April 19, 2011 / 12:16 AM / 7 years ago

UPDATE 3-Teck results lifted by strong copper, coal prices

* Q1 Adj EPS C$0.76 vs Wall St view of C$0.74

* Q1 revenue C$2.37 bln vs Wall St view C$2.19 bln

* Co wins further pricing gains on coking coal (Adds analyst comment, background, by-line; Figures in U.S. dollars, unless indicated)

By Euan Rocha

TORONTO, April 18 (Reuters) - Teck Resources TCKb.TO reported first-quarter adjusted earnings that more than doubled and topped expectations on Monday, largely driven by coal and copper prices.

Canada’s largest diversified miner said large pricing gains in both coal and copper, more than offset the negative impact from operational issues that cut back shipment volumes for both commodities.

Last month, Teck warned that adverse weather and a strike at one of its coal mines in British Columbia would hurt its coal shipments, while excessive rainfall and operational issues at a mine in Chile would hurt copper output. [ID:nL3E7EN08P]

Vancouver-based Teck is also one of the world’s top copper and zinc producers, with mines spread across Canada, Chile, Peru and the United States. The company is also one of the world’s top exporters of metallurgical, or coking coal -- a key raw material used in the manufacture of steel.

During the first quarter, copper touched a new record of $10,190 a tonne, as positive economic data, coupled with fears of supply constraints led fund managers to invest heavily in the metal, widely used in manufacturing and construction. The price of copper has since retreated and three-month copper on the London Metal Exchange CMCU3 now trades at about $9,340.

On the coal front, flooding in Australia, coupled with Teck’s own supply disruptions issues in Canada, have resulted in tightening coking coal markets, pushing prices for the commodity significantly higher. [ID:nL3E7EV482]

Teck now expects its average selling price for coal in the second-quarter to be in the range of $280 to $290 per tonne, up from $207 per tonne in the first quarter. The company also said pricing for its highest quality coal is now at, or above $330 a tonne.

“This is the first indication that the company has achieved that level of pricing on a contract basis for their highest quality coal for the second-quarter period,” said Desjardins Securities analyst John Hughes, noting that this would result in a big boost in profit margins.

STRONG RESULTS

Excluding one-time items, Teck said quarterly earnings rose to C$450 million, or 76 Canadian cents a share, compared with a year-ago profit of C$198 million, or 34 Canadian cents a share.

Analysts, on average, had forecast earnings of 74 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Net income in the quarter ended March 31 fell to C$461 million, or 78 Canadian cents a share, from C$896 million, or C$1.51 a share a year ago, when results were boosted by a large gain from the sale of a stake in the Waneta Dam in British Columbia.

First quarter revenue rose 25 percent to C$2.37 billion, on the back of revenue growth in the company’s copper, coal and zinc segments. Analysts were looking for revenue of C$2.19 billion, according to Thomson Reuters I/B/E/S.

Teck also said that following discussions with its Japanese clients, it expects the recent earthquake and tsunami to only have a minimal impact on its copper, coal and zinc sales within the country. (Reporting by Euan Rocha; editing by Carol Bishopric)

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