The volatile market conditions have forced the Freeport-McMoRan Inc (NYSE:FCX) to cut dividend. As per the reports, it recently announced that due to the reduction in commodity prices, it would not be able to pay pre-specified dividend to its customers. While talking about the details of the dividend cut, Freeport stated that it would slash the quarterly dividends by 84%.
Insights On the Matter:
The announcement of Freeport has come as a shock for many who were hoping for a good dividend in this quarter. As per the reports, the company is looking forward to slashing its dividend from 31-1/4 cents a share to 5 cents a share. This announcement of the company affected the shares of Freeport negatively. They went down by as much as 2.7% within a single day and hit a mark of $18.80 in trading before the commencement of the morning session in New York.
It’s not a sudden move by the company. Freeport announced in January that it might cut dividend payout depending upon the prices of oil and copper. During the second half of 2014, prices of copper and oil reduced globally.
What Does This Price Cut Means:
It is a shock for all the shareholders, but for the company, it’s nothing but another strategic step taken in a difficult situation like this. The dividend cut will allow the company to strengthen its financial position during a volatile condition like this. However, it added that it would look forward to increasing the cash returns to all the shareholders as business condition and market warrant.
How It Started:
Freeport-McMoRan Inc (NYSE:FCX) announced in the last month that it was not able to sell any oil and copper asset in the market as the customers were not ready to pay full price. The company had been trying to take this step for the last few months. Experts claim that share price of the company may further go down in a few days time.