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Teck Resources profit hit by low coal, copper prices

Canada's largest diversified miner Teck Resources Ltd reported on Thursday its quarterly operating profit fell mostly due to lower prices of coal and copper.

The Vancouver-based company said its selling price for coal declined 11 percent, while that of copper fell 10 percent during the fourth quarter ended Dec 31.

The company said its operating profit in the period fell to C$407 million from C$716 million a year earlier.

Excluding gains from asset sales, impairment charges and other items, the company earned C$227 million ($207 million), or 40 Canadian cents per share, in the quarter. This compared to an adjusted profit of C$409 million, or 70 Canadian cents per share, a year earlier.

Analysts on average had expected Teck to earn 44 Canadian cents per share, according to Thomson Reuters I/B/E/S.

Teck said copper revenue fell 15 percent to C$762 million, mainly due to weaker prices and lower volumes caused by delayed shipments.

Coal revenue fell 5 percent to C$963 million. Most of Teck's coal production is made up of metallurgical, or steelmaking, coal, which is typically more profitable than thermal coal used to generate electricity.

Total revenue fell 11 percent to C$2.38 billion at the company, which also produces zinc and has energy holdings in Canada's tar sands.

In recent weeks the company's U.S.-based rivals, Peabody Energy, Alpha Natural Resources and Arch Coal have reported lower revenue due to weak coal prices.

Net income in the quarter rose to C$243 million, from C$217 million, a year earlier, when the company's profit was affected by a charge related to refinancing its high-yield notes.

CAUTIOUS OUTLOOK

Teck cautioned that it continues to experience volatile markets for its products and prices for some of its products have declined significantly.

While demand for coal remains strong, new sources of supply have put downward pressure on coal prices, Teck said, adding that recent weakness in some of these markets may persist for some time.

The company noted however, that recent declines in the value of the Canadian dollar have improved the profitability of its Canadian operations so far this year.

The company said its copper production for 2014 is expected to be in the range of 320,000 to 340,000 tonnes, compared with 364,000 tonnes produced in 2013.

Coal production in 2014 is expected to be in the range of 26 to 27 million tonnes, but actual output will depend primarily on customer demand for deliveries of steelmaking coal.

Teck said its zinc-in-concentrate production this year will be in the range of 555,000 to 585,000 tonnes, down from 623,000 tonnes in 2013.

Shares of Teck Resources, which have fallen 18 percent in the last year, closed at C$27.86 on Wednesday on the Toronto Stock Exchange.

Source: Reuters