Teck reports unaudited annual & fourth quarter results: 2018

by Keith Powell
SMS truck.

"Our financial position remains very strong, leaving us well positioned for the coming year,” said Don Lindsay, president and CEO of Teck. — Photo courtesy KootenayBiz/SMS

Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (“Teck”) reported record annual profit attributable to shareholders of $3.1 billion for 2018. In the fourth quarter, adjusted profit attributable to shareholders was $500 million ($0.87 per share) and profit attributable to shareholders was $433 million ($0.75 per share) compared with $680 million ($1.18 per share) and $740 million ($1.28 per share) a year ago.

“2018 was another very good year for Teck,” said Don Lindsay, President and CEO. “We achieved record earnings of $3.1 billion and record EBITDA of $6.2 billion, we were very pleased with the extremely successful start-up of production at Fort Hills and we announced the sanctioning of our Quebrada Blanca Phase 2 project and a US$1.2 billion partnering transaction. Our financial position remains very strong, leaving us well positioned for the coming year.”

Highlights and Significant Items

  • In 2018, we achieved records in annual profit attributable to shareholders of $3.1 billion, revenues of $12.6 billion and EBITDA of $6.2 billion.
  • Annual profit attributable to shareholders was a record $3.1 billion ($5.41 per share), compared with $2.5 billion ($4.26 per share) a year ago. Annual adjusted profit attributable to shareholders was, $2.4 billion ($4.13 per share) compared with $2.5 billion ($4.36 per share) a year ago.
  • Adjusted profit in the fourth quarter was $500 million ($0.87 per share) compared with $680 million ($1.18 per share) in the fourth quarter of last year. Profit attributable to shareholders was $433 million ($0.75 per share) in the fourth quarter compared with $740 million ($1.28 per share) a year ago.
  • Our annual EBITDA was a record $6.2 billion in 2018 compared to $5.6 billion in 2017 and adjusted EBITDA1 was $5.4 billion in 2018 compared with $5.7 billion in 2017. Adjusted EBITDA for the fourth quarter was $1.3 billion compared with $1.5 billion last year. EBITDA was $1.2 billion in the fourth quarter, compared with $1.6 billion a year ago.
  • In December, our Board approved the construction of the Quebrada Blanca Phase 2 (QB2) project, with first production targeted for the second half of 2021.
  • We also announced a transaction through which Sumitomo Metal Mining Co. Ltd. and Sumitomo Corporation will subscribe for a 30% indirect interest in the subsidiary that owns the QB2 project by contributing US$1.2 billion to the project. Additional payments are contingent on further development.
  • On February 11, 2019, we agreed with Posco Canada Limited (Poscan), pursuant to a reopener in the Greenhills joint venture agreement, to substantially increase the royalty paid by Poscan in respect of its 20% share of Greenhills coal production. At current coal prices the increase in the royalty will amount to approximately $90 million annually.
  • Our steelmaking coal operations achieved a quarterly production record of 7.3 million tonnes in the fourth quarter and set an annual record for total material moved in 2018.
  • Antamina achieved record annual combined copper and zinc concentrate production of 2.4 million tonnes in 2018.
  • Fort Hills achieved plant production of 201,000 barrels of bitumen per day in December, exceeding design nameplate capacity of 194,000 barrels per day.
  • As a result of a significant decline in global benchmark crude oil prices and a significant widening of Western Canadian Select (WCS) price differentials, we incurred a fourth quarter loss of $92 million in our energy business unit before depreciation, amortization and inventory write-downs.
  • In December, the Government of Alberta announced a temporary curtailment of provincial crude oil and bitumen production, effective January 1, 2019. Subsequent to this announcement, the spot WCS price differentials narrowed significantly from a high at US$52.55 per barrel to the current differentials of approximately US$10.50 per barrel.
  • In December, we paid a dividend of $0.15 per share consisting of a supplemental dividend of $0.10 per share and our regular base dividend of $0.05 per share, which totaled $86 million. In addition, our Board directed management to apply $400 million to the repurchase of Class B subordinate voting shares. To date, we have purchased approximately 8.5 million Class B subordinate voting shares for $247 million, of which $131 million was spent in the fourth quarter. As previously announced, our Board will consider an additional return of capital to shareholders on closing of the QB2 transaction.
  • In November 2018, we increased our US$3.0 billion committed credit facility to US$4.0 billion (undrawn at December 31, 2018) and extended the maturity date from October 2022 to November 2023. We also reduced our US$1.2 billion committed credit facility to US$600 million and extended the maturity date to November 2021.
  • Our liquidity remains strong at $6.6 billion including $1.3 billion in cash at February 12, 2019 and US$4.0 billion of undrawn, committed credit facilities.
  • Moody’s upgraded our corporate family credit rating to investment grade in early January 2019 to Baa3 with a stable outlook from Ba1 with a positive outlook. We have credit ratings of BB+ with a positive outlook from each of S&P and Fitch.
  • In November we were named as one of Canada’s Top 100 Employers by Mediacorp for the second year in a row and in January 2019, we were recognized as one of the Global 100 Most Sustainable Corporations by Corporate Knights, a media and investment research company. Teck was the top-ranked company in the Metals and Mining category.

To view Teck’s full unaudited fourth quarter results for 2018, please visit this link.

Forward looking statements apply.

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