- Teck Resources Limited (TSX:TECK.A) generated C$608 million in adjusted earnings during 2020’s first quarter, less than halve of the $1.4 billion generated in 2019’s same period
- Teck attributes its poor quarterly earnings to the impact of COVID-19 on resource spot prices, such as steelmaking coal, copper and zinc
- To help mitigate the decline in prices, the company is now targeting a $1 billion reduction in planned spending
- Since initially implementing the cost reduction scheme at the end of 2019, the company has so far retained more than $375 million in capital
- Teck Resources Limited (TECK.A) is down 7.27 per cent, with shares trading for $14.28 and a market cap of $5.48 billion
Teck Resources Limited (TSX:TECK.A) has reported a significant drop in first quarter earnings, due to the ongoing COVID-19 pandemic.
The company generated C$608 million in adjusted earnings for the first quarter, less than halve of the $1.4 billion generated in 2019’s same period.
Consequently, profits also took a substantial hit. Teck made $94 million in adjusted profits for the quarter, compared to $587 million during Q1 2019.
It is worth noting that these are adjusted profits, rather than net earnings. Looking at the unadjusted figures, Teck generated a net loss of more than $300 million in 2020’s first quarter.
Teck attributes its poor performance to the impact of COVID-19 on resource spot prices. For example, the price steelmaking coal, one of the company’s key products, dropped from $248 in 2019 to $176 more recently. Copper and zinc prices have seen notable declines, as the COVID-19 pandemic slows global industries and decreases demand for industrial supplies.
To help mitigate the decline in prices, Teck is redoubling its cost-cutting efforts. Teck is now targeted a $1 billion reduction in its planned 2020 expenditures. The program has already been underway since late 2019 and the company has managed to retain a further $375 million in capital.
Don Lindsay, President and CEO, believes that operational safety will help the company mitigate further damage from the pandemic.
“Our current focus is on managing the risks around COVID-19 and ensuring we have the necessary measures in place to safeguard our people and our local communities.
“The pandemic has had a significant negative impact on the global economy and commodity markets and the outlook is uncertain. However, almost all of our sites are currently operating, with some at reduced production,” he said.
Don went on to say that, despite the poor performance in other sectors, the company’s steelmaking coal operations exceeded its estimated sales guidance for the quarter.
Teck Resources Limited (TECK.A) is down 7.27 per cent, with shares trading for $14.28 at 12:56pm EST.