Tech Resources Q2 net profit soars to $756M; adjusted earnings beat expectations

VANCOUVER – Higher prices for coal and copper helped Teck Resources Ltd. (TSX:TCK.B) post a big increase in second-quarter profits, easily beating analyst expectations on earnings but falling short on revenue.

Reporting after markets closed, the Vancouver-based miner said Thursday that earnings attributable to shareholders were $756 million, or $1.28 per share, compared with $283 million or 48 cents per share in the same 2010 quarter.

Adjusted quarterly profit was $663 million or $1.12 per share, compared with $347 million or 59 cents per share in the second quarter of 2010.

Revenue in the three months ended June 30 was $2.8 billion, up from $2.2 billion.

Teck was expected to earn $1.02 per share in adjusted earnings on $2.68 billion of revenues in the second quarter, according to analysts surveyed by Thomson Reuters.

“Our adjusted earnings . . . were nearly 90 per cent higher than earnings in the second quarter of 2010 with the increase due mainly to higher prices for coal and copper,” president and CEO Don Lindsay said in a release.

Lindsay also said the company was pleased with the results of its US$2-billion notes offer which closed in early July, saying it strengthen the company’s balance sheet.

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“We now have $3.4 billion of cash and short-term investments at the date of this report. Our efforts for the balance of the year will continue to focus on ramping up production at our coal mines and advancing our copper, coal and oilsands development projects.”

Teck had earlier reduced its coal production guidance for the second quarter and said unit mining costs would be greater as a result of higher labour and other expenses.

It said coal sales should be at the low end of its previously announced guidance range of 5.5 million to six million tonnes.

The company also said it was reducing production guidance as a result of the March 11 earthquake and tsunami in Japan. Some customers had deferred shipments due to reduced steel production requirements, it said.

Teck also said it expected the unit mining cost of product sold to be in the range of $71 to $76 per tonne for the year, primarily due to one-time costs related to labour settlements and higher than expected costs for items such as external mining contractors and diesel.

Vancouver-based Teck is a diversified resource company involved in copper, coal, zinc and energy. It has mines in Canada, the U.S., Chile and Peru.

The company also holds a 20 per cent stake in the undeveloped Fort Hills oilsands project north of Fort McMurray, Alta.. Suncor Energy Inc. (TSX:SU) holds a 40.8 per cent stake, while Total owns the remaining 39.2 per cent.

On the Toronto Stock Exchange, Teck shares closed up 59 cents at $47.88 on Thursday.