Teck Resources Ltd. (TCK/B), Canada’s largest diversified miner, said third-quarter profit slumped 78 percent as prices for steelmaking coal fell.
Net income dropped to C$180 million ($181.6 million), or 31 cents a share, from C$814 million, or C$1.37, a year earlier, Vancouver-based Teck said today in a statement. Excluding one- time items, profit was 60 cents a share, compared with the 59- cent average estimate of 22 analysts surveyed by Bloomberg. Sales declined 26 percent to C$2.51 billion.
Prices for metallurgical coal, used by steelmakers, have dropped this year as Asian growth slowed and global demand eased. Benchmark contract prices for the fourth quarter fell to $170 a metric ton from $225 in the previous quarter, Orest Wowkodaw, a Toronto-based analyst at Canaccord Financial Inc., said in a Sept. 16 note.
China is “experiencing a slowdown in steel production and Teck is feeling it,” John Goldsmith, Toronto-based vice president of Canadian equities at Montrusco Bolton Investments Inc., said in an interview before the announcement. Montrusco Bolton oversees C$5.1 billion and doesn’t own Teck stock.
Teck has deferred about C$1.5 billion of capital spending from its original 2012 and 2013 budgets, and is cutting costs across its businesses to shave at least C$200 million from annual operating expenses.
Coal sales accounted for 57 percent of operating income last year, up from 7.6 percent in 2007, according to data compiled by Bloomberg. The company reduced coal output over the third quarter, and said annual volumes will meet the lower end of its guidance of 24.5 million metric tons.
The company, which also mines copper, zinc and molybdenum in the Americas, maintained its total production target for the year.
Teck dropped 2.5 percent to C$30.54 at the close in Toronto yesterday. The shares have declined 15 percent this year.
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