February 9, 2012 / 10:28 AM / 6 years ago

UPDATE 3-Teck quarterly profit lifted by coal business

* Q4 EPS C$1.08 vs C$0.55 a yr ago

* Adjusted EPS C$1.04 vs C$0.87 a yr ago

* Revenue up 9.4 pct, driven by stronger coal prices

* Teck shares little changed on NYSE and TSX (Recasts, adds CEO comments; in U.S. dollars unless noted)

Feb 9 (Reuters) - Teck Resources reported a sharp increase in quarterly profit on Thursday, as it benefited from higher coal prices, and the diversified Canadian miner laid out plans to further improve its operational performance in 2012.

Vancouver-based Teck expects to ramp up its copper and coal production over the coming year, but the miner cautioned that its plan to lift coal output depended on market conditions.

Despite reporting record revenue and profit for the year, Teck warned it was still experiencing volatile markets, as uncertainty in Europe continues to have an effect on the global economy.

“We are pleased with the results for the year but there are a number of places where we didn’t meet target,” Chief Executive Don Lindsay said on a conference call. “We would certainly like to see improvements there in 2012.”

Lindsay, who has steered a turnaround in Teck’s fortunes following a rough patch after the 2008 economic downturn, said he is confident the company has resolved operational issues that hampered its coal business in the early part of 2011.

“One thing that we would really like to see improvement in would be the copper production and cost area,” said Lindsay, adding that he is keen to see the copper business hit a 400,000 tonne annualized rate by the middle of this year.

Teck, whose roots reach back more than a century to the Kirkland Lake gold rush in the early 1900s, is one of the world’s top exporters of metallurgical coal - a key raw material used in steel production. The company, which owns mines across Canada and in the United States, Chile and Peru, is also a large producer of copper and zinc.


Net income rose to C$637 million ($637 million), or C$1.08 a share, from C$325 million, or 55 Canadian cents a share, a year earlier, when a one-time financing item weighed down results.

Excluding one-time items, earnings increased to C$1.04 a share, in line with analysts’ expectations, according to Thomson Reuters I/B/E/S.

Quarterly revenue rose 9.4 percent to C$2.97 billion, as a 27 percent increase in coal prices helped offset declines in the prices of copper, zinc and lead.

Gross profit from Teck’s coal business rose 42 percent to C$781 million, even though prices have pulled back from record levels hit earlier in 2011. The company said it had realized an average coal price of $253 per tonne in the fourth quarter.

Teck said it has already reached agreements with customers to sell 5.3 million tonnes of coal in the first quarter at an average price of $230 a tonne. The company expects to conclude additional sales over the course of the quarter.

Teck shares closed up 4 Canadian cents at C$40.79 on the Toronto Stock Exchange, and up 1 cent at $40.88 in New York.


Teck said that while both copper and zinc prices are roughly the same as the averages for 2011, coal market conditions weakened in the third quarter and remained so through the fourth quarter.

Given operational improvements, the company sees 2012 copper output rising to between 350,000 and 375,000 tonnes. This compares with 322,000 tonnes produced in 2011.

It expects 2012 production of zinc in concentrate to be in the range of 580,000 to 610,000 tonnes, compared with 646,000 tonnes in 2011. The decline is primarily due to lower expected output from its huge Red Dog mine in Alaska.

Teck forecast 2012 coal production of between 24.5 million and 25.5 million tonnes, up from about 22.8 million tonnes in 2011.

“Our actual production will depend upon improvements in customer demand for deliveries of steelmaking coal,” the company said. “Should deliveries not improve, we may adjust our production plans, depending on market conditions.”

$1=$1 Canadian Reporting By Euan Rocha; editing by Rob Wilson

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