(Adds conference call, analyst comment, updates stock price)
By Susan Taylor and Nicole Mordant
TORONTO/VANCOUVER Feb 15 Canadian miner Teck
Resources Ltd reported a better-than-expected
quarterly profit on Wednesday, lifted by a surge in the price of
coal for steelmaking, but weaker demand at the start of the year
spooked investors, sending its shares lower.
Teck, North America's largest producer of steelmaking - or
coking - coal, said that inquiries from buyers had picked up
recently and that it expects sales to be weighted toward the
second half of this quarter after a slow start.
"I actually feel much better today than I did three weeks
ago," Teck Chief Executive Donald Lindsay said on a conference
Teck blamed the weaker start on customers drawing down coal
inventories following a fourth-quarter buying binge, sparked by
global supply worries that were ultimately unfounded. The Lunar
New Year holidays also crimped demand in Asia.
Shares of the Vancouver-based company, which also mines
copper, gold and silver, were down 9 percent at C$29.70 in
mid-afternoon trading. It was the best-performing stock on the
Toronto Stock Exchange in 2016.
Teck has reached agreements with the majority of its coal
customers for the first quarter, based on a quarterly benchmark
price of $285 per tonne.
But since that benchmark was set in early December, spot
prices have plunged to about $155 per tonne. Teck expects an
average realized price this quarter of about 70 percent to 75
percent of the $285-per-tonne benchmark.
Teck forecast first-quarter steelmaking coal sales of
approximately 6 million tonnes, down from 7.3 million tonnes
But Lindsay said the miner's top priority was reducing debt,
and it was aiming to get debt levels, possibly this year, below
$5 billion from $6.1 billion at the end of 2016.
A surge in coal prices last year from below $80 a tonne to
above $300 had raised expectations of mine restarts. Real Foley,
Teck's coal marketing vice president, said less than 15 million
tonnes of coking coal had come online globally and that there
had been no restarts since last October.
The company forecast 2017 steelmaking coal production of 27
million to 28 million tonnes, but said output may be adjusted
depending on demand.
Teck, the world's second-biggest exporter of seaborne coking
coal, reported an adjusted profit of C$1.61 per share in the
three months to the end of December, ahead of analysts'
consensus estimate of C$1.56.
(Reporting by Susan Taylor in Toronto, Nicole Mordant in
Vancouver and Vishaka George and Vishal Sridhar in Bengaluru;
editing by Sunil Nair, Paul Simao and G Crosse)