Download/view Q1 2014 Report (200KB PDF) for the full text of this release.
Excerpt:
Vancouver, BC – Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) (“Teck”) reported first quarter adjusted profit attributable to shareholders of $105 million, or $0.18 per share, compared with $328 million or $0.56 per share in 2013. Profit attributable to shareholders was $69 million ($0.12 per share) compared with $319 million ($0.55 per share) a year ago.
"We are pleased with our operating performance in the first quarter, with higher production volumes for our major products," said Don Lindsay, President and CEO. "However, prices for these commodities were weak, particularly coal, compared to the first quarter of 2013 resulting in lower profits and cash flows than last year. As a result, we are increasing our efforts to reduce our costs and capital spending."
Highlights and Significant Items
- Our operations performed well in the first quarter with coal production up 8%, copper up 2% and zinc in concentrate up 11%, in each case over the first quarter of 2013.
- We started commissioning the mill optimization project at Highland Valley Copper and exceeded design throughput rates in March with an average of 139,000 tonnes per day.
- The Fort Hills oil sands project, which was sanctioned in October 2013, is progressing on schedule and on budget.
- Profit attributable to shareholders was $69 million and EBITDA was $557 million in the first quarter.
- Gross profit before depreciation and amortization was $732 million in the first quarter compared with $994 million in the first quarter of 2013.
- Cash flow from operations, before working capital changes, was $470 million in the first quarter of 2014 compared with $776 million a year ago.
- We have reached agreements with our quarterly contract customers to sell 5.5 million tonnes of coal in the second quarter of 2014 based on US$120 per tonne for the highest quality product and we expect total sales in the second quarter, including spot sales, to be at or above 6.5 million tonnes.
- Our cash balance was $2.4 billion at March 31, 2014.
- Our cost reduction program has exceeded our initial goals, with $345 million of annualized reductions realized to date. We are targeting a further $200 million of annualized cost reductions and $150 million of capital expenditure reductions.
- We are deferring the restart of our Quintette coal mine until market conditions for a restart are more favourable.
- With a more favourable outlook for zinc prices, we are planning to restart the Pend Oreille zinc mine in Washington State. The mine is expected to produce 44,000 tonnes of zinc in concentrate per year for at least five years.
Download/view Q1 2014 Report (200KB 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, 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, the expected timing and costs of restarting our Pend Oreille zinc operation, expectations regarding second quarter coal sales levels, cost of product sold, annual production targets, our expectation that Antamina will return to higher production in 2014, the amount of our portion of the 2014 expenditures for the Fort Hills oils sands project, anticipated capital expenditures, expectations that we have sufficient credit capacity to meet capital commitments and working capital over the next four years, and demand and market outlook for commodities. 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, 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 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, 2013, 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 Q1/2014 financial results at 11:00 AM Eastern time, 8:00 AM Pacific time, on Tuesday, April 22, 2014. 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 will be archived at www.teck.com.
Download/view Q1 2014 Report (200KB 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
14-9-TR
