Teck reports unaudited annual & fourth quarter results: 2018

"Our financial position remains very strong, leaving us well positioned for the coming year,” said Don Lindsay, president and CEO of Teck. — Photo co

This post is for paid
subscribers only

Subscribe now

Already have an account? Sign in

"Our financial position remains very strong, leaving us well positioned for the coming year,” said Don Lindsay, president and CEO of Teck. — Photo courtesy KootenayBiz/SMS

Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (“Teck”) reported record annual profit attributable to shareholders of $3.1 billion for 2018. In the fourth quarter, adjusted profit attributable to shareholders was $500 million ($0.87 per share) and profit attributable to shareholders was $433 million ($0.75 per share) compared with $680 million ($1.18 per share) and $740 million ($1.28 per share) a year ago.

“2018 was another very good year for Teck,” said Don Lindsay, President and CEO. “We achieved record earnings of $3.1 billion and record EBITDA of $6.2 billion, we were very pleased with the extremely successful start-up of production at Fort Hills and we announced the sanctioning of our Quebrada Blanca Phase 2 project and a US$1.2 billion partnering transaction. Our financial position remains very strong, leaving us well positioned for the coming year.”

In 2018, we achieved records in annual profit attributable to shareholders of $3.1 billion, revenues of $12.6 billion and EBITDA of $6.2 billion.
Annual profit attributable to shareholders was a record $3.1 billion ($5.41 per share), compared with $2.5 billion ($4.26 per share) a year ago. Annual adjusted profit attributable to shareholders was, $2.4 billion ($4.13 per share) compared with $2.5 billion ($4.36 per share) a year ago.
Adjusted profit in the fourth quarter was $500 million ($0.87 per share) compared with $680 million ($1.18 per share) in the fourth quarter of last year. Profit attributable to shareholders was $433 million ($0.75 per share) in the fourth quarter compared with $740 million ($1.28 per share) a year ago.
Our annual EBITDA was a record $6.2 billion in 2018 compared to $5.6 billion in 2017 and adjusted EBITDA1 was $5.4 billion in 2018 compared with $5.7 billion in 2017. Adjusted EBITDA for the fourth quarter was $1.3 billion compared with $1.5 billion last year. EBITDA was $1.2 billion in the fourth quarter, compared with $1.6 billion a year ago.
In December, our Board approved the construction of the Quebrada Blanca Phase 2 (QB2) project, with first production targeted for the second half of 2021.
We also announced a transaction through which Sumitomo Metal Mining Co. Ltd. and Sumitomo Corporation will subscribe for a 30% indirect interest in the subsidiary that owns the QB2 project by contributing US$1.2 billion to the project. Additional payments are contingent on further development.
On February 11, 2019, we agreed with Posco Canada Limited (Poscan), pursuant to a reopener in the Greenhills joint venture agreement, to substantially increase the royalty paid by Poscan in respect of its 20% share of Greenhills coal production. At current coal prices the increase in the royalty will amount to approximately $90 million annually.
Our steelmaking coal operations achieved a quarterly production record of 7.3 million tonnes in the fourth quarter and set an annual record for total material moved in 2018.
Antamina achieved record annual combined copper and zinc concentrate production of 2.4 million tonnes in 2018.
Fort Hills achieved plant production of 201,000 barrels of bitumen per day in December, exceeding design nameplate capacity of 194,000 barrels per day.
As a result of a significant decline in global benchmark crude oil prices and a significant widening of Western Canadian Select (WCS) price differentials, we incurred a fourth quarter loss of $92 million in our energy business unit before depreciation, amortization and inventory write-downs.
In December, the Government of Alberta announced a temporary curtailment of provincial crude oil and bitumen production, effective January 1, 2019. Subsequent to this announcement, the spot WCS price differentials narrowed significantly from a high at US$52.55 per barrel to the current differentials of approximately US$10.50 per barrel.
In December, we paid a dividend of $0.15 per share consisting of a supplemental dividend of $0.10 per share and our regular base dividend of $0.05 per share, which totaled $86 million. In addition, our Board directed management to apply $400 million to the repurchase of Class B subordinate voting shares. To date, we have purchased approximately 8.5 million Class B subordinate voting shares for $247 million, of which $131 million was spent in the fourth quarter. As previously announced, our Board will consider an additional return of capital to shareholders on closing of the QB2 transaction.
In November 2018, we increased our US$3.0 billion committed credit facility to US$4.0 billion (undrawn at December 31, 2018) and extended the maturity date from October 2022 to November 2023. We also reduced our US$1.2 billion committed credit facility to US$600 million and extended the maturity date to November 2021.
Our liquidity remains strong at $6.6 billion including $1.3 billion in cash at February 12, 2019 and US$4.0 billion of undrawn, committed credit facilities.
Moody’s upgraded our corporate family credit rating to investment grade in early January 2019 to Baa3 with a stable outlook from Ba1 with a positive outlook. We have credit ratings of BB+ with a positive outlook from each of S&P and Fitch.
In November we were named as one of Canada’s Top 100 Employers by Mediacorp for the second year in a row and in January 2019, we were recognized as one of the Global 100 Most Sustainable Corporations by Corporate Knights, a media and investment research company. Teck was the top-ranked company in the Metals and Mining category.

To view Teck’s full unaudited fourth quarter results for 2018, please visit this link.

Forward looking statements apply.