Download/view Q4 2014 Report for the full text of this release.
Excerpt:
Vancouver, BC – Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) (“Teck”) reported annual adjusted profit attributable to shareholders of $452 million, or $0.78 per share, compared with $1.0 billion or $1.74 per share in 2013. Fourth quarter adjusted profit attributable to shareholders was $116 million, or $0.20 per share, compared with $227 million, or $0.40 per share, in the fourth quarter of 2013.
“Although 2014 was a challenging year with significantly lower prices for some of our key products, our operations performed well, setting various production records and generating positive cash flows at all sites,” said Don Lindsay, President and CEO. “We continued to focus on conserving cash and maintaining a strong financial position.”
Highlights and Significant Items
- Gross profit before depreciation and amortization in 2014 was $2.9 billion compared with $3.7 billion in 2013. Gross profit before depreciation and amortization was $757 million in the fourth quarter compared with $875 million in the fourth quarter of 2013.
- Cash flow from operations, before working capital changes, was $2.0 billion in 2014 compared with $2.6 billion last year. Cash flow from operations, before working capital changes, was $522 million in the fourth quarter compared with $636 million a year ago.
- Profit attributable to shareholders was $362 million in 2014 compared with $961 million in 2013. Profit attributable to shareholders was $129 million in the fourth quarter of 2014 compared with $232 million in the same period last year.
- We closed the year with a cash balance of $2.0 billion and in January paid a $0.45 per share dividend, which totaled $259 million. On an annualized basis our dividend was $0.90 per share.
- Our liquidity remains strong with a cash balance of $1.7 billion at February 11, 2015 and US$3.0 billion available under our revolving credit facility which matures in 2019.
- If we meet our full year guidance for production, costs and capital expenditures, assuming current commodity prices and exchange rates and no unusual transactions or events, we should complete 2015 with over $1 billion in cash without any material change in our overall U.S. dollar debt level.
- Our cost reduction program continues to exceed our initial goals with approximately $640 million of annualized reductions realized to date. This contributed to reduced unit costs at 10 of our 13 operations and all of our operations generating positive cash flows for the year.
- Operating highlights in 2014, included:
- record annual coal production of 26.7 million tonnes,
- record annual zinc production of 596,000 tonnes at our Red Dog mine,
- record throughput of approximately 138,000 tonnes per day at Antamina, and
- we exceeded our initial business unit production guidance for the year, except for refined metal at our Trail Operations.
- We have reached agreements with our customers to sell 6.2 million tonnes of coal in the first quarter of 2015 based on US$117 per tonne for the highest quality product and we expect total sales in the first quarter, including spot sales, to be at or above 6.5 million tonnes.
- We remain committed to advancing long-life growth projects, such as the Fort Hills oil sands project. The partners are focused on capital discipline and are working with our contractors to take advantage of the current economic environment. All critical milestones set for 2014 have been achieved on the Fort Hills oil sands project. Detailed engineering activities were approximately 65% complete by the end of the fourth quarter.
- The restart of the Pend Oreille zinc mine was completed in the fourth quarter on time and under budget. The first shipment of zinc and lead in concentrate to our Trail Operations was made in mid-December, and we expect to reach full production of 44,000 tonnes per year in the second quarter of 2015.
- On January 21, 2015, we were recognized as one of the Global 100 Most Sustainable Corporations for 2014 by media and investment research company, Corporate Knights for the third consecutive year. We were the top-ranked mining company and the second-ranked Canadian company on this year’s list.
In addition to these items, the recent drop in oil prices and the strengthening of the U.S. dollar are expected to have a significant positive effect on our operating costs over the near term if they persist. Each CAD$0.01 change in the exchange rate affects our EBITDA by approximately $52 million, which is lower than our previous estimates due mainly to the effect of lower commodity prices, and each US$1 per barrel reduction in the oil price reduces operating costs by approximately $5 million, in each case on an annualized basis.
Download/view Q4 2014 Report 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 headings “Outlook,” that appear in this release but also elsewhere in this document, include estimates, forecasts, and statements as to management’s expectations with respect to, among other things, anticipated cost and production forecasts 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), our expectation that we should complete 2015 with over $1 billion in cash without any material change in our overall U.S. dollar debt level, plans and expectations for our development projects, the impact of currency exchange rates, the expected timing of production at the Fort Hills oil sands project and its economic benefits, 2015 capital expenditure projections, expected timing of the full production at Pend Oreille, sensitivity of EBITDA to exchange rates and the price of oil, our expectation that lower oil prices will reduced budget and schedule pressure on the Fort Hills oil sands project, our expectation that the restart of the Pend Oreille zinc mine will provide additional benefits to our Trail Operations, expected work and expenditures in respect of the Elk Valley Water Quality Plan, expectation that our earn-in commitment for Fort Hills will be fulfilled in the second quarter of 2015, timing of a regulatory approval for the Frontier energy project, expectations that we have access to cash and credit lines sufficient to meet our capital commitments and working capital needs, 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. Assumptions regarding the sensitivity of EBITDA and operating costs to oil prices are based on assumptions regarding the amount of diesel fuel used in our operations and transporting our coal products is as forecast, and also based on an assumed Canadian/U.S. dollar exchange rate of $1.20. Assumptions regarding the impact of foreign exchange are based on current commodity prices. Assumptions regarding the Elk Valley Water Management Plan are based on current technology. 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 and production schedules may be adjusted by our partners. The effect of the price of oil on operating costs will be affected by the exchange rate between Canadian and U.S. dollars.
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 Q4/2014 financial results at 11:00 AM Eastern time, 8:00 AM Pacific time, on Thursday, February 12, 2015. 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 Q4 2014 Report 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
15-4-TR
