Teck Resources profit misses estimates

Steelmaking coal price dip hurts company

Canada's Teck Resources Ltd missed analysts' estimates for quarterly profit on Tuesday, hurt by a steep drop in the prices of steelmaking coal, sending its shares down.

Miners globally have been struggling after the COVID-19 pandemic wreaked havoc on commodity markets, forcing companies to shut mines, slash production and even wind down some operations.

Teck said labour intensive activities such as maintenance, mine operations and projects continue to be impacted by COVID-19 safety protocols.

The company, however, said construction work at its Quebrada Blanca Phase 2 copper mine in Chile was being ramped up and it was expecting the project to be about 40 per cent complete by year end.

Work at the site was suspended in March and remains partially on hold to limit the transmission of COVID-19.

Average price realized for steelmaking coal dropped 34.6 per cent to US$102 per tonne in the third quarter, while sales stood at 5.1 million tonnes compared with 6.1 million tonnes a year earlier.

The Vancouver-based miner also cut its forecast for copper production for the second half of the year by 5,000 tonnes and now expects it to be between 140,000 tonnes and 155,000 tones.

Copper sales in the quarter fell to 69,000 tonnes from 75,000 tonnes.

Teck said profit attributable to shareholders was $61 million, or 11 cents per share, in the quarter ended Sept. 30, compared with $369 million, or 66 cents per share, a year earlier.

Excluding items, it posted a profit of 24 cents per share, missing analysts' average estimate of 27 cents, according to IBES data from Refinitiv.

Teck dropped 5.85 per cent to close at $16.57 in Toronto trading after earlier sinking to its lowest in six weeks.

“Our financial performance recovered strongly from a second quarter that was significantly negatively impacted by COVID-19, and despite the decline in realized steelmaking coal prices, we posted gains in profitability and operating cash flows,” Don Lindsay, President and CEO, said in a statement.

“Across our business, our people have adapted to the new normal of operating through the pandemic, staying focused on health and safety while continuing to responsibly produce materials essential to the global economic recovery.”

The company said that since its cost-reduction plan began late last year, it has realized about $270 million in operating cost reductions and $550 million in capital cost reductions.

“These reductions are against our expected spending that was contemplated at the end of June 2019, the company said.

“We have US$3.8 billion available on our US$4.0 billion revolving credit facility and our US$1.0 billion revolving credit facility is undrawn as at Oct. 26, 2020.”