1st Quarter 2019: Teck reports $1 Billion profit compared to $1.6 Billion last year

by Keith Powell
Don Lindsay, President and CEO of Teck.

Don Lindsay, President and CEO of Teck. — Photo courtesy Teck

Vancouver, BC – British Columbia, - Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (“Teck”) reported profit attributable to shareholders of $630 million ($1.11 per share) for the first quarter of 2019 compared with $759 million ($1.32 per share) a year ago. Adjusted profit attributable to shareholders was $568 million ($1.00 per share) compared with $753 million ($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 $630 million ($1.11 per share) in the first quarter compared with $759 million ($1.32 per share) a year ago. Adjusted profit was $568 million ($1.00 per share) compared with $753 million ($1.31 per share) in the first quarter of last year.
  • EBITDA was $1.4 billion compared with $1.6 billion in the first quarter of 2018. Our adjusted EBITDA in the first quarter totaled $1.3 billion compared with $1.6 billion last year.
  • Gross profit was $1.0 billion in the first quarter compared with $1.4 billion a year ago. Gross profit before depreciation and amortization was $1.4 billion compared with $1.7 billion in the first quarter of 2018.
  • The transaction through which Sumitomo Metal Mining Co. Ltd. (SMM) and Sumitomo Corporation (SC) subscribed for a 30% indirect interest in Compañia Minera Quebrada Blanca S.A., which owns Quebrada Blanca Phase 2 (QB2), closed on March 29, 2019. On closing of the transaction SMM and SC contributed $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 mobilization is in progress. The current construction workforce is over 1,600 people across the six major construction areas. First production is targeted for the second half of 2021.
  • In March, we paid our regular base dividend of $0.05 per share, which totaled $28 million. We continue to purchase shares under our normal course issuer bid in accordance with our Board’s direction to management to apply $400 million to the repurchase of Class B subordinate voting shares. To date, we have purchased approximately 11.9 million Class B subordinate voting shares for $348 million, of which $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 Limited (Poscan) to substantially increase the royalty paid by Poscan in respect of its 20% share of Greenhills coal production, effective February 11, 2019. At benchmark steelmaking coal prices of approximately US$200 per tonne, the royalty payment will increase by approximately $90 million annually. At current steelmaking coal prices, the increase in the royalty has increased first quarter revenue by approximately $13 million. The new royalty remains in effect until December 31, 2022.
  • Our liquidity remains strong at $8.7 billion, including $2.5 billion in cash at April 22, 2019, of which $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 $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 our 2019 guidance.

Forward looking statements apply. 

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