BRITISH COLUMBIA

Teck Resources Q3 profit falls sharply but beats estimates amid cost reductions

10/24/2013 05:49 EDT | Updated 12/24/2013 05:12 EST
VANCOUVER - Teck Resources Limited (TSX:TCK.B) is reporting a third-quarter adjusted profit of $252 million, which was far better than analyst estimates but down sharply from the same time last year.

The Vancouver-based mining company says prices for all of its principal products have fallen. Coal prices, in particular, have fallen by 28 per cent and copper has slid eight per cent from a year ago.

Teck says steelmaking coal is too low to sustain industry production levels in the long run.

As a result, Teck chief executive Don Lindsay said the company's focus is on its $330-million cost savings program, reduced spending on sustaining capital and a review of its development projects.

"Our steelmaking coal sales of 7.6 million tonnes (in the third quarter) set a quarterly record and demand from customers is strong," Lindsay said in a statement.

"However, the current price for steelmaking coal remains below what we believe is required to sustain adequate production in the industry in the long term," Lindsay added.

Teck's adjusted profit amounted to 44 cents per share, down from $425 million or 73 cents per share in the same quarter of 2012, but six cents per share above estimates compiled by Thomson Reuters.

The company says it has agreements to sell 5.6 million tonnes of coal in the fourth quarter at an average price of US$145 per tonne and expects total sales to be at or above 6.3 million tonnes.

Revenues from operations of $2.5 billion in the third quarter were the same as a year ago as increased coal volumes offset the price declines. A $49-million decline in revenue from Teck's copper unit was offset by $57 million more revenue from zinc compared with a year ago.