Analysis of Debt
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Total Debt (Carrying Amount)
Freeport-McMoRan Inc., balance sheet: debt
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current portion of debt | ||||||
| Long-term debt, less current portion | ||||||
| Total long-term debt, including current portion (carrying amount) |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Current Portion of Debt
- The current portion of debt experienced significant fluctuations over the five-year period. Beginning at $34 million at the end of 2020, the amount rose sharply to $372 million in 2021 and then surged to $1,037 million in 2022. This peak was followed by a decrease to $766 million in 2023 and a pronounced reduction to $41 million in 2024, nearing the initial 2020 levels. The trend suggests periods of increased short-term debt obligations in 2021 and 2022, with a substantial reduction in the most recent year.
- Long-term Debt, Less Current Portion
- Long-term debt excluding the current portion showed a generally declining trend from 2020 to 2023, starting at $9,677 million in 2020 and decreasing to $8,656 million by the end of 2023. However, in 2024, there was a slight reversal, with the debt increasing to $8,907 million. This pattern indicates moderate repayment or reduction efforts over the earlier years with a minor uptick in the most recent period.
- Total Long-term Debt, Including Current Portion (Carrying Amount)
- Total long-term debt, which includes the current portion, fluctuated during the reported years. It began at $9,711 million in 2020, followed by a slight decrease to $9,450 million in 2021. The total debt then peaked at $10,620 million in 2022, reflecting the rise in the current portion of debt. Subsequently, this amount declined to $9,422 million in 2023 and further to $8,948 million in 2024, demonstrating a downward trend after the 2022 peak.
- Summary Insights
- The data reveal that the company's short-term debt obligations experienced notable volatility, particularly with a pronounced spike in 2022 and subsequent reduction by 2024. Long-term debt, aside from the current portion, exhibited a steady decline over most years, with a slight rebound in the latest period. Overall, total long-term debt, inclusive of the current portion, peaked in 2022, aligning with the surge in short-term debt, and has since trended downwards. This suggests a period of increased borrowing or refinancing around 2022, followed by efforts to reduce overall debt levels in more recent years.
Total Debt (Fair Value)
| Dec 31, 2024 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Total long-term debt, including current portion (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2024-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Freeport-McMoRan Inc., interest costs incurred
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense, net | |||||||||||
| Capitalized interest | |||||||||||
| Interest costs |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The data reveals several notable trends in the interest-related financial figures over the five-year period.
- Interest Expense, Net
- This figure shows a consistent decline over the period analyzed, decreasing from 598 million US dollars at the end of 2020 to 319 million US dollars by the end of 2024. This represents a significant reduction of nearly 47%, suggesting effective management or restructuring of interest-bearing liabilities, improved interest rates, or reduction in debt principal.
- Capitalized Interest
- Capitalized interest exhibits a fluctuating but overall increasing trend. Starting at 147 million US dollars in 2020, it dropped sharply to 72 million US dollars in 2021 but then rose to 150 million in 2022, continued increasing to 267 million in 2023, and further to 391 million in 2024. This upward trend in the last three years indicates increasing investments in qualifying assets or projects that allow the capitalization of interest costs.
- Interest Costs
- The total interest costs, representing the sum of net interest expense and capitalized interest, show some variability. After a decline from 745 million in 2020 to 674 million in 2021, the figure increased to 710 million in 2022 and peaked at 782 million in 2023 before declining again to 710 million in 2024. Despite these fluctuations, interest costs remain relatively stable around the 700 million mark in the later years, reflecting ongoing debt servicing obligations.
Overall, the decline in net interest expense paired with the rise in capitalized interest suggests a strategic shift in the handling of interest charges, possibly through increased investment in long-term assets or revised capitalization policies. The stability in overall interest costs indicates steady debt levels or financing activities, while the reduction in net interest expense contributes positively to the income statement by lowering immediate interest charges recognized.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs
= ÷ =
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio demonstrated a notable upward trend from 2020 to 2024. Starting at 4.03 in 2020, it surged significantly to 13.73 in 2021, indicating an improved ability to cover interest expenses. Although there was a slight decline in the subsequent years, reaching 12.69 in 2023, the ratio increased substantially again to 22.7 in 2024. This overall pattern suggests an enhanced financial position regarding interest obligations over the five-year period.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio also showed improvement from 2020 through to 2024, albeit less pronounced and with more variability compared to the non-adjusted ratio. Beginning at 3.23 in 2020, it increased sharply to 12.26 in 2021, followed by a gradual decrease to 8.36 in 2023. In 2024, there was a recovery to 10.2. This adjusted metric's fluctuations may reflect changes in the treatment of capitalized interest and underlying earnings capacity but still indicates a generally stronger coverage ability year over year.
- Overall Insights
- Both ratios exhibit considerable strengthening of the company’s capability to cover interest expenses over the analyzed timeframe. The larger increase and higher values in the interest coverage ratio without capitalized interest suggest that earnings relative to interest obligations improved significantly. The adjusted ratio presents a more conservative view but similarly indicates improved interest coverage, which could be linked to operational performance and effective management of interest-related costs.