Teck doubles Q2 profits

Diversified miner Teck Resources doubled its quarterly profit on higher copper and coal prices, the company announced on Thursday.

Teck said it brought in $756 million in profits in the second quarter of 2011, a 90 percent increase from the same period in 2010, or $1.12 a share compared to 59 cents per share in Q2 2010.

President and CEO Don Lindsay attributed the doubling of profits to higher prices for coal and copper — the company’s chief commodities — along with a US$2 billion rights offering in July that cashed up the company to the tune of $3.4 billion.

“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 oil sands development projects,” he said.

Teck’s stock was up 18 cents at the close of trading on Thursday, to $48.53 on the TSX. A 30-cent dividend was paid to shareholders on July 5.

Highlights

• Gross profit, before depreciation and amortization, of $1.4 billion in the second quarter was a record and 31% higher than the $1.1 billion in the second quarter of 2010 primarily due to significantly higher copper and steel-making coal prices. We also had record quarterly revenues of $2.8 billion.
• Cash flow from operations, before changes in non-cash working capital items, of $1.2 billion in the second quarter of 2011 was 48% higher than the $817 million a year ago.
• We reached agreement on prices with the majority of our coal customers for the third quarter of 2011 with pricing at approximately US$315 per tonne for our highest quality products.
• Our Fording River and Elkview coal operations ratified new five-year labour agreements in the second quarter.
• We completed the sale of our interest in the Carrapateena project for cash proceeds of US$134 million and recorded an after-tax gain of $99 million.
• On July 5, we issued US$2.0 billion in aggregate amount of notes, consisting of US$300 million (3.15%) due 2017, US$700 million (4.75%) due 2022 and US$1.0 billion (6.25%) due 2041. We expect to use the proceeds for general corporate purposes, which may include anticipated capital spending for project development in our coal, copper and energy businesses and debt repayment.
• At July 28, our cash and short-term investments were $3.4 billion and our net debt was $3.2 billion.
• We declared a $0.30 per share dividend on our Class A common shares and Class B subordinate voting shares, which was paid on July 5.