17 slides from Teck Resources Limited Class A's earnings presentation, Apr 22, 2014
Slide 1: First Quarter 2014 Results
First Quarter 2014 Results April 22, 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 Market • Good demand for all principal products • Uneconomic supply of steelmaking coal is impacting prices Teck • Increased efforts to reduce operating costs and capital expenditures • Strong financial position • Semi-annual dividend paid in January 3
Slide 4: Q1 2014 Highlights
Q1 2014 Highlights Production To Q1 2014 (000’s tonnes) Q1 2013 • Higher production volumes for major Coal 6,730 ▲ 496 products Copper 85 ▲2 - Record for monthly coal production in January Zinc in concentrate 163 ▲ 16 - Increased copper production Zinc – refined 62 ▼ 12 • Profitability impacted by
Slide 5: Profitability
Profitability Adjusted Profit ($M) 120 +$21 ($2) $105 100 Q1 To +$9 ($M) +$8 2014 Q1 2013 80 $69 Gross profit1 732 ▼ 262 $ Millions 60 EBITDA 557 ▼ 345 Profit attributable 40 69 ▼ 250 to shareholders 20 Adjusted profit 105 ▼ 223 0 Profit Asset sales & FX losses Tax items Derivative Adjusted attribu
Slide 6: Steelmaking Coal
Steelmaking Coal Average Realized Price Sales (Mt) Revenue (C$M) (C$/tonne) 6.6 6.2 1,060 161 143 880 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Production (Mt) Cash Unit Costs (C$/tonne) Gross Profit1 (C$M) 95 516 6.7 Record 83 6.2 monthly 5 Inventory 1 production January 38 Transport 36 292 S
Slide 7: Copper
Copper Sales (kt) Realized Price (US$/lb) Revenue (C$M) 3.55 82 83 3.25 684 652 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Production (kt) Total Cash Unit Costs1 (US$/lb) Gross Profit2 (C$M) 85 351 83 1.62 318 1.55 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 1. After by-product margins. 7 2
Slide 8: Highland Valley Mill Optimization
Highland Valley Mill Optimization Throughput exceeds expectations • Designed for: 130 ktpd • Average in March: 139 ktpd • Highest day: 175 ktpd 8
Slide 9: Highland Valley Mill Optimization
Highland Valley Mill Optimization 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 Sales (kt) Realized Price (US$/lb) Revenue (C$M) Conc Refined 2% 0.93 0.91 585 148 551 124 73 62 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Production (kt) Costs (C$M) Gross Profit1 (C$M) Conc Refined Conc Refined 126 121 163 121 124 147 105 74 61 62 Q1 2013 Q1 2014 Q1 2013
Slide 11: Pend Oreille
Pend Oreille Restart • Further life of ~5y expected • Annual production of 44kt zinc in concentrate PHOTO TO FOLLOW 11
Slide 12: Energy
Energy Fort Hills Update • On schedule • Spending consistent with the project budget • Teck’s share of cash spending1 - 2014 estimate: $850M - Q1 2014 actual: $114M Fort Hills Project. Credit: Ledcor Group 12 1. Including earn-in commitments.
Slide 13: Cash
Cash Cash Changes in Q1 2014 ($M) 3500 +$75 ($400) +$470 ($204) 3000 $2,772 ($259) ($172) 2500 $104 $2,386 $ Millions 2000 1500 1000 500 0 Cash - start of Cash flow from Working capital PP&E, incl. Fort Capitalized Dividends Debt principal & Distributions to Cash - quarter quarter operations changes
Slide 14: Pricing Adjustment
Pricing Adjustment Simplified Pricing Adjustment Model • Negative pricing adjustment of ($63M) in Q1 2014 100 Q1 2012 • Driven by quarterly change in Pre-tax Settlement Adjustment ($ millions) commodity prices 50 Q3 2012 - Copper: down -$0.34 Q1 2014 - Zinc: down -$0.04 Q4 2013 Q2 2011 0 Q4 2011 Q4
Slide 15: Operating Cost & Capex Reductions
Operating Cost & Capex Reductions • Exceeded initial goals of our cost reduction program - Realized $345M in ongoing annual operating cost savings to date • Increasing efforts to reduce operating costs and capex - Targeting $200M in additional annual operating cost reductions - Reducing sustaining a
Slide 16: Near-Term Priorities
Near-Term Priorities Focusing intensely on further cost reductions Reducing capital expenditures Deferring restart of Quintette met coal mine Executing restart of Pend Oreille zinc-lead mine 16
Slide 17: 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 17