Freeport-McMoRan Inc. (NYSE:FCX)

The common-size income statement reveals several key trends over the five-year period. A consistent decline in profitability is observed, alongside increasing costs of operations. While revenues remain constant as a percentage of themselves, the composition of expenses shifts significantly, impacting net income attributable to common stockholders.

Cost of Sales

Cost of sales as a percentage of revenues demonstrates a steady and substantial increase, rising from 61.41% in 2021 to 71.84% in 2025. This indicates increasing production costs or decreasing selling prices, or a combination of both, eroding gross profit margins. The most significant increase occurred between 2022 and 2023.

Gross Profit

Consequently, gross profit as a percentage of revenues experiences a corresponding decline, decreasing from 38.59% in 2021 to 28.16% in 2025. This downward trend directly reflects the increasing cost of sales and suggests diminishing pricing power or operational efficiencies.

Operating Expenses

Selling, general, and administrative expenses show a modest increase over the period, moving from 1.68% to 2.10% of revenues. Exploration and research expenses also increase, from 0.24% to 0.74%. Environmental obligations and shutdown costs experienced a large spike in 2023 (1.40%) before decreasing to 0.22% in 2025, suggesting a one-time significant expense in that year. These increases contribute to the overall pressure on operating income.

Operating Income

Operating income as a percentage of revenues follows the trend of gross profit, declining from 36.62% in 2021 to 25.15% in 2025. This indicates that the company is generating less profit from its core operations despite consistent revenue levels.

Net Income & Attributable Income

Net income as a percentage of revenues decreases from 23.48% in 2021 to 16.02% in 2025. A notable portion of this decline is attributable to net income attributable to noncontrolling interests, which increases significantly as a percentage of revenues, from -4.64% to -7.52%. Consequently, net income attributable to common stockholders experiences a substantial decrease, falling from 18.85% in 2021 to 8.50% in 2025. This suggests a growing share of profits being allocated to non-controlling interests.

Interest Expense & Other Income

Interest expense, net, generally decreases as a percentage of revenues, from 2.64% to 1.42%, indicating improved debt management or reduced debt levels. Other income, net, fluctuates, with a notable increase in 2022 and 2023, potentially offsetting some of the declines in operating income. However, its impact is limited compared to the increasing cost of sales.

Provision for Income Taxes

The provision for income taxes remains relatively stable as a percentage of revenues, fluctuating between 9.91% and 10.06%. This suggests that the effective tax rate remains consistent despite changes in profitability.

In summary, the analysis reveals a concerning trend of declining profitability driven primarily by increasing costs of sales. While some expense categories show moderate increases, the substantial rise in cost of sales significantly impacts gross profit and ultimately net income attributable to common stockholders. The increasing allocation of net income to noncontrolling interests further exacerbates the decline in earnings available to common shareholders.