Teck Resources profit slumps as prices drop, costs climb

TORONTO (Reuters) - Diversified miner Teck Resources Ltd, the world’s second-biggest exporter of steel-making coal, reported lower-than-expected third-quarter earnings on Thursday, hit by declining commodity prices and higher costs.

A number of one-time events also weighed on the quarter, including delayed zinc sales and higher costs at the Trail smelter due to forest fire smoke, adding up to C$58 million ($44.39 million), TD Securities analyst Greg Barnes said in a note.

Strong steel-making coal sales in the quarter would have “significantly” exceeded Teck’s forecast of 6.8 million tonnes, the company said, but logistics issues at Westshore Terminals delayed delivery of approximately 250,000 tonnes of the material, worth some C$55 million in revenue.

The Vancouver-based company now expects 2018 steel-making coal output in the low end of a range between 26 million and 27 million tonnes, while full-year costs are seen at C$60-C$63 a ton, up from C$56-C$60 previously.

Teck shares fell as much as 6 percent after the results were announced before edging up to C$25.99, a 3.4 percent decline.

That was partly offset by improved guidance for Teck’s copper and zinc units, said Clarkson Platou analyst Jeremy Sussman in a note.

Teck now expects 2018 copper output of 285,000-295,000 tonnes, up from 280,000-290,000 tonnes, with costs at $1.25-$1.30 per pound, down from US$1.30-$1.40.

Zinc output in 2018 is now estimated at 660,000-675,000 tonnes, up from 655,000-670,000 tonnes.

Teck, which also produces copper, zinc, gold and bitumen, said it expects fourth-quarter steel-making coal sales will be flat from 6.7 million tonnes in the third quarter.

The average realized price of steel-making coal rose 10 percent in the third quarter to US$172 a ton, it said.

Teck also said it may face charges under the Canadian Fisheries Act, for discharges of selenium and calcide from its Elk Valley coal mines. Penalties could include fines or operations orders and be material, but it is too early to asses, the company said.

The company still expects to announce a development partner for its Quebrada Blanca Phase 2 project in the fourth quarter. In April, Teck said a partner could contribute about $2 billion for a 30 percent to 40 percent share.

For the quarter ended Sept. 30, Teck said its adjusted profit fell to C$466 million ($357.6 million), or C0.81 per share, from C$605 million, or C$1.05 per share. Analysts expected earnings of 94 Canadian cents a share, according to Refinitiv.

Revenue rose 4.4 percent to C$3.21 billion.

($1 = 1.3031 Canadian dollars)

($1 = 1.3066 Canadian dollars)

Reporting by Susan Taylor and Kanishka Singh; Editing by Gopakumar Warrier and Tom Brown