Teck Resources Earnings: Driven Down by Lower Metallurgical Coal Sale Volumes and Prices

No-moat Teck Resources’ third-quarter 2023 result was lower than our expectations. Adjusted EBITDA of CAD 1.2 billion fell 36% on third-quarter 2022. Teck’s metallurgical coal business accounted for about two-thirds of EBITDA, with copper and zinc roughly splitting the remainder. Adjusted net profit after tax of CAD 400 million, or CAD 0.76/USD 0.55 per share, declined 57% on last year, driven by lower metallurgical coal prices and sales volumes along with higher unit cash costs. Lower earnings and temporary increases in working capital drove negative free cash flow of about CAD 650 million, but net debt remains reasonable at about 1.1 times trailing 12 months EBITDA.