Teck Resources (NYSE:TECK) reported robust Q3 2023 earnings, with adjusted EBITDA of $1.2 billion, driven by strong pricing for copper and steelmaking coal. Despite challenges, including construction delays at the QB2 project and lowered production guidance, the company remains focused on maintaining its competitive low-cost position. According to InvestingPro data, the company's market cap stands at a significant 18.77B USD, with a P/E ratio of 14.95.
Key takeaways from the call include:
- Strong pricing for copper and steelmaking coal drove Q3 earnings.
- The QB2 project is ramping up and is expected to achieve design throughput and recovery rates by year-end.
- Delays in QB2 construction led to an increase in capital guidance to $8.6 billion to $8.8 billion.
- The company is considering a separation of its steelmaking coal business to unlock the value of its copper growth portfolio.
- There were lower-than-expected steelmaking coal sales due to supply chain issues, but prices remain robust.
- The company is progressing with its copper growth strategy, with near-term development projects aiming to double copper production in the near term.
Teck's copper portfolio is performing well, and the company expects to double its consolidated copper production when QB2 reaches full capacity. The company ended the quarter with $7 billion of liquidity, including $1.5 billion in cash. As per InvestingPro Tips, Teck's management has been aggressively buying back shares, indicating confidence in the company's future performance.
Teck also made progress on its sustainability goals, including an agreement with Norden to reduce emissions in its steelmaking coal supply chain. However, there were delays in construction at QB2, leading to an increase in capital guidance to $8.6 billion to $8.8 billion.
Red Conger, President and COO, explained that issues such as manufacturing defects in tailings water return pumps and a drill bit failure in the ocean floor led to QB2's CapEx increase. These issues caused delays and increased costs, including the need to hire additional contractors.
CEO Jonathan Price emphasized that the guidance provided includes all known risks and allowances for unknown risks. He also mentioned that lessons from QB2 will be applied to future projects to ensure better capital assumptions and project delivery.
Shehzad Bharmal, SVP of the Copper Business Unit, stated that the company is pleased with the progress of QB2 and expects the project to reach full design capacity by year-end. The company is also working on feasibility studies and permitting for near-term growth projects such as San Nicolas and QBME.
Teck Resources (NYSE: TECK) has obtained the permit for a certain project in May 2023 and plans to apply for the construction permit in mid-2024. The company expects a build in working capital for the year but does not anticipate a material change outside of the normal timing of sales and accounts payable. InvestingPro Tips also highlights that the company has maintained dividend payments for 14 consecutive years, further solidifying its financial stability.
Jonathan Price provided updates on near-term projects, including the completion of the feasibility study for QBME expansion. The company is excited about the opening of QB2 in Chile, which will double their consolidated copper production. For more insightful tips like these, check out the InvestingPro product that includes additional tips.
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