TORONTO (Reuters) - Teck Cominco TCKb.TO said on Wednesday its second-quarter profit rose 2.5 percent, as new copper mines and higher coal prices made up for a 60 percent drop in zinc profits.
The Canadian diversified miner earned a net C$497 million ($492 million) in the quarter, or C$1.12 per share, up from C$485 million. The company did not provide a year-before per-share figure.
On a continuing operations basis, earnings per share rose to C$1.14 from C$1.13.
Analysts polled by Reuters had expected, on average, a profit of C$1.02 a share, before exceptional items.
Quarterly revenue rose 20 percent to C$1.87 billion, helped by the addition of three mines from the acquisition of copper miner Aur Resources last year.
The strength in the copper division was augmented by a near doubling in metallurgical coal revenues, thanks to 2008 realized coal prices that rose to $275 a tonne from $96 in 2007 for the Elk Valley Coal Partnership, in which Teck holds a 52 percent direct and indirect interest.
Zinc revenues dropped 24 percent as prices fell 47 percent year-on-year on a Canadian dollar basis.
Teck said it expects earnings to strengthen in the second half of the year due to the higher coal prices.
“Our outlook for the rest of 2008 looks favorable as the copper price remains high and we will have a much higher percentage of coal sold at the significantly higher 2008 coal year prices,” Teck Chief Executive Don Lindsay said in a statement.
Elk Valley should sell between 23 and 25 million tonnes of coal this year, but Teck warned that problems with rail shipping has forced the company to cut production at certain mines.
It said if rail shipments do not increase to the level required by Elk Valley’s business for the rest of the year, the company may be forced to shut down plants where stockpiles have reached capacity, Teck said.
Teck’s shares, which have risen about 11 percent this year, eased 92 Canadian cents to C$39.18 on the Toronto Stock Exchange. The results were released after markets closed.
Capital spending for the year should be about C$875 million, Teck said. The company’s cash position at June 30 was C$1.2 billion.
The company also said its Galore Creek copper and gold project, which was halted late last year due to soaring costs, is now on care and maintenance, and the company is studying whether it can become a viable operation.
“There can be no assurance that this work will result in a commercially viable project or that a future write-down of our investment will not be required,” Teck said.
Teck owns half of the project, while NovaGold (NG.TO) owns the other half.
Reporting by Cameron French; Editing by Andre Grenon