Vancouver, BC – Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) (“Teck”) reported unaudited annual adjusted profit attributable to shareholders of $188 million, or $0.33 per share, compared with $452 million, or $0.78 per share in 2014. Fourth quarter adjusted profit attributable to shareholders was $16 million, or $0.03 per share, compared with $116 million, or $0.20 per share, in the fourth quarter of 2014. Total non-cash after-tax impairment charges for 2015 amounted to $2.7 billion, of which $536 million was taken in the fourth quarter.
“We were pleased with our operating performance in 2015, meeting our guidance, reducing our costs and raising nearly $1 billion through two streaming transactions to strengthen our balance sheet,” said Don Lindsay, President and CEO. “However, the commodity cycle continues to provide us with a very challenging environment such that our near-term priorities are to keep all of our operations cash flow positive, meet our commitment to Fort Hills with internal sources of funds, evaluate options to further strengthen our liquidity and maintain a strong financial position by ending the year without drawing on our lines of credit.”
Highlights and Significant Items
- Annual adjusted profit attributable to shareholders was $188 million, or $0.33 per share. Fourth quarter adjusted profit attributable to shareholders was $16 million, or $0.03 per share.
- Gross profit before depreciation and amortization in 2015 was $2.6 billion compared with $2.9 billion in 2014. Gross profit before depreciation and amortization was $614 million in the fourth quarter compared with $757 million in the fourth quarter of 2014.
- Cash flow from operations, before working capital changes, was $1.7 billion in 2015 compared with $2.0 billion last year. Cash flow from operations, before working capital changes, was $428 million in the fourth quarter of 2015 compared with $491 million a year ago.
- The loss attributable to shareholders was $459 million in the fourth quarter compared with a profit of $129 million in the fourth quarter of 2014.
- Our quarterly loss included impairment charges of $736 million on a pre-tax basis, including $45 million on our steelmaking coal assets, $93 million on copper and $598 million on the Fort Hills oil sand project resulting in a $536 million after-tax charge. For 2015, total pre-tax asset impairment charges were $3.6 billion and $2.7 billion on an after-tax basis.
- Adjusted EBITDA for 2015 (not including the non-cash impairment charges) was $2.0 billion compared with $2.4 billion in 2014.
- Our liquidity remains strong with a cash balance of $1.8 billion at February 10, and US$3.0 billion available under our revolving credit facility which matures in 2020.
- Construction of the Fort Hills oil sands project is more than 50% complete and progressing substantially on schedule and on budget. As at February 10, our remaining cash funding to complete the project is $1.2 billion.
- We received a payment of $789 million (US$610 million) for the sale of a silver stream linked to our share of the Antamina mine.
- Cash unit production costs were reduced at all of our operations in 2015 compared with a year ago as a result of the highly focused efforts on our cost reduction program and lower diesel prices.
- We have reached agreements with the majority of our steelmaking coal customers for the first quarter of 2016, based on a quarterly benchmark of US$81 per tonne for the highest quality product, and we expect total sales in the first quarter, including spot sales, to be at least 5.5 million tonnes of steelmaking coal.
- We were recognized as one of the Global 100 Most Sustainable Corporations for the fourth consecutive year by media and investment research company Corporate Knights.
- Operating highlights in 2015 included:
- all our operating mines, with the exception of Quebrada Blanca and Pend Oreille, remained cash positive in the fourth quarter and for 2015,
- we achieved record annual production at Trail for refined zinc and silver, and
- we achieved record annual mill throughput at Antamina.
- If we meet our full year guidance for production, costs and capital expenditures, assuming current commodity prices and exchange rates and no unusual transactions or events, we should complete 2016 with at least $500 million in cash without any material change in our overall U.S. dollar debt level.
Download/view Q4 2015 Report for the full text of this release.
Cautionary Statement on Forward-Looking Information
This news release contains certain forward-looking information and forward-looking statements as defined in applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements, principally under the headings “Outlook,” that appear in this release but also elsewhere in this document, include estimates, forecasts, and statements as to management’s expectations with respect to, among other things, anticipated cost and production forecasts at our business units and individual operations and expectation that we will meet our production guidance, sales volume and selling prices for our products (including settlement of coal contracts with customers), our target to complete 2016 with approximately $500 million in cash, plans and expectations for our development projects, the impact of currency exchange rates, the expected timing of production at the Fort Hills oil sands project and its economic benefits, our expectations that our Quebrada Blanca Phase 2 initiatives will materially reduce initial capital costs for the project and other expectations regarding the new design and cost process, timing for the filing of an SEIA, timing for the completion of the Project Corridor feasibility study 2016, capital expenditure projections, sensitivity of EBITDA to exchange rates and the price of oil, expectations that we have access to cash and credit lines sufficient to meet our capital commitments and working capital needs, and demand and market outlook for commodities. These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially.
These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditions, the supply and demand for, deliveries of, and the level and volatility of prices of, zinc, copper and steelmaking coal and other primary metals and minerals as well as oil, and related products, the timing of the receipt of regulatory and governmental approvals for our development projects and other operations, our costs of production and production and productivity levels, as well as those of our competitors, power prices, continuing availability of water and power resources for our operations, market competition, the accuracy of our reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, conditions in financial markets, the future financial performance of the company, our ability to attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studies on our expansion projects, our steelmaking coal and other product inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for our operations and expansions, our ongoing relations with our employees and business partners and joint venturers. Assumptions regarding the sensitivity of EBITDA and operating costs to oil prices are based on assumptions regarding the amount of diesel fuel used in our operations and transporting our coal products is as forecast, and also based on an assumed Canadian/U.S. dollar exchange rate of $1.40. Our forecast of $500 million in cash at the end of 2016 is based on an assumed Canadian/U.S. dollar exchange rate of $1.40, current commodity prices and assumes no unusual transactions or events occur and that we meet our full year guidance for production, costs and capital expenditures. Assumptions regarding the impact of foreign exchange are based on current commodity prices. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to vary materially.
Factors that may cause actual results to vary materially include, but are not limited to, changes in commodity and power prices, changes in market demand for our products, changes in interest and currency exchange rates, acts of foreign governments and the outcome of legal proceedings, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, adverse weather conditions and unanticipated events related to health, safety and environmental matters), union labour disputes, political risk, social unrest, failure of customers or counterparties to perform their contractual obligations, changes in our credit ratings, unanticipated increases in costs to construct our development projects, difficulty in obtaining permits, inability to address concerns regarding permits of environmental impact assessments, and changes or further deterioration in general economic conditions. Our Fort Hills project is not controlled by us and construction and production schedules may be adjusted by our partners.
Statements concerning future production costs or volumes are based on numerous assumptions of management regarding operating matters and on assumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation or utilities, adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies. Statements regarding anticipated steelmaking coal sales volumes and average steelmaking coal prices for the quarter depend on timely arrival of vessels and performance of our steelmaking coal-loading facilities, as well as the level of spot pricing sales.
We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning risks and uncertainties associated with these forward-looking statements and our business can be found in our Annual Information Form for the year ended December 31, 2014, filed under our profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) under cover of Form 40-F.
Teck will host an Investor Conference Call to discuss its Q4/2015 financial results at 11:00 AM Eastern time, 8:00 AM Pacific time, on Thursday, February 11, 2016. A live audio webcast of the conference call, together with supporting presentation slides, will be available at our website at www.teck.com. The webcast will be archived at www.teck.com.
Download/view Q4 2015 Report for the full text of this release.
Vice President, Investor Relations and Strategic Analysis
Senior Vice President, Sustainability and External Affairs