Teck Resources (TSX:TECKa) Ltd. (TSE:NYSE:TECK.B) (NYSE:TECK), a Vancouver-based miner, reported disappointing Q3 earnings, with shares falling over 6% following the announcement. The company's earnings per share stood at C$0.76, falling short of the C$1.06 analyst consensus. This was due to decreased steelmaking coal sales and a drop in Highland Valley copper sales volumes following a geotechnical incident. Year-over-year revenue also saw a decline of 15.5% to C$3.6 billion.
In light of these results, Teck has revised its 2023 copper and steelmaking coal production forecasts downward for the second consecutive quarter. Copper production is now projected between 320K-365K tons this year, down from the previous forecast of 330K-375K tons. The FY 2023 steelmaking coal production forecast has also been reduced to 23M-23.5M tons from the earlier projection of 24M-26M tons.
The company also reported reduced profits due to declining coal and zinc prices in Q3. Wildfires in British Columbia and labor disputes further hindered steelmaking coal sales, resulting in sales of only 5.2 million tonnes.
Despite these setbacks, Teck saw an 8% year-over-year increase in copper production and a 3% rise in sales volumes. The company's stock has appreciated by 13.3% over the past year, with shares last trading at C$53.30.
Furthermore, Teck increased the capital costs for its QB2 copper project in Chile to between $8.6 billion-$8.8 billion, up from the previous estimate of $8 billion-$8.2 billion. This was due to delays in the construction of the mineral’s production facility, leading to an anticipated annual production at the lower end of its 2023 guidance.
Despite the challenges faced by Teck Resources, including two rejected takeover offers from Swiss firm Glencore (OTC:GLNCY), the company retains a Strong Buy consensus rating from Wall Street analysts. This is based on seven Buys assigned in the past three months. The price target stands at C$70.34, indicating a 41.26% upside potential.
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