19 slides from Teck Resources Limited Class A's earnings presentation, Oct 29, 2014
Slide 1: Third Quarter 2014 Results
Third Quarter 2014 Results October 29, 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: Continuing to Execute Well
Continuing to Execute Well • Updated 2014 guidance ranges - Higher zinc mine production - Higher mid-points for coal & copper production - Lower mid-points for coal & copper costs • Planned 2014 capex reduced by ~$375M • Cost reduction program continuing to deliver results • Solid financial position
Slide 4: Q3 2014 Operational Highlights
Q3 2014 Operational Highlights • Operations are performing well - Coal production increased in Q3, and 1 Mt higher year-to-date - Record coal production at Elkview and Greenhills in Q3 and year-to-date - Zinc in concentrate production also up • Significant cost reductions achieved - Lowered total op
Slide 5: Profitability Impacted By Significantly Lower Steelmaking Coal Prices
Profitability Impacted By Significantly Lower Steelmaking Coal Prices Q3 To ($M) Zinc Gross Profit1 ($M) 2014 Q3 2013 270 Gross profit1 750 ▼ 169 183 EBITDA 651 ▼ 164 Profit attributable • Benefiting from improving zinc to shareholders 84 ▼ 183 fundamentals Adjusted profit 159 ▼ 93 Q3 2013 Q3 2014
Slide 6: Steelmaking Coal
Steelmaking Coal Sales (Mt) Realized Price (C$/tonne) Revenue (C$M) 7.5 144 1,088 6.7 119 2nd 798 highest sales achieved in Q3 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Production (Mt) Unit Costs (C$/tonne) Gross Profit1 (C$M) 91 6.8 88 417 6.7 Inventory 3 Transport 38 38 187 Site 50 50 Q3 201
Slide 7: Further Cuts Needed in the Steelmaking Coal Market
Further Cuts Needed in the Steelmaking Coal Market Seaborne Metallurgical Coal Margin Curve at Spot Price of US$115/t • ~25 Mt of production cuts announced - Lag to full implementation - Market imbalance ~10 to 15 Mt Teck • Margin curve shows around one third of seaborne met coal is operating at neg
Slide 8: Copper
Copper Sales (kt) Realized Price (US$/lb) Revenue (C$M) 95 3.23 3.17 714 82 628 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Production (kt) Total Cash Unit Costs1 (US$/lb) Gross Profit2 (C$M) 91 318 1.73 292 78 1.64 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Total costs & unit costs reduced
Slide 9: Zinc
Zinc Zinc Sales (kt) Zinc Realized Price (US$/lb) Revenue (C$M) Conc1 Refined 1.04 183 823 174 78 0.84 721 70 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Zinc Production (kt) Lead Production (kt) Gross Profit2 (C$M) Conc1 Refined Conc Refined 270 29 flat 148 77 24 24 142 70 23 18
Slide 10: Base Metals Markets in Deficit
Base Metals Markets in Deficit* 395¢ LME COPPER Prices 800 LME COPPER Stocks 375¢ 2012 360.6¢ US/lb 2013 332.1¢ US/lb 600 Thousands 355¢ 2014 314.0¢ US/lb 400 Copper 2013 335¢ ICSG forecasts 200 315¢ a deficit of 307 kt 295¢ 0 for 2014 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 275¢ Jan Fe
Slide 11: Fort Hills Project Update
Fort Hills Project Update Project achieving and tracking key milestones • Engineering activity >50% complete • Construction manpower ~3k strong • $4.5B in major contracts let in the quarter - Secondary extraction: $2.6B - Utilities: $1.5B 11 - Cogeneration: $244M
Slide 12: Cash Flow & Liquidity
Cash Flow & Liquidity Cash Changes in Q3 2014 3000 +$492 +$62 ($343) 2500 ($145) ($156) $2,131 ($16) ($259) 2000 $87 $1,853 $ Millions 1500 1000 500 0 Cash - start of Cash flow from Working capital PP&E, incl. Capitalized Debt interest Debt principal Dividends paid FX, Cash - quarter quarter operati
Slide 13: Investment Grade Credit Rating
Investment Grade Credit Rating • Our long-term targets are consistent with Long-Term maintaining mid-BBB credit rating Ratio Target • Ratios may vary from targets periodically, Debt to Debt+Equity ~30% reflecting commodity price cycles and corporate activity Debt to EBITDA ~2.5x • Our debt to debt+e
Slide 14: Pricing Adjustments
Pricing Adjustments Outstanding at Outstanding at June 30, 2014 September 30, 2014 Pounds (M) US$/lb Pounds (M) US$/lb Copper 225 3.15 224 3.04 Zinc 75 1.00 164 1.04 • Negative pricing adjustments of $28M in Q3 2014 Simplified Pricing Adjustment Model • Driven by quarterly change in 100 commodity pr
Slide 15: Significant Reductions in Operating Costs and Capex
Significant Reductions in Operating Costs and Capex • Total of $590M of annualized operating cost reductions realized since 2H2012 • Capital spending plans for 2014 reduced significantly from the start of the year, to ~$1.5B 15
Slide 16: Production & Site Cost Guidance
2014 Outlook – UPDATED (October 29, 2014) Production & Site Cost Guidance Guidance Steelmaking Coal Coal production 26.5-27 Mt Coal site costs C$52-55 /t Coal transportation costs C$37-39 /t Coal costs – combined* US$79-84 /t Copper Copper production 330-340 kt Copper cash unit costs (net of by-prod
Slide 17: Near-Term Priorities
Near-Term Priorities Cost management program continues Capital spending reduced for 2014 Executing restart of Pend Oreille 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: Third Quarter 2014 Results
Third Quarter 2014 Results October 29, 2014