Teck Resources profit climbs

Investments in new equipment, plant upgrades and employees have resulted in substantial increases in coal output, while investments in Chile and Peru have helped boost copper output, the Vancouver, British Columbia-based company said.

Even so, Teck lowered its 2011 coal sales forecast because of global economic conditions and trimmed its 2011 copper production forecast because of weather-related issues.

Despite the more cautious outlook, Teck's shares rose more than 6 percent to $39.35 in trade before the morning bell in New York on Thursday, helped in part by a 33 percent dividend increase.

"Near-term economic concerns have pressured all the coal stocks, including Teck, so Teck's more cautious outlook may be priced into the stock," wrote BMO Capital Markets analyst Meredith Bandy, in a research note.

Teck said it was making progress in advancing other late-stage copper developments, particularly its Quebrada Blanca and Relincho projects in Chile.

Net income rose to C$814 million, or C$1.37 a share, from C$316 million, or 54 Canadian cents, a year earlier.

Excluding gains from asset sales, foreign exchange losses and other one-time items, earnings raised to C$1.26 a share, slightly above the average forecast of C$1.25, according to Thomson Reuters I/B/E/S.

Teck said the results reflected higher copper and coal sales volumes and favourable prices for all our major products, especially copper and coal.

Negative factors included a stronger Canadian dollar, higher operating costs and a C$113 million after-tax pricing adjustments arising from the decline of copper prices late in the quarter.

Gross profit rose more than 50 percent to C$362 million in the copper business and increased more than 90 percent to C$954 million in the coal business. Earnings from the zinc business rose 35 percent to C$255 million, the company said in a statement. Quarterly revenue rose 40 percent to C$3.38 billion.

"Despite strong growth from emerging economies, especially China, we continue to experience volatile market prices for our products," the company said. The recent financial crisis in Greece and other European nations is having an effect on the global economy and this may affect business, the company added.

Given weakening steel markets, Teck said it expects its 2011 coal sales volumes to be in the range of 22.2 million and 23 million tonnes. In July, Teck had forecast that coal sales volumes would be at the low end of a range of 23.5 million to 24.5 million tonnes.

Teck, one of the world's top exporters of metallurgical coal, an important ingredient for steelmaking, said its new coal sales volume forecast depended on full delivery of its contractual commitments for the fourth quarter.

The company also cut its 2011 copper sales guidance down to about 320,000 tonnes, from a previous forecast range of 330,000 to 340,000 tonnes, mainly due to lower than expected production from its Quebrada Blanca operation in Chile.

Teck said late on Wednesday its board has authorized a 33 percent increase in its semi-annual dividend.

The company also said it had reached an agreement to sell 5.6 million tonnes of coal to its customers in the fourth quarter at an average price of about US$255 per tonne.

Copyright Reuters, 2011