Big miner Teck Resources has lower Q2 profit of $80M, revenues down slightly

VANCOUVER – Teck Resources Limited (TSX:B) reported Thursday a second-quarter profit of $80 million, down from $143 million a year ago, as the big miner was hit by a lower price for steelmaking coal.

The company said the profit amounted to 14 cents share for the three months ended June 30, compared with 25 cents per share a year ago.

Revenue totalled nearly $2.01 billion for the quarter, down from $2.1 billion in the same quarter of 2013.

Teck reported an adjusted profit for the quarter of $72 million, or 13 cents per share, compared with $197 million, or 34 cents per share year-over-year.

The average analyst estimate had been for a profit of 12 cents per share, according to Thomson Reuters.

The drop in profit came as Teck’s realized price for coal fell to US$111 per tonne, compared with US$156 per tonne a year ago.

The company also said its realized price for copper, another key commodity it produces, fell to US$3.08 per pound from $3.24 in the second quarter of 2013. Teck’s realized price for zinc increased to 94 cents US per pound, up from 83 cents US a year ago.

The company said the lower price for coal was partially offset by the positive effect of a stronger U.S. dollar, lower corporate overhead spending and changes in pricing adjustments year-over-year.

“We are pleased with the performance of our operations this quarter and with our efforts to reduce our costs and capital spending to ensure we emerge stronger from the current challenging price environment, particularly the substantially lower steelmaking coal price that was prevalent in the second quarter of 2014 compared with last year,” Teck president and chief executive Don Lindsay said in a statement.

Teck also said that a cost cutting program launched in 2012 has exceeded its initial goals.

The company said it has identified $180 million of ongoing annual operating cost savings and so far implemented $170 million and realized $150 million on an annualized basis.

The savings are in addition $360 million in savings achieved last year, which are now being embedded its operating procedures.

The company, which had set a target of 600 jobs, said it has cut 535 positions across its operations and it will continue to look for further reductions through attrition where possible.