Teck profits jump in fourth quarter and 2011 on higher commodity prices

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A truck hauls a load at Teck Resources Coal Mountain operation near Sparwood, B.C. in a handout photo. THE CANADIAN PRESS/HO, Teck Resources

Teck Resources Ltd. (TSX:TCK.B), which posted a record annual profit Thursday, is focused on its own internal growth strategy as it looks to increase copper production and launch its oilsands operations, chief executive Don Lindsay said.

Lindsay said the company is always reviewing potential acquisitions, but for now, Teck likes what it already has.

"The stay-the-course strategy looks pretty good to us and we're very pleased that we have that position that we can exploit," he told a conference call with analysts.

"If we see another opportunity that looks like it could make the situation even better, then we will act, but so far we haven't seen anything."

Among Teck's projects in development are the second phase to its Quebrada Blanca mine in Chile that will more than double production and extend the mine's production life by more than 30 years, as well as the company's Fort Hills oilsands project in northern Alberta.

"Over a five-year period, you'll see materially more copper production per share and coal production per share," Lindsay said.

The Vancouver-based company reported a profit of nearly $2.8 billion or $4.50 per diluted share on $11.5 billion in revenue for 2011, up from $1.8 billion or $3.08 per diluted share on $9.2 billion in revenue in 2010. Teck ended 2011 with $4.4 billion in cash.

The fourth-quarter profit attributable to shareholders nearly doubled to $637 million, or $1.08 per diluted share. That compared with $325 million, or 55 cents per diluted share, in the fourth quarter of 2010. Quarterly revenues totalled $3 billion in the fourth quarter, compared with $2.7 billion a year ago.

After excluding one-time items, Teck reported a profit of $1.04 per share compared with an adjusted profit of 87 cents per share a year ago.

The average analyst estimate had been for a profit of $1.07 per diluted share for the fourth quarter on $2.9 billion in revenue, according to Thomson Reuters.

RBC Capital Markets analyst Fraser Phillips, who rates Teck an "outperform" with average risk, said the company is advancing a portfolio of growth projects in coal and copper.

"Teck remains one of our preferred mining investment vehicles and, in our view, is especially attractive given the expected announcements over the next 12 months surrounding expansion and feasibility studies in its various operating segments," Phillips wrote in a note to clients Thursday.

Lindsay said company was pleased with the latest results, but noted Teck fell short of its targets in its copper and coal businesses.

He said the company is aiming to hit an annualized production rate of 400,000 tonnes of copper by the middle of the year.

"That's probably an area where we feel that we underperformed in 2011," he said.

"Both getting production up and the resulting costs going down in copper is a real focus this year."

In its outlook for 2012, the company said it expected copper production in a range of 350,000 to 375,000 tonnes compared with 322,000 tonnes in 2011 due to improved production at its mines.

Coal production is expected to be in the range of 24.5 million to 25.5 million tonnes, though Teck noted that it will depend on improvements in customer demand.

Teck said zinc in concentrate production in 2012 is expected to be in the range of 580,000 to 610,000 tonnes compared with 646,000 tonnes in 2011.

Production from the Red Dog mine production is expected to decrease by approximately 35,000 tonnes and Teck's share of zinc production from the Antamina mine will decrease by about 10,000 tonnes.

Refined zinc production from Teck's operation in Trail, B.C., in 2012 is expected to be in the range of 280,000 to 290,000 tonnes.

In January, Teck signed a deal to buy SilverBirch Energy Corp. for $435 million, snagging full ownership in two oilsands projects and spinning out the rest into a new junior company.

The deal gives Teck the Frontier and Equinox projects, as well as a nearby property called Twin Lakes, while the spin-out firm, to be called SilverWillow Energy Corp., will take a handful of early-stage properties.

The move also expands Teck's oilsands business and allows it to use the truck-and-shovel open-pit mining expertise it's honed from mining coal, copper and zinc.

Earlier this week, Teck said workers at its Quebrada Blanca mine in Chile ratified a new, 46-month labour agreement that runs through November 2015.

Teck is a diversified miner producing steelmaking coal, zinc, copper and energy. The company's energy business includes the 20 per cent stake in the Fort Hills project and a 50 per cent interest in the Frontier project in the Athabasca region of northern Alberta.

Shares in the company closed up four cents at $40.79 on the Toronto Stock Exchange.