PROFIT & LOSS

Teck's adjusted profit jumps 247%

Teck Resources has reported a massive jump in profit thanks to the rising copper price and a resilient performance despite COVID-19 challenges.

 Progress at Teck Resources’ QB2 concentrator in Chile, pictured in January

Progress at Teck Resources’ QB2 concentrator in Chile, pictured in January

The Canada-based diversified miner announced a 247% jump in adjusted profit attributable to shareholders, year-on-year, of C$326 million or 61c per share for the March quarter.

"Strong first quarter operational performance, in line with plan, and higher commodity prices contributed to a very solid start to 2021," president and CEO Don Lindsay said.

Canaccord Genuity said the financial results were largely in line with consensus but below their forecasts due to lower revenue from the zinc business in aggregate.

Lindsay said overall progress at the QB2 copper development project in Chile had surpassed the halfway mark this month, the Neptune port upgrade in British Columbia was in the commissioning phase and there was no change to annual guidance.

QB2 is expected to double Teck's consolidated copper production capacity but COVID-19 impacts had pushed costs up by US$50 million, the company said in February.

Teck said it was pleased with the progress it was making at QB2 in light of restrictions. It said the final extent of COVID-19 related costs would depend on the progress of the pandemic in Chile and the extent of further impacts on staffing levels and project progress.

The issue was among "a number of near-term headwinds" for Teck, according to Canaccord Genuity analysts.

"These include COVID-19 impacts on QB2, elections and constitutional reform in Peru and Chile, ongoing pressure on the FOB coking coal price, rising diesel prices and a strengthening CAD," they said.

"Longer-term, we believe Teck will continue to trade at a discount without a credible exit strategy from its energy and coal businesses."

Teck's energy unit had a gross loss of $33 million for the March quarter, compared with a $123 million loss a year earlier.

This was primarily due to increased crude oil prices and partially offset by higher unit operating costs due to lower production as planned, the company said.

Teck declared liquidity of C$6.3 billion at April 27.

It announced an eligible dividend of 5c per share.

The company expects to produce 275,000-295,000 tonnes of copper this year, 585,000-610,000t of zinc, about 300,000t of refined zinc, 25.5-26 million tonnes of steelmaking coal and 8.6-12.1 million barrels of bitumen.

Canaccord Genuity kept Teck's rating at hold and price target at $26.50.

Teck shares (TSX: TECK.B) closed down 0.97% yesterday to $27.55, valuing it at $14.4 billion (US$11.7 billion).

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