Teck Resources Ltd. posted a $305 million profit for their first quarter, starting 2021 strong and foreshadowing a solid year ahead. Compared to the first quarter last year, the number represents a $600 million swing in the opposite direction from a $312 million loss in 1Q20. The 246.8% jump in first-quarter adjusted profit is a big move to start the year that is expected to be the start of a long, profitable run for the industry.
Much of that loss came from a $474 million asset impairments charge at its Fort Hills oil sands operation. Still, it is clear that high commodity prices in 2021 are a large part of what is driving the company’s performance and stock price. Revenue for the quarter was also up 7.14% YoY to $2.55 billion from $2.38 billion in the same quarter the year before.
While analyst consensus had an estimate of 62 cents per share and Teck hit an adjusted 61 cents, this didn’t phase investors, and the 247% profit bump was what investors decided was more important. In a statement, chief executive Don Lindsay said, “Strong first-quarter operational performance, in line with plan, and higher commodity prices contributed to a very solid start to 2021. We achieved major milestones for our priority project, including surpassing the halfway point at our flagship QB2 copper growth project and moving into the commissioning phase of our Neptune steelmaking coal terminal upgrade.
Higher copper prices continue to drive profits and progress for copper miners right now as demand for raw materials increases with economic reopenings and COVID-19 vaccine rollouts. The first quarter of 2021 saw a 54% price increase to US$3.92 per pound, giving a strong boost to copper miners and contributing to a lift in commodity prices across the board.
With such a strong start to 2021, Teck Resources seems set up for a long run this year as investors continue to pile into copper mining companies to get a piece of the decades-long supercycle the red metal is entering now.
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