Teck Resources Limited reports first quarter adjusted profit

— Photo courtesy Teck.

Teck Resources Limited reports first quarter adjusted profit of $328 million, or $0.56 per share, compared with $544 million in 2012.

"I'm pleased with our performance so far this year," said Don Lindsay, president and CEO. "Sales of steelmaking coal were up 24 per cent over the first quarter of 2012, a new record for first quarter sales, while sales volumes for copper and zinc were similar to last year despite various operational challenges. However, with continuing uncertain global economic conditions, prices for all of our major products were down compared to the first quarter of last year resulting in lower profits and cash flows."

Highlights and significant items

• Gross profit before depreciation and amortization was $994 million in the first quarter compared with $1.2 billion in the first quarter of 2012.     

• Cash flow from operations, before working capital changes, was $776 million in the first quarter of 2013 compared with $1.1 billion a year ago.

• Profit attributable to shareholders was $319 million and EBITDA was $902 million in the first quarter.

• We achieved all-time record first quarter coal sales of 6.6 million tonnes despite relatively weak market conditions and shipping constraints due to repairs at Westshore terminals, which continued into early February.

• To date we have reached agreements with our coal customers to sell 5.4 million tonnes of coal in the second quarter of 2013 at an average price of US$154 per tonne and expect total sales in the second quarter, including spot sales, to be at or above 6.0 million tonnes.   

• Our cash balance was $2.95 billion at March 31, 2013, after dividend payments, share repurchases, capital expenditures and investments totaling approximately $1.0 billion in the first quarter.

• Our cost reduction program has exceeded our initial goals, and to date our existing operations have begun the implementation of annualized cost savings and expenditure deferrals of $275 million in 2013.

• Our finance expense was down 40% from a year ago, primarily as a result of the full benefit of our debt refinancing transactions undertaken last year, which reduced our average interest rate to 4.8% from 7.5%.

• The effect of the new accounting standards for waste removal costs increased profit attributable to shareholders by $53 million, or $0.09 per share, in the first quarter of 2013 compared with previous accounting standards.

• On April 15 we received an Area Based Management Plan Order from the British Columbia Ministry of the Environment, providing clarity around  watershed protection and mining activities in the Elk Valley. We consider this a positive step that will provide a regulatory basis to deal with effects of mining on water quality in the Elk Valley and will establish a regulatory context for permitting of future mining activity.