Teck Resources Ltd. reported stronger-than-expected third quarter earnings due to record coking coal sales, but profit still plunged 41% from last year because of lower prices for coal and other commodities.
The current price for steelmaking coal remains below what we believe is required to sustain adequate production in the industry in the long term, chief executive Don Lindsay said in a statement.
Vancouver-based Teck sold 7.6 million tonnes of coal in the quarter, up 36% from a year ago. But its realized coal price was US$139 a tonne, compared to US$193 in the third quarter of 2012. Prices are under extreme pressure because of concerns about slowing global growth, particularly in China and other emerging markets.
In the third quarter, adjusted profit was $252-million, or 44¢ a share, well above the average analyst estimate of 38¢. Teck earned 73¢ a share in the third quarter of 2012.
We are pleased with our operating performance this quarter, Mr. Lindsay said.
Teck shares climbed more than 4% on Thursday morning in response to the strong earnings.
For the full year, the company now expects to be near the top end of its coal production guidance of 24.5 to 25.5 million tonnes.
TD Securities analyst Greg Barnes noted that Teck beat his sales volume estimates for coal, copper and zinc.
He pointed out that there was no update on the Fort Hills oil sands project in Alberta, in which Teck owns 20%. The owners are expected to make a production decision before the end of the year, and the high-cost project has caused some concern for shareholders.
