Teck Resources Ltd. is planning to eliminate 600 positions from its global workforce, delay the restart of a B.C. coal mine and aim to cut spending by five per cent after posting a $105-million adjusted profit for the first quarter, less than half what it made during the same period last year.
The Vancouver-based mining company, which has been coping with low prices for commodities such as copper and coal, said its adjusted profit for the three months ended March 31 amounted to 18 cents per share — down from $328 million or $0.56 per share in 2013.
That was below the 24 cents per share that analysts expected, according to estimates compiled by Thomson Reuters.
Revenue also fell more than analysts had projected, dropping to $2.084 billion from $2.33 billion. Analysts had estimated Teck would have $2.098 billion of revenue for the quarter.
Its net profit attributable to shareholders was $69 million (12 cents per share) compared with $319 million (55 cents per share) a year ago.
The company says it will reduce its global workforce about five per cent through attrition, hiring freezes and reductions in contractors and employees. It's also targeting a five per cent reduction in other costs for total savings of about $200 million and will reduce capital spending by about $150 million.
Teck Resources says it will defer equipment purchases, reduce spending on development projects and delay the restart of its Quintette coal mine in British Columbia until market conditions are more favourable. The Quintette coal mine, near Tumbler Ridge, closed in 2000.
The company says coal and copper prices in U.S. dollar terms were lower by 19 per cent and 11 per cent, respectively, in the first quarter compared with a year ago. Coal prices are at their lowest level since 2007 and margins are at their lowest level in 10 years.
That was partially offset by higher output, with coal production up eight per cent, copper up two per cent and zinc concentrate up 11 per cent compared with the first quarter of 2013.
The company also said its Fort Hills oil sands project is progressing on schedule and on budget.
"We are pleased with our operating performance in the first quarter, with higher production volumes for our major products," said president and CEO Don Lindsay.
"However, prices for these commodities were weak, particularly coal, compared to the first quarter of 2013 resulting in lower profits and cash flows than last year. As a result, we are increasing our efforts to reduce our costs and capital spending."