRan 2Q profit dips on one-time costs

The Phoenix-based company, the world's largest publicly traded copper producer, also paid more for everything from energy to labor and supplies as it pushed to meet demand in a tight copper market.

Shares tumbled more than 6.5 percent, or $7.12, to $99.89 by midafternoon.

"We are seeing higher costs. You're going to hear that from every company in our industry and other industries," Richard Adkerson, president and chief executive officer, told analysts during a conference call. "The great thing about our assets is that we are situated so that we can absorb the impact of these costs."

Although the lagging U.S. economy has slowed the demand for copper, Adkerson said the market remains tight because of challenges the industry has in meeting production targets amid higher costs.

For the April-June period, Freeport-McMoRan reported net income after preferred dividends of $947 million, or $2.25 a share, which compared with $1.1 billion, or $2.62 a share, in the year-ago period.

Revenue totaled $5.4 billion, essentially unchanged from the second quarter of 2007.

Analysts surveyed by Thomson Financial had predicted, on average, earnings of $2.44 per share and revenue of $5.3 billion. These forecasts typically exclude one-time items.

Deutsche Bank North America analyst Jorge Beristain said the earnings were artificially depressed by non-cash charges related to the Phelps Dodge acquisition last year.

"It does look like they beat the headline number (earnings per share estimate) by about 10 percent after you make some non-cash and volume adjustments," he said.