Teck Resources profit drops with currency fluctuation

Teck Resources Limited, the Canadian base metal producer which received a 1.5-billion- U.S.- dollar-investment from China's Sovereign Wealth Fund last year, reported a 54 percent drop in second-quarter profit Wednesday in comparison to the period a year ago.

In a conference call with media, the Vancouver-based producer of coal, zinc and copper, among others, reported a net income of 260 million Canadian dollars (about 268 million U.S. dollars), or 44 Canadian cents a share, down from 570 million Canadian dollars a year ago.

While earnings were 1.17 Canadian dollars a share in the period a year ago, Teck Resources Chief Executive Officer Don Lindsey noted the company "had a very large non-cash gain on debt revaluation due to exchange rate fluctuations and other unusual items."If excluded, the earnings would have been the same at 44 Canadian cents per share.

Revenue for the April to June quarter increased to 2.1 billion Canadian dollars, up from 1.7 billion Canadian dollars a year ago.

"Our business fundamentals have improved with increasing copper and coal production and relatively strong copper and coal prices,"said Lindsey, noting declines in the Canadian dollar and copper and zinc all had negative implications on company earnings in the second quarter.

"We have contracted for the current quarter for our premium blend of coal at 225 U.S. dollars a ton and copper seems to have bounced off its recent lows to be back over 3 U.S. dollars."

Lindsay said Teck's operating resulting for its coal business had a strong quarter as production was 40 percent higher on a year- on-year basis, while sales were almost 30 percent higher, reflecting a "substantial recovery that we've seen in the steel industry."

Teck's second-quarter coal sales increased 29 percent to 6.4 million metric million tons, mainly from demand from contract customers such as China.

In July 2009, China Investment Corporation purchased a 17.2 percent stake in the mining company through its Sovereign Wealth Fund. The purchase was for vote restricted B-shares with no representation on the company board.

Greg Waller, Teck Resources vice president of investor relations and strategic analysis, said the fund's investment would have "doubled in value" since the purchase.

At press time, Teck shares were trading at 35 Canadian dollars in Toronto in comparison to a low of 24.50 Canadian dollars during the past year. In New York, the shares were trading at 33.83 U.S. dollars after hitting a high of 46.92 U.S. dollars on June 4. (1 U. S. dollars = 1.0309 Canadian dollars)

Source: Xinhua