Teck Resources Ltd slashes dividend as commodity prices plummet – by Peter Koven (National Post – April 21, 2015)

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Teck Resources Ltd. has finally slashed its dividend, a move many analysts thought was inevitable as the company grapples with weak coal prices and high spending at its Fort Hills oil sands project.

The Vancouver-based miner announced on Tuesday that it cut its semi-annual dividend by two-thirds. The payout is now 15 cents a share, down from 45 cents.

The move will help keep Teck’s balance sheet in solid condition as it continues its $2.9 billion investment in Fort Hills. It has only spent about $900 million so far, meaning there is $2 billion to go. First production is expected in late 2017.

Teck also reported weaker-than-expected first quarter results on Tuesday. Adjusted profit dropped 39 per cent year-over-year to $64 million, or 11 cents a share, which was below the consensus analyst estimate of 15 cents.

Positively, the company’s liquidity remains strong. Teck currently holds $1.4 billion of cash, and it has an additional US$3 billion available in a revolving credit facility.

Despite missing the average analyst forecast, Teck put a positive spin on the earnings. The company noted that coal sales and production reached 6.8 million tonnes, a record for the first quarter.

The company is also getting a boost from the strengthening U.S. dollar, which is lowering its costs. Teck said that at current exchange rates, each one-cent decline in the Canadian dollar against the U.S. dollar affects its annual pre-tax earnings by $52 million.

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