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Excerpt:
Vancouver, BC - Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) ("Teck") reported third quarter adjusted profit attributable to shareholders of $159 million, or $0.28 per share, compared with $252 million or $0.44 per share in 2013. Profit attributable to shareholders was $84 million in the third quarter, or $0.14 per share, compared with $267 million, or $0.46 per share, a year ago.
"Our operations performed well during the third quarter and this has allowed us to report profits, conserve cash and maintain a strong financial position with approximately $5 billion of liquidity at the end of the quarter," said Don Lindsay, President and CEO. "We are pleased with the progress being made in the development of the Fort Hills oil sands project and the reopening of the Pend Oreille zinc mine while continuing our focus on reducing costs and spending on other capital projects."
Highlights and Significant Items
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Profit attributable to shareholders was $84 million in the third quarter, which included a non-cash tax charge of $64 million associated with the introduction of new Chilean tax legislation.
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EBITDA was $651 million in the third quarter compared with $815 million a year ago.
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Gross profit before depreciation and amortization was $750 million compared with $919 million in the third quarter of 2013.
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Cash flow from operations, before working capital changes, was $492 million in the third quarter of 2014 compared with $647 million a year ago.
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Our liquidity remains strong with a cash balance of $2.0 billion at October 28, 2014 and US$3 billion available under our revolving credit facility that matures in 2019.
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Our cost reduction program continues to deliver results as we realized lower total operating and lower unit costs in our copper and zinc business units.
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We have reached agreements with our customers to sell 6.3 million tonnes of coal in the fourth quarter of 2014 based on US$119 per tonne for the highest quality product and we expect total sales in the fourth quarter, including spot sales, to be at or above 6.5 million tonnes, resulting in 2014 sales of approximately 26.2 million tonnes.
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Coal production was up 2% in the quarter compared with a year ago and on a year-to-date basis, production is one million tonnes higher than a year ago. Coal sales of 6.7 million tonnes in the third quarter were the second highest on record for this period and follow record-high sales for the first half of 2014.
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All of our six coal mines reported positive cash margins in the quarter.
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The Pend Oreille zinc mine restart is progressing well, with first ore expected in December 2014.
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We are increasing our zinc in concentrate production guidance for the second time this year as a result of strong performance from our Red Dog Operations and now expect to produce in the range of 615,000 to 630,000 tonnes in 2014.
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Since the start of the year, the Canadian/U.S. dollar exchange rate has moved significantly in our favour. Each Cdn$0.01 change in the exchange rate affects our EBITDA by approximately $60 million on an annualized basis.
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Our estimated capital spending for 2014 has been revised downward to $1.5 billion, or approximately $375 million lower than our original annual guidance. Timing of cash expenditures at Fort Hills accounts for approximately $225 million of the reduction, while the balance primarily relates to our cost reduction program.
Download/view Q3 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 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, 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 impact of currency exchange rates, the expected timing of restarting the Pend Oreille zinc operation, the expected timing of production at the Fort Hills oil sands project, expectations regarding fourth quarter coal sales levels and cost of product sold, forecast copper unit costs, the amount of our portion of the 2014 expenditures for the Fort Hills oil sands project, the expectation that the Fort Hills oil sands project will provide us with significant cash flows and the life of the project, the Frontier application timing milestones, costs associated with our Elk Valley water management and timing of approval of our Elk Valley Water Quality Plan, 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 and production schedules may be adjusted by our partners.
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.
Teck will host an Investor Conference Call to discuss its Q3/2014 financial results at 11:00 AM Eastern time, 8:00 AM Pacific time, on Wednesday, October 29, 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 Q3 2014 Report for the full text of this release.
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