Teck Resources flags fourth-quarter profit coming below estimates

Teck’s Trail Operation, located in British Columbia, is one of the world’s largest fully integrated zinc and lead smelting and refining complexes. (Image courtesy of Teck Resources.)

Teck Resources, (TSX:TECK.A | TECK.B)(NYSE:TCK), Canada’s largest diversified miner, announced late on Thursday it expected fourth-quarter profits to be significantly below estimates, due to the low price of Canadian oil at the end of 2018, issues at its operations in Trail, B.C., and a decline in commodity prices.

The Vancouver-based mining giant said all those factors combined, plus inventory valuations, would reduce its earnings for the period  by C$0.30 per share , while earnings before interest, tax, depreciation and amortization (EBITDA) will be down by C$195 million (about $148m).

The low price of Canadian oil at the end of 2018, issues at its operations in Trail, B.C., and a decline in commodity prices weighed in the miner’s Q4 results.

Teck says it expects a loss of 15 cents per share in its energy business unit due to the low price for Western Canadian Select oil, which dropped from $29.80 per barrel in early October to a low of $6.42 in late November, before ending the year at $24.66.

Canadian oil has climbed this year, helped by mandatory production limits by the Alberta government and is now more than $40 per barrel.

The miner’s Trail Operations, in turn, faced ongoing supply interruptions from some traditional third-party suppliers in the three months to the end of December, it said.  As a result, the company expects a loss of 5 cents per share, which adds to a charge of 10 cents per share due to weak commodity prices in the fourth quarter.

The company will record pre-tax inventory write-downs totalling C$80 million (about $61m) due to a decline in commodity prices during the fourth quarter, it added.

Teck had reported lower-than-expected third-quarter earnings, hit by declining commodity prices and higher costs. Full financial results will be announced on Feb. 13.

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