Teck Resources Limited (TCK) (Teck) reported third quarter adjusted profit attributable to shareholders of $159 million, or $0.28 per share, compared with $252 million or $0.44 per share in 2013. Profit attributable to shareholders was $84 million in the third quarter, or $0.14 per share, compared with $267 million, or $0.46 per share, a year ago.
“Our operations performed well during the third quarter and this has allowed us to report profits, conserve cash and maintain a strong financial position with approximately $5 billion of liquidity at the end of the quarter,” said Don Lindsay, President and CEO. “We are pleased with the progress being made in the development of the Fort Hills oil sands project and the reopening of the Pend Oreille zinc mine while continuing our focus on reducing costs and spending on other capital projects.”
Highlights and Significant Items
– Profit attributable to shareholders was $84 million in the third quarter, which included a non-cash tax charge of $64 million associated with the introduction of new Chilean tax legislation.
– EBITDA was $651 million in the third quarter compared with $815 million a year ago.
– Gross profit before depreciation and amortization was $750 million compared with $919 million in the third quarter of 2013.
– Cash flow from operations, before working capital changes, was $492 million in the third quarter of 2014 compared with $647 million a year ago.
– Our liquidity remains strong with a cash balance of $2.0 billion at October 28, 2014 and US$3 billion available under our revolving credit facility that matures in 2019.
– Our cost reduction program continues to deliver results as we realized lower total operating and lower unit costs in our copper and zinc business units.
– We have reached agreements with our customers to sell $6.3 million tonnes of coal in the fourth quarter of 2014 based on US$119 per tonne for the highest quality product and we expect total sales in the fourth quarter, including spot sales, to be at or above 6.5 million tonnes, resulting in 2014 sales of approximately 26.2 million tonnes.
– Coal production was up 2% in the quarter compared with a year ago and on a year-to-date basis, production is one million tonnes higher than a year ago. Coal sales of 6.7 million tonnes in the third quarter were the second highest on record for this period and follow record-high sales for the first half of 2014.
– All of our six coal mines reported positive cash margins in the quarter.
– The Pend Oreille zinc mine restart is progressing well, with first ore expected in December 2014.
– We are increasing our zinc in concentrate production guidance for the second time this year as a result of strong performance from our Red Dog Operations and now expect to produce in the range of 615,000 to 630,000 tonnes in 2014.
– Since the start of the year, the Canadian/U.S. dollar exchange rate has moved significantly in our favour. Each Cdn$0.01 change in the exchange rate affects our EBITDA by approximately $60 million on an annualized basis.
– Our estimated capital spending for 2014 has been revised downward to $1.5 billion, or approximately $375 million lower than our original annual guidance. Timing of cash expenditures at Fort Hills accounts for approximately $225 million of the reduction, while the balance primarily relates to our cost reduction program.