Download/view Q2 2013 Report (PDF) for the full text of this release.
Excerpt:
Vancouver, BC – Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) (“Teck”) reported second quarter adjusted profit of $197 million, or $0.34 per share, compared with $398 million or $0.68 per share in 2012.
“We are pleased with our operating performance this quarter and have made good progress on our cost reduction program. However, prices for our products have continued to weaken, particularly steelmaking coal. We continue to adapt to changing market conditions and are taking steps to further reduce our capital spending, slowing the start of our Quintette mine reopening and delaying the development of Quebrada Blanca Phase 2. In addition, we are reducing our sustaining capital expenditures and increasing the targets for our cost reduction program,” said Don Lindsay, President and CEO.”
Highlights and Significant Items
- Gross profit before depreciation and amortization was $871 million in the second quarter compared with $1.1 billion the second quarter of 2012.
- Cash flow from operations, before working capital changes, was $584 million in the second quarter compared with $874 million a year ago.
- Profit attributable to shareholders was $143 million and EBITDA was $670 million in the second quarter.
- Our cash balance was $2.8 billion at June 30, 2013.
- Our cost reduction program has exceeded our initial goals, and to date our existing operations have identified over $250 million of annual ongoing potential cost savings at constant production levels and have implemented $220 million of these initiatives. We have recently revised our target savings to $300 million.
- Our Quebrada Blanca operations returned to profitability in the second quarter as a result of our initiatives to reduce workforce and operating costs.
- We are taking steps to reduce capital spending in light of market conditions, slowing the start of the Quintette mine reopening and delaying development of the Quebrada Blanca Phase 2 expansion project.
- To date we have reached agreements with our coal customers to sell 6.4 million tonnes of coal in the third quarter of 2013 at an average price of US$143 per tonne. We expect to conclude additional sales over the course of the quarter.
- We paid a $0.45 per share dividend on our Class A common shares and Class B subordinate voting shares on July 2, 2013.
Download/view Q2 2013 Report (PDF) for the full text of this release.
Cautionary Statement on Forward-Looking Information
This news release contains certain forward-looking information and forward-looking statements as defined in applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements, principally under the heading “Outlook,” but also elsewhere in this document, include estimates, forecasts, and statements as to management’s expectations with respect to, among other things, anticipated costs and production at our business units and individual operations and expectation that we will meet our production guidance, sales volume and selling prices for our products (including settlement of coal contracts with customers), plans and expectations for our development projects, including resulting increases in forecast operating costs and costs of product sold, expected production, expected progress, costs and outcomes of our various projects and investments, including but not limited to those described in the discussions of our operations, the potential savings that may be realized under our cost reduction program and the identification of further savings, the sensitivity of our profit to changes in commodity prices and exchange rates, the impact of potential production disruptions, the impact of currency exchange rates, future trends for the company, progress in development of mineral properties, timing of completion, and results of our mill optimization project program at Highland Valley Copper, statements under the heading “Copper Development Projects,” including the expected timing of re-filing the SEIA, and commercial production, for Quebrada Blanca Phase 2, the timing of the feasibility study for Relincho, statements under the heading “Coal” regarding expected sales levels, cost of product sold, annual transportation costs and depreciation and amortization expense, the timing of final approval and production from the Quintette coal mine, proposed upgrades at Neptune and the expected results of those upgrades, our expectation that we can continue to achieve long-term selenium concentration targets, the timing of operation of our water treatment plant at Line Creek, timing of expected start-up of the acid plant at Trail, the statements under the heading “Energy” regarding timing of project sanction and approval decisions, statements under the heading “Outlook” regarding anticipated capital expenditures and demand and market outlook for commodities and the lives of our assets and the sensitivity of their valuation to changes in commodity prices. These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially.
These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditions, the supply and demand for, deliveries of, and the level and volatility of prices of, zinc, copper and coal and other primary metals and minerals as well as oil, and related products, the timing of the receipt of regulatory and governmental approvals for our development projects and other operations, our costs of production and production and productivity levels, as well as those of our competitors, power prices, continuing availability of water and power resources for our operations, market competition, the accuracy of our reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, conditions in financial markets, the future financial performance of the company, assumptions regarding the impact of our cost reduction program on our operations, our ability to attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studies on our expansion projects, our coal and other product inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for our operations and expansions, our ongoing relations with our employees and business partners and joint venturers. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to vary materially.
Factors that may cause actual results to vary materially include, but are not limited to, changes in commodity and power prices, changes in market demand for our products, changes in interest and currency exchange rates, acts of foreign governments and the outcome of legal proceedings, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, adverse weather conditions and unanticipated events related to health, safety and environmental matters), union labour disputes, political risk, social unrest, failure of customers or counterparties to perform their contractual obligations, changes in our credit ratings, unanticipated increases in costs to construct our development projects, difficulty in obtaining permits, inability to address concerns regarding permits of environmental impact assessments, and changes or further deterioration in general economic conditions. Our Fort Hills project is not controlled by us and construction, sanction and production schedules may be adjusted by our partner.
Statements concerning future production costs or volumes, and the sensitivity of the company’s profit to changes in commodity prices and exchange rates are based on numerous assumptions of management regarding operating matters and on assumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation or utilities, adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies. Statements regarding anticipated coal sales volumes and average coal prices for the quarter depend on timely arrival of vessels and performance of our coal-loading facilities, as well as the level of spot pricing sales.
We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning risks and uncertainties associated with these forward-looking statements and our business can be found in our Annual Information Form for the year ended December 31, 2012, filed under our profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) under cover of Form 40-F.
Webcast
Teck will host an Investor Conference Call to discuss its Q2/2013 financial results at 11:00 AM Eastern time, 8:00 AM Pacific time, on Thursday, July 25, 2013. A live audio webcast of the conference call, together with supporting presentation slides, will be available at our website at www.teck.com. The webcast is also available at www.earnings.com. The webcast will be archived at www.teck.com
Download/view Q2 2013 Report (PDF) for the full text of this release.
Investor Contact:
Greg Waller
Vice President, Investor Relations and Strategic Analysis
604.699.4014
greg.waller@teck.com
Media Contact:
Marcia Smith
Senior Vice President, Sustainability and External Affairs
604.699.4616
marcia.smith@teck.com
13-24-TR
