- Like many in the resource sector, Teck Resources (TECK-A) has been hit hard by the impact of COVID-19 on the second quarter of 2020
- The company’s unaudited results show a substantial drop in gross profit of almost 88 per cent, from C$1.05 billion in the second quarter of last year to just $139 million this year
- Similarly, revenue fell by 45 per cent to $1.72 billion from roughly $3.14 billion in 2019
- The company also released a revised capital expenditure guidance for the 2020 year, knocking $110 million off its previous forecast
- Tech Resources (TECK.A) is currently up 1.95 per cent and is trading at $16.32 per share
Like many in the resource sector, Teck Resources (TECK-A) has been hit hard by the impact of COVID-19 on its second quarter.
For the three months ending June 30, the company reported a substantial 88 per cent drop in gross profit, from from C$1.05 billion in the second quarter of last year to just $139 million this year.
Similarly, revenue fell by 45 per cent to $1.72 billion from roughly $3.14 billion in 2019.
The hamstrung performance was attributed almost entirely to the impact of the COVID-19 pandemic, which drove a significant decrease in demand for Teck’s products and forced the suspension of construction activities at its QB2 project in March.
All up, the company estimates to have incurred roughly $260 million in abnormal COVID-related costs, which came from labour expenses for idle employees, medical testing, the temporary suspension of work at the company’s QB2 and Antamina operations, and un-capitalised borrowing costs.
Don Lindsay, President and CEO of Teck Resources, said that the situation is likely to improve throughout the second half of the year.
“We remain focused on protecting our people and communities, while continuing to operate responsibly and safely to support the economic recovery in the wake of the pandemic.
“We took steps during the quarter to further strengthen our financial position, reduce costs and position Teck to significantly improve margins towards the end of 2020 and early 2021 as we complete major capital projects,” he added.
As part of its second quarter financials, Teck re-issued its previously withdrawn guidance for 2020. Total capital expenditures, excluding partner contributions and project financing, are expected to be $1.53 billion.
This represents a $110 million drop in the company’s original budget for the year, and a significant decrease compared to last year’s expenditures of more than $1.75 billion.
Teck Resources (TECK.A) is currently up 1.95 per cent to $16.32 per share at 10:21am EDT.