Freeport-McMoRan Inc. engages in the mining of mineral properties in the United States, Indonesia, Peru, and Chile. It primarily explores for copper concentrate, copper cathode, copper rod, gold, molybdenum, silver, and other metals, as well as oil and gas. The company's portfolio of assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Tyrone and Chino in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde and El Abra mines in South America. It also operates a portfolio of oil and gas assets comprising oil and natural gas production onshore in South Louisiana; and on the GOM Shelf and oil production offshore California, as well as natural gas production from the Madden area in central Wyoming. As of December 31, 2016, the company's estimated consolidated recoverable proven and probable mineral reserves totaled 86.8 billion pounds of copper, 26.1 million ounces of gold, and 2.95 billion pounds of molybdenum, as well as estimated proved developed oil and natural gas reserves totaled 18 million barrels of oil equivalents. The company was formerly known as Freeport-McMoRan Copper & Gold Inc. and changed its name to Freeport-McMoRan Inc. in July 2014. Freeport-McMoRan Inc. was founded in 1987 and is headquartered in Phoenix, Arizona.
Business Analysis of Freeport-McMoRan
The Basic Materials Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Freeport-McMoRan compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Freeport-McMoRan to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Freeport-McMoRan with an interactive chart.
- Revenue Growth: Freeport-McMoRan reported a revenue growth of 1.5% year-on-year during 2016. Metal Mining Industry grew at -5.5% in the same period
- COGS share of Revenues: As a percentage of revenue, Freeport-McMoRan spent 118.5% of its total revenues on COGS. Metal Mining industry average (COGS share of revenue) in the same period was 86.3%
- R&D share of Revenues: As a percentage of revenue, Freeport-McMoRan spent 0.4% of its total revenues on R&D. Metal Mining industry average R&D spending in the same period was 0.5%
- SG&A share of Revenues: As a percentage of revenue, Freeport-McMoRan spent 4.1% of its total revenues on Sales, Marketing, and General Administration (SG&A). Metal Mining industry average SG&A spending in the same period was 6.3%
- Inventory share of Revenues: As a percentage of revenue, Freeport-McMoRan spent 35.6% of its total revenues on Inventories. Metal Mining industry average Inventory spending in the same period was 20.9%
- Accounts Payable share of Revenues: As a percentage of revenue, Freeport-McMoRan invested 16.1% of its total revenues on Accounts Payable (A/P) Metal Mining industry average Accounts Payable investment in the same period was 9.8%
- Accounts Receivable share of Revenues: As a percentage of revenue, Freeport-McMoRan invested 8.2% of its total revenues on Accounts Receivable (A/R). Metal Mining industry average Accounts Receivable investment in the same period was 10.1%
- PP&E share of Revenues: As a percentage of revenue, Freeport-McMoRan invested 157.1% of its total revenues on Property, Plants, and Equipments (PP&E). Metal Mining industry average PPE investment in the same period was 67.7%
- Intangibles share of Revenues: Freeport-McMoRan Intangibles share of Revenues details are not available because either company does not share the data or we do not have it
- Net Margins: Freeport-McMoRan Net Margins in the year 2016 were -29.1%. Metal Mining industry average Net Margins in the same period were -3.7%
Sector and Industry Association of Freeport-McMoRan
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
Freeport-McMoRan is associated with Basic Materials Sector and Metal Mining Industry.
Basic Materials sector is comprised of the following industries: Metal Mining; Coal Mining; Chemicals. The definitions for each of the industries is as follows:
- Metal Mining industry includes companies primarily engaged in mining, developing mines, or exploring for precious metals such as Gold, Silver, Platinum and base metals such as Iron, Copper, Aluminum, Lead, and Zinc. It also includes companies that manufacture alloys such as steel.
- Coal Mining industry includes companies engaged in the exploration for and/or mining of coal.
- Chemicals industry includes companies that produce and/or distribute commodity and specialty chemicals. The companies manufacture three general classes of products: (1) basic chemicals, such as acids, alkalies, salts, and organic chemicals; (2) chemical products to be used in further manufacture, such as synthetic fibers, plastics materials, dry colors, and pigments; and (3) finished chemical products to be used as materials or supplies in other industries, such as paints, fertilizers, and explosives.
Industry Ranking of Freeport-McMoRan
With $14.8 billion revenues, Freeport-McMoRan ranked number 2 of all the companies in the US Metal Mining industry. There were a total of 34 public companies in the US Metal Mining industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Metal Mining industry by revenues during 2016 were:
- Nucor ($16.2 billion)
- Freeport-McMoRan ($14.8 billion)
- Arconic ($12.4 billion)
- United States Steel ($10.3 billion)
- Alcoa ($9.3 billion)
- Reliance Steel & Aluminum ($8.6 billion)
- Steel Dynamics ($7.8 billion)
- A-Mark Precious Metals ($6.8 billion)
- Newmont Mining ($6.7 billion)
- AK Steel Holding ($5.9 billion)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.
- Conduct a holistic benchmarking; to identify and target additional sources of value
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- Get free data, charts, and analysis of Freeport-McMoRanand its peers on select key performance indicators by clicking the reports provided below