Teck Resources Ltd., Canada’s largest diversified miner, said third-quarter profit slumped 78 percent as prices for steelmaking coal fell.
Net income dropped to C$180 million ($181.1 million), or 31 cents a share, from C$814 million, or C$1.37, a year earlier, Vancouver-based Teck said today in a statement. Excluding one-time items such as an after-tax charge from the refinancing of high-yield debt, profit was 60 cents a share, compared with the 59-cent average estimate of 22 analysts compiled by Bloomberg. Sales declined 26 percent to C$2.51 billion.
Prices for metallurgical coal, used by steelmakers, have dropped this year as Asian growth slowed and global demand eased. Teck, which also produces copper, zinc and molybdenum, sold coal for an average of $193 a metric ton in the quarter, 33 percent less than the $286 a year earlier, according to the statement.
“While the results are weaker than we forecast they aren’t as bad as some feared,” Greg Barnes, a Toronto-based analyst at TD Securities Inc., said today in a note to clients. “The coal operations appear to have performed better than most would have thought given the sharp drop in prices over the summer.”
Teck has deferred about C$1.5 billion of capital spending from its 2012 and 2013 budgets and is cutting costs across its businesses to shave at least C$200 million from annual operating expenses. The company didn’t comment on how it would reduce expenses.
Coal sales accounted for 57 percent of operating income last year, up from 7.6 percent in 2007, according to data compiled by Bloomberg. Third-quarter output rose 5.9 percent to 6.3 million tons.
The company’s 2012 full-year coal output will meet the lower end of its guidance of 24.5 million metric tons, according to the statement. Teck maintained its total production target for the year.
“The medium to longer term fundamentals for steelmaking coal are quite favorable, however, the recent weakness in the seaborne steelmaking coal market may well persist into the first half of 2013,” the company said.
Teck rose 2.8 percent to C$31.39 at the close in Toronto. The shares have declined 13 percent this year.