BASE METALS

Teck's profits jump 44% on coal sales and forex gains

Forex gains excluded the numbers still beat analyst expectations

Posted: Thursday , 29 Oct 2009

TORONTO (Reuters) - 

Teck Resources (TCKb.TO: Quote) said on Wednesday its third-quarter profit rose 44%, helped by a C$311 million debt-related foreign exchange gain and higher coal sales volumes.

The base metals miner earned C$609 million ($564 million), or C$1.07 a share, in the quarter ended Sept. 30. This was up from a profit of C$424 million, or 95 Canadian cents per share, in the year-before period.

Stripping out the foreign exchange gain and other items, Teck earned 59 Canadian cents a share, topping the profit of 50 Canadian cents a share, expected by analysts polled by Thomson Reuters I/B/E/S.

Revenues jumped to C$2.1 billion from C$1.7 billion, helped by sharply higher metallurgical coal sales volumes following the company's purchase of Fording Canadian Coal Trust last year. The higher sales offset weaker a 44% drop in realized prices.

Teck said it expects 2009 coal sales to be in the range of 19.5 million tonnes to 20.5 million tonnes, which is slightly above its previous guidance. The average realized selling prices is expected to be in the range of $155 per tonne to $158 per tonne.

Revenues from copper and zinc were also stronger, as lower year-over-year spot prices were more than offset by positive pricing adjustments on sales from earlier in the year settled at higher third-quarter prices.

PAYING DOWN DEBT

The company has spent the past year cleaning up its balance sheet after taking on $9.8 billion in bank loans last year to buy Fording. The purchase boosted its production of metallurgical coal, which is used in the steelmaking process.

Teck has cut costs, sold off non-core assets, issued bonds, and recently sold a 17%equity stake to state-owned China Investment Corp. Those efforts have so far reduced the Fording debt to $2.7 billion, the company said.

"We expect further reduction of approximately $1.1 billion upon the completion of previously announced asset sales expected later this year and early 2010," Teck Chief Executive Don Lindsay said in a statement.

The company is now hoping to soon regain its investment-grade debt rating.

Teck's stock, which has quintupled this year after falling hard in late 2008, retreated 7.1 percent to C$30.72 on the Toronto Stock Exchange on Wednesday, prior to the after-market release of the results.

($1=$1.08 Canadian) (Reporting by Cameron French, editing by Leslie Gevirtz)

© Thomson Reuters 2009 All rights reserved