Teck reports 1Q19 results
Published by Claire Cuddihy,
Global Mining Review,
Teck Resources Ltd (Teck) reported profit attributable to shareholders of CAN$630 million (CAN$1.11 per share) for the first quarter of 2019 compared with CAN$759 million (CAN$1.32 per share) a year ago. Adjusted profit attributable to shareholders was CAN$568 million (CAN$1.00 per share) compared with CAN$753 million (CAN$1.31 per share) a year ago.
“Demand for our products remains strong, commodity prices continue to be solid and we were pleased to regain investment grade credit ratings, which confirms our strong financial position,” said Don Lindsay, President and CEO. “Our previously issued guidance for the year remains unchanged and our main focus for the remainder of the year is the development of our QB2 copper project.”
Highlights and significant items
- Profit attributable to shareholders was CAN$630 million (CAN$1.11 per share) in the first quarter compared with CAN$759 million (CAN$1.32 per share) a year ago. Adjusted profit was CAN$568 million (CAN$1.00 per share) compared with CAN$753 million (CAN$1.31 per share) in the first quarter of last year.
- EBITDA was CAN$1.4 billion compared with CAN$1.6 billion in the first quarter of 2018. Our adjusted EBITDA in the first quarter totaled CAN$1.3 billion compared with CAN$1.6 billion last year.
- Gross profit was CAN$1.0 billion in the first quarter compared with CAN$1.4 billion a year ago. Gross profit before depreciation and amortisation was CAN$1.4 billion compared with CAN$1.7 billion in the first quarter of 2018.
- The transaction through which Sumitomo Metal Mining Co. Ltd. (SMM) and Sumitomo Corp. (SC) subscribed for a 30% indirect interest in Compañia Minera Quebrada Blanca S.A., which owns Quebrada Blanca Phase 2 (QB2), closed on 29 March 2019. On closing of the transaction SMM and SC contributed CAN$1.3 billion (US$966 million) to the QB2 project and are expected to contribute a further US$307 million over the remainder of 2019.
- Construction of QB2 was approved by our Board in December 2018 and mobilisation is in progress. The current construction workforce is over 1600 people across the six major construction areas. First production is targeted for the second half of 2021.
- In March, the company paid its regular base dividend of US$0.05 per share, which totalled US$28 million. We continue to purchase shares under our normal course issuer bid in accordance with our Board’s direction to management to apply US$400 million to the repurchase of Class B subordinate voting shares. To date, the company have purchased approximately 11.9 million Class B subordinate voting shares for CAN$348 million, of which CAN$180 million was purchased in the first quarter. As previously disclosed, our Board will consider an additional return of capital to shareholders over the course of 2019 following the closing of the QB2 transaction and related project financing.
- As previously announced, in early February we agreed with Posco Canada Ltd (Poscan) to substantially increase the royalty paid by Poscan in respect of its 20% share of Greenhills coal production, effective 11 February 2019. At benchmark steelmaking coal prices of approximately CAN$200/t, the royalty payment will increase by approximately CAN$90 million annually. At current steelmaking coal prices, the increase in the royalty has increased first quarter revenue by approximately CAN$13 million. The new royalty remains in effect until 31 December 2022.
- Our liquidity remains strong at CAN$8.7 billion, including CAN$2.5 billion in cash at 22 April 2019, of which CAN$1.3 billion is in Chile for the development of our QB2 project.
- We have received investment grade credit ratings from four rating agencies since the end of 2018. As a result, approximately CAN$1.1 billion in letters of credit posted as financial security for QB2 power purchase contracts, and transportation, tank storage and pipeline capacity agreements for our interest in Fort Hills have been terminated.
- There is no change to the company’s 2019 guidance.
This management’s discussion and analysis is dated as at 22 April 2019 and should be read in conjunction with the unaudited consolidated financial statements of Teck Resources Ltd (Teck) and the notes thereto for the three months ended 31 March 2019 and with the audited consolidated financial statements of Teck and the notes thereto for the year ended 31 December 2018.
Read the article online at: https://www.globalminingreview.com/finance-business/23042019/teck-reports-1q19-results/
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