19 slides from Teck Resources Limited Class A's earnings presentation, Jul 24, 2014
Slide 1: Second Quarter 2014 Results
Second Quarter 2014 Results July 24, 2014
Slide 2: Forward Looking Information
Forward Looking Information Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario).
Slide 3: Overview
Overview • Executing well in difficult market conditions - Oversupply continues to impact coal prices • Solid financial position and strengthened liquidity • Increased focus on reducing costs and capex • Updated 2014 guidance - Lower coal and copper costs - Higher zinc concentrate production • Semi-
Slide 4: Q2 2014 Highlights
Q2 2014 Highlights • Solid operational performance - Increased throughput at 10 of our 13 operations - Higher production volumes in coal and copper • Significant progress in cost reduction • Benefiting from improving zinc market fundamentals Q2 To Q2 Zinc Realized Price (US$/lb) Zinc Gross Profit1
Slide 5: Profitability Impacted By Lower Coal Prices
Profitability Impacted By Lower Coal Prices Adjusted Profit EPS: $0.14 100 Adjusted EPS: $0.13 To $80 ($M) Q2 2014 90 Q2 2013 ($12) 80 +$4 $72 Gross profit1 633 ▼ 238 70 EBITDA 558 ▼ 112 60 $ Millions 50 Profit attributable 80 ▼ 63 to shareholders 40 Adjusted profit 72 ▼ 125 30 20 10 0 Profit FX ga
Slide 6: Steelmaking Coal
Steelmaking Coal Sales (Mt) Realized Price (C$/tonne) Revenue (C$M) 6.8 1,002 6.3 159 833 122 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Production (Mt) Cash Unit Costs (C$/tonne) Gross Profit1 (C$M) 6.4 92 6.0 89 444 Inventory 2 39 37 Transport 200 Site 50 53 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2
Slide 7: Steelmaking Coal Market Curtailments Slowly being Implemented
Steelmaking Coal Market Curtailments Slowly being Implemented Steelmaking Coal Steelmaking Coal Production Cuts Timeline Production Cuts By Region 12 USA 10 <2.5 Mt of 2014 8 announced cutbacks Australia implemented to date Mt 6 Canada 4 2 New Zealand 0 Q1-14 Q2-14 Q3-14 Q4-14 2015+ - 2 4 6 8 10 12
Slide 8: Copper
Copper Sales (kt) Realized Price (US$/lb) Revenue (C$M) 87 flat 87 693 3.37 650 3.07 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Production (kt) Total Cash Unit Costs1 (US$/lb) Gross Profit2 (C$M) 85 87 1.64 338 1.60 293 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Full-year copper cost guida
Slide 9: Highland Valley Mill Optimization
Highland Valley Mill Optimization Throughput exceeds design capacity in Q2 • Design: 130 ktpd • Q2 Average: 140 ktpd Supports mining through at least 2027 • Increase in mill throughput of ~10% • Improvement in recovery • Copper production ~15 ktpa higher 9
Slide 10: Zinc
Zinc Zinc Sales (kt) Zinc Realized Price (US$/lb) Revenue (C$M) Conc1 Refined 0.96 526 70 2 kt 72 93 0.85 455 75 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Zinc Production (kt) Lead Production (kt) Gross Profit2 (C$M) Conc1 Refined Conc Refined 140 139 141 70 72 23 27 25 21 87 Q
Slide 11: Base Metals Markets Improving
Base Metals Markets Improving LME COPPER Prices 700 LME COPPER Stocks 2013 332.1¢ US/lb 375¢ Thousands 2014 314.6¢ US/lb 500 Copper 325¢ 300 LME inventory 100 down ~500 kt 275¢ last 12 months -100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 20
Slide 12: Energy: Fort Hills Update
Energy Fort Hills Update • On schedule & spending consistent with the project budget • Engineering and procurement almost 50% complete • Many EPC contracts in place or being completed within budget • Mobilized in all project areas • Site construction 2000 people and continuing to ramp up 12
Slide 13: Cash Flow & Liquidity
Cash Flow & Liquidity Cash Changes in Q2 2014 3000 +$520 ($84) ($335) ($199) 2500 $2,386 ($57) ($5) ($95) $2,131 2000 $ Millions 1500 1000 500 0 Cash - start of Cash flow from Working capital PP&E, incl. Fort Capitalized Debt principal & Share FX, distributions Cash - quarter quarter operations chan
Slide 14: Pricing Adjustments
Pricing Adjustments Simplified Pricing Adjustment Model • Positive pricing adjustment of $31M in Q2 2014 100 Q1 2012 Pre-tax Settlement Adjustment ($ millions) • Driven by quarterly change in commodity prices 50 Q3 2012 - Copper: up $0.14 Q2 2014 Q3 2013 - Zinc: up $0.10 Q2 2011 Q4 2013 0 Q4 2011 Q4
Slide 15: Operating Costs & Capital Expenditures
Operating Costs & Capital Expenditures • Cost reduction program exceeded our initial goals, with $360M of annualized reductions achieved to year end 2013 • Additional $150M in annualized reductions realized year-to-date, and a further $50M is targeted for 2014 • Also, on track for $150M in sustainin
Slide 16: 2014 Outlook – Production & Site Cost Guidance
2014 Outlook – UPDATED (July 24, 2014) Production & Site Cost Guidance Guidance Steelmaking Coal Coal production 26-27 Mt Coal site costs C$52-57 /t Coal transportation costs C$37-41 /t Coal costs – combined* US$82-91 /t Copper Copper production 320–340 kt Copper cash unit costs (net of by-product m
Slide 17: Near-Term Priorities
Near-Term Priorities Focusing intensely on cost reductions Managing our capital spending profile Executing restart of Pend Oreille mine 17
Slide 18: Investor Relations Contacts
Investor Relations Contacts www.teck.com/investor investors@teck.com Telephone: +604-699-4257 or Toll-free (Canada & US) 1-877-759-6226 Best Investor Relations In Sector: Materials 18
Slide 19: Second Quarter 2014 Results
Second Quarter 2014 Results July 24, 2014