On July 28, Teck released its second quarter results for 2016, posting a $15 million profit to shareholders, which equates to $.03 per share. This is a decrease from 2015, when Teck posted a second quarter profit of $63 million, or $0.11 per share.
According to their press release, Teck had a gross profit of $536 million, before depreciation and amortization, compared to $676 million in the same quarter of 2015. Teck’s report indicates they have reduced their cash unit costs at their operations. They specifically point to steelmaking coal unit costs, inclusive of transportation costs, as it decreased to $76 CAD per tonne, compared to $83 in the same quarter of the previous year. Cash flow from operations is $339 million, compared to $335 million in 2015.
Teck has also reported they have reached agreements with its customers and have projected its third quarter sales.
“We have reached agreements with the majority of our steelmaking coal customers for the third quarter of 2016, based on a quarterly benchmark of US$92.50 per tonne for the highest quality product, and we expect total sales in the third quarter, including spot sales, to be at least 6.8 million tonnes of steelmaking coal,” read their press release. “We expect our realized price as compared to the current quarterly benchmark to be consistent with the typical range we normally achieve.”
The company also highlighted their liquidity, citing it “remains strong at $5.4 billion inclusive of $1.4 billion in cash.” This measure is as of July 27, a day before the second quarter results were released.
Teck reported that their Elkview, Greenhills and Line Creek mines all set new production records, both for the second quarter and for the first half of a year. Additionally, unit cash production costs were lower, compared to the same time frame in 2015, dropping 10 per cent. This is attributed to “initiatives undertaken through our cost reduction program,” higher production rates and decreased energy prices.
Teck’s president and CEO, Don Lindsay, commented on Teck’s performance and the health of the industry thus far.
“While the commodity cycle continues to be challenging, we are starting to see some positive changes in the direction of zinc and steelmaking coal prices,” he said in the release. “We are pleased with the performance of our operations, which have continued to reduce costs while maintaining production volumes. In addition, through recent transactions, we now have no substantial bond maturities for five years.”
Teck’s full second quarter report can be found on their website, Teck.com.