Teck Resources Ltd. said revenues rose by nearly 25 per cent in the second quarter due to increased coal sales and higher commodity prices compared to last year, but that the recent correction pushed down profits in the period.
Teck, the world's second largest producer of hard coking coal used in steelmaking, also said late Tuesday that coal prices could come down later this year as the global economic recovery remains sluggish and China's economy cools.
For the April-June quarter, Canada's largest miner said it earned $260-million, or 44 cents per share, in the April-June quarter, compared with $570-million or $1.17 per share in the same period last year.
"Net earnings in the second quarter of 2010 included negative after-tax pricing adjustments of $52-million as a result of declining copper and zinc prices in the period. This compares with $36-million of positive pricing adjustments in the same period a year ago," the company said in releasing its earnings after markets closed Tuesday.
Adjusted earnings were $324-million, or 55 cents per share, which was below the 60-cents-per-share average forecast from a survey of 15 analysts completed by Thomson Reuters.
For the same quarter last year, Teck reported adjusted earnings of $213-million, or 44 cents per share, which excludes foreign-exchange gains and proceeds from the sale of a gold mine.
Revenues in the latest quarter were $2.1-billion, compared to $1.7 billion last year. Teck's revenues come mostly from its coal operations, followed by copper and zinc.
"Our second quarter benefitted from a substantial increase in coal sales to 6.4 million tonnes and the higher benchmark prices negotiated for the second quarter," Teck chief executive Don Lindsay said in a statement.
Coal revenues increased by $242-million year-over-year, due to higher coal sales volumes.
While the company has locked in a coal price of about $225 (U.S.) per tonne for the third quarter, it expects selling prices to drop to around $195 to $200 per tonne during the period, which could impact the fourth-quarter contract price.
"There has been recent uncertainty with regard to global steel product pricing, steel production, and coking coal spot pricing, but it is too early to determine whether or not this will impact the contract pricing for the fourth quarter," Teck said.
Copper and zinc revenues rose by $161-million in the second quarter, but were partly offset by the impact of a weaker U.S. dollar.
Vancouver-based Teck also warned of higher transportation costs down the road as a result of an explosion at its Greenhills mine last month, which has meant trucking raw coal to other sites for processing.
Still, the company said the impact of the incident on its production will be minor, while tweaking its production forecast slightly to between 23.5 million to 24.5 million tonnes, down from a high of 25 million tonnes.
The company also said Tuesday that it will put in place measures to protect aquatic life at its six coal mines in British Columbia, based on recommendations from an independent review released late last month.
"While costs associated with specific control measures have not been established, it is likely that future costs of selenium management could be material," Teck said, also warning that permitting for some projects may be delayed until the plans are in place.