Teck Q2 profit below estimates as it records one-time items, lower metal prices - InfoNews

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Teck Q2 profit below estimates as it records one-time items, lower metal prices

The corporate logo of Teck Resources Limited is shown in this undated handout photo. THE CANADIAN PRESS/HO
July 25, 2019 - 8:33 AM

VANCOUVER - Teck Resources Ltd.'s profit attributable to shareholders dropped below analyst estimates to $231 million in the second quarter, down from $634 million a year ago, as the mining company faced challenges on multiple fronts.

The quarter included a $109-million asset impairment charge related to the Cardinal River steelmaking coal operation, where Teck has decided against financing an extension.

Teck announced in May that the operation is expected to close in the second half of 2020,a plan it confirmed on Thursday.

It also lowered its 2019 steelmaking coal production estimate by half-a-million tonnes to between 25.5 million and 26.0 million tonnes, citing geotechnical issues at Cardinal River and weather-related challenges in northwestern Alberta.

During the quarter, revenue from steelmaking coal was essentially flat compared with last year at nearly $1.59 billion, or about half of Teck's total revenue, which increased to $3.14 billion from $3.02 billion a year earlier.

Teck's revenue from copper and zinc declined amid lower metal prices.

But energy revenue increased significantly —to $295 million from $78 million — as prices for Western Canadian Select improved to US$49.13 per barrel after hitting US$19.35 in the fourth quarter of 2018.

However, Teck said second-quarter production from the Fort Hills oilsands operation was below design capacity due to Alberta production curtailments that went into effect in January in reaction to the low WCS price late last year.

The curtailment is expected to continue into August, it added.

"We still expect to be within our annual production guidance for bitumen but with the extension of the curtailments, we now expect to be at the lower end of the range," the company said.

Besides operational factors, Teck's bottom line in the quarter was affected by a $166-million after-tax charge related to the early redemption of debt maturing in June 2024, partially offset by a $26-million gain on a debt prepayment option.

Its net income for the quarter amounted to 41 cents per share, down from $1.10 per share. Adjusted profit attributable to shareholders was 81 cents per share, down from $1.14 in last year's second quarter.

Analysts had estimated 84 cents per share of adjusted profit and $415 million of net income, according to financial markets data firm Refinitiv.

Teck B shares traded at $29.78 at about 11 a.m. ET, down 25 cents or less than one per cent.

Companies in this story: (TSX:TECK.A, TSX:TECK.B)

News from © The Canadian Press, 2019
The Canadian Press

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