Freeport-McMoRan's realized copper price rose 36% year over year in the second quarter — yet revenue still fell 7.3% to $7,029 million. The reason is volume: copper sales dropped 30.1% and gold sales dropped 76.4% while the Grasberg Block Cave mine works through a phased restart after the September 2025 mud rush. Earnings per share still rose 28.3% to $0.68, but that gain came from a lower tax rate and a smaller minority-interest deduction, not from a better quarter underground. Copper then set an all-time high after the quarter closed: the LME settlement price closed at a record $6.56 per pound on August 6, 2026 — the same date as the 10-Q filing; the chronology is consistent with LME settlements occurring before U.S. market hours, but readers should confirm against the subsequent-events note — and COMEX at a record $6.70 per pound on August 5, both disclosed in the 10-Q. For a copper miner, the commodity cycle and the company's own operating cycle are unusually far out of phase.
One framing note before the numbers. On the metrics Wall Street tracks, this was a beat, not a miss: adjusted EPS of $0.75 came in above the $0.62 consensus and revenue of $7.03 billion above roughly $6.47 billion expected. The year-over-year declines below are real, but they measure the quarter against a pre-mud-rush baseline, not against expectations.
Sources. All financial figures are from Freeport-McMoRan's Form 10-Q for the quarter ended June 30, 2026, filed with the SEC on August 6, 2026, unless otherwise noted. Ramp-up rates, adjusted (non-GAAP) earnings and consensus comparisons are from the company's Q2 2026 earnings release (Form 8-K, Exhibit 99.1), the Q2 2026 earnings call and published analyst estimates. Multi-year annual figures are from SEC XBRL company filings data (CIK 0000831259). All amounts are in U.S. dollars, consolidated basis.
1. Balance Sheet
1-1. Key asset movements
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change |
|---|---|---|---|
| Cash and cash equivalents | 3,824 | 4,080 | +6.7% |
| Trade accounts receivable | 977 | 716 | −26.7% |
| Product inventories | 3,332 | 3,363 | +0.9% |
| Materials and supplies, net | 2,738 | 2,924 | +6.8% |
| Mill and leach stockpiles (current) | 1,423 | 1,577 | +10.8% |
| Property, plant and equipment, net | 40,736 | 41,705 | +2.4% |
| Long-term tax receivables | 810 | 1,066 | +31.6% |
| Total assets | 58,167 | 59,727 | +2.7% |
Receivables fell 26.7%, and that is a volume story rather than a collection story. Indonesia segment revenue dropped from $3,417 million to $1,483 million, down 56.6%.
The product mix underneath tells the more interesting story, though it is a consolidated figure rather than an Indonesia-only one. Concentrate revenue fell from $2,023 million to $976 million, down 51.8% — a steep decline, but not the hardest-hit product line; gold revenue fell 76.4%. What offsets it is refined product: copper cathode revenue rose from $2,173 million to $2,647 million, and rod and other refined copper products rose from $969 million to $1,533 million, up 58.2%. Two forces overlap. Grasberg is producing less, and PTFI completed its own smelter and refinery during 2025, so tonnes that once left Indonesia as third-party concentrate now leave as refined metal sold by PTFI itself. Concentrate sales have not disappeared — $976 million of them remain — but the mix has shifted structurally toward refined product, not merely cyclically.
Long-term tax receivables rose 31.6%. In April 2026 PTFI received $220 million of assessments from Indonesian tax authorities covering 2022 audit exceptions for income and other taxes. PTFI paid the disputed amounts on June 30, 2026 and filed objections, so the cash left the business but the claim sits on the balance sheet as a receivable. Inventories and stockpiles built modestly, consistent with production running ahead of sales during the ramp.
1-2. Debt structure
Total debt was essentially unchanged at $9,386 million versus $9,379 million at year-end. The mix shifted sharply, though. Current debt rose from $466 million to $1,220 million, up 161.8%, while long-term debt fell 8.4% to $8,166 million. This is reclassification of near-term maturities, not new borrowing — proceeds from debt of $2,077 million and repayments of $2,072 million in the first half nearly offset.
This filing does not disclose a maturity schedule or average coupon, so the specific instruments moving into current cannot be identified here. Liquidity coverage is not in question. In May 2026 FCX and PTFI entered a new $3.0 billion five-year revolving facility maturing May 2031, replacing one scheduled to mature in October 2027, and Cerro Verde replaced its own with a $350 million five-year facility. At June 30 the FCX revolver had no borrowings and $5 million of letters of credit outstanding. Available capacity across FCX, PTFI and Cerro Verde totaled $4.85 billion, roughly four times the current debt portion. All three borrowers were in compliance with covenants. Management reports net debt of $2.1 billion, calculated as $9.4 billion of debt less $4.1 billion of cash and less $3.2 billion of debt attributable to PTFI's downstream processing facilities.
Operating liabilities were stable. Accounts payable and accrued liabilities moved from $4,565 million to $4,582 million. Environmental and asset retirement obligations totaled $5,943 million across current and long-term portions, the standard long-tailed liability of a mining balance sheet. Long-term lease obligations declined slightly to $973 million.
1-3. Capital structure
Paid-in capital was essentially unchanged: common stock of $163 million plus capital in excess of par of $23,659 million totals $23,822 million, against $23,843 million combined at year-end — a decline of $21 million. Retained earnings did the work, rising 103.4% from $1,385 million to $2,817 million. The arithmetic is clean — $1,865 million of six-month net income attributable to common stockholders less $433 million of declared dividends leaves $1,432 million retained. The $434 million shown in the cash flow statement is dividends actually paid; the $1 million gap is timing, not a different number.
Treasury stock deepened to negative $6,227 million from negative $6,024 million, reflecting $203 million of buybacks. Noncontrolling interests of $12,113 million remain large, reflecting outside ownership in PTFI, where Freeport holds 48.76%, and Cerro Verde, where Freeport's stake rose from 55.08% to 55.66% after buying 2.0 million additional shares in the open market for $107 million in May.
2. Income Statement
2-1. Headline results
| Item | Q2 2025 ($M) | Q2 2026 ($M) | Change | 6M 2025 ($M) | 6M 2026 ($M) | Change |
|---|---|---|---|---|---|---|
| Revenues | 7,582 | 7,029 | −7.3% | 13,310 | 13,263 | −0.4% |
| Operating income | 2,432 | 2,003 | −17.6% | 3,735 | 4,140 | +10.8% |
| Operating margin | 32.1% | 28.5% | −3.6pp | 28.1% | 31.2% | +3.1pp |
| Net income | 1,547 | 1,391 | −10.1% | 2,340 | 2,778 | +18.7% |
| Less: noncontrolling interests | (775) | (407) | −47.5% | (1,216) | (913) | −24.9% |
| Net income to common | 772 | 984 | +27.5% | 1,124 | 1,865 | +65.9% |
| Diluted EPS ($) | 0.53 | 0.68 | +28.3% | 0.77 | 1.29 | +67.5% |
The gap between a 17.6% fall in operating income and a 27.5% rise in profit attributable to common shareholders is the quarter's defining feature. Two below-the-operating-income-line items explain the divergence.
First, minority interests. Profit attributable to noncontrolling interests fell 47.5%, from $775 million to $407 million. Grasberg's weakness falls disproportionately on PTFI's outside shareholders, while the U.S. mines that carry no minority ownership contributed more. The same consolidated dollar of profit now leaves a larger share with FCX shareholders.
Second, tax. The consolidated effective rate fell from 37% to 30% for the six months. Lower Indonesian earnings reduced the weight of high-tax foreign income.
A separate factor — idle facility costs — depresses the operating income line itself but does not explain the divergence, since it reduces both operating income and net income by equal amounts. While Grasberg ramps back up, a portion of PTFI's production costs are classified as idle facility costs, which are non-inventoriable — they hit the income statement immediately instead of being capitalized into inventory. Q2 carried $284 million in production and delivery costs plus $79 million in DD&A, $363 million in total. The six-month figure is $862 million ($690 million plus $172 million).
Stripping the noise clarifies the operating picture, with one caveat. Adding back $363 million of idle costs and removing the $18 million gain on asset sales gives normalized operating income of $2,348 million, against $2,432 million a year ago — a decline of just 3.5%, on a normalized margin of 33.4% versus 32.1%. The 2025 comparison figure is left unadjusted because Q2 2025 preceded the mud rush and carried no idle costs, so the two are comparable on that dimension. On this basis margins expanded, and volume rather than profitability per unit caused the reported decline.
The caveat is that idle costs are not a one-quarter artifact to be waved away. The company guides to approximately $1.2 billion of idle facility and restoration costs for full-year 2026, including about $0.3 billion in the third quarter — implying roughly $38 million for the fourth quarter as the ramp progresses through the year. Idle costs do not end with 2026, however: the company does not expect a return to full capacity before late 2027, and further costs should be expected in 2027 as the ramp continues. An investor adding back the 2026 charges is making a legitimate adjustment for a real cost, while recognising that normalisation is not yet complete.
Operating leverage was pronounced on a reported basis. Revenue fell 7.3% and operating income fell 17.6%, a ratio of roughly 2.4 to 1 — each 1% of revenue change moved operating income about 2.4%. On a normalized basis, however, the 3.5% decline in normalized operating income on a 7.3% revenue fall implies a ratio below 0.5 to 1, consistent with the margin expansion noted above; the reported-basis figure is driven by the front-loaded idle cost charge rather than by the underlying unit economics.
The company's adjusted net income of $1,080 million, or $0.75 per share, excludes $96 million of after-tax net charges, principally the idle facility and restoration costs. For the six-month period the comparable net charge is $45 million, or $0.03 per share, because the first half's idle costs were partially offset by the gain on the mud rush insurance settlement. GAAP diluted EPS of $0.68 is the figure used throughout this analysis.
2-2. Cost behavior and segment mix
Production and delivery costs were $4,320 million against $4,282 million a year earlier — up 0.9% while copper sales volume fell 30.1%. That apparent flatness reflects two opposing forces: rising purchased-metal costs for the refining operations offset the underlying mine-level absorption loss. The mine-level impact is visible in site production and delivery costs, which rose from $2.71 to $3.28 per pound, up 21.0%, because the same mine, mill and workforce were spread across far fewer pounds. Depreciation fell 21.7% to $523 million, and SG&A rose 6.3% to $135 million.
| Segment operating income | Q2 2025 ($M) | Q2 2026 ($M) | Change |
|---|---|---|---|
| Morenci | 132 | 265 | +100.8% |
| Cerro Verde | 340 | 736 | +116.5% |
| Indonesia operations | 1,868 | 499 | −73.3% |
| U.S. Rod & Refining | 7 | 22 | +214.3% |
| Atlantic Copper | 13 | 26 | +100.0% |
| Total reportable segments | 2,360 | 1,548 | −34.4% |
Note that reportable segments do not sum to consolidated operating income. For Q2 2026, the $1,548 million above plus $656 million from other segments less $201 million of corporate expenses and intersegment eliminations reconciles to the $2,003 million reported. The unnamed "other segments" — which include El Abra, Bagdad, Safford, Sierrita and the molybdenum mines — contributed a material $656 million that the table alone does not show.
With that said, the portfolio did its job. Morenci and Cerro Verde both roughly doubled on higher realized copper and molybdenum prices, offsetting part of Indonesia's collapse. Excluding the $363 million of idle costs charged against it, Indonesia earned $862 million rather than $499 million — still down 53.9%. Management notes that operating income from U.S. copper mines rose roughly 2.4 times in the first six months.
3. Cash Flow
| Item (six months) | 2025 ($M) | 2026 ($M) | Change |
|---|---|---|---|
| Operating cash flow | 3,253 | 3,543 | +8.9% |
| Investing cash flow | (2,432) | (2,177) | — |
| Financing cash flow | (908) | (1,048) | — |
| Capital expenditures | (2,433) | (2,077) | −14.6% |
| Free cash flow | 820 | 1,466 | +78.8% |
| Period-end cash (incl. restricted) | 4,824 | 4,491 | — |
Free cash flow of $1,466 million looks like a strong improvement, and the cash is real. One adjustment matters. Operating cash flow includes $699 million of insurance proceeds collected in April 2026 for the mud rush claim; the cash fl