Teck Resources Ltd (USA)(NYSE:TCK) reported that the steel-making coal demand in China has weakened in the first two months of 2015. The imports are well below 2014’e recorded levels. Along with the announcement, the company declared a big dividend cut of 67%. Don Lindsay, the CEO said that whether the weakness will continue or not it still unclear. The indications from customers imply that the decline is unusual and the demand could rebound in near term. The coal demand outside China region has remained robust.
The details
The Chief Executive of Teck Resources further added that the management have to see how 2015 unfolds, but certainly has proved weak so far. The company is the second-biggest exporter of steel-making coal in the world. It also produces zinc and copper.
Reduced dividend
Teck Resources reduced its half-yearly dividend by 67% to 15 Canadian cents per share from previous dividend of 45 Canadian cents per share. It is for the first time, the company reduced its dividend since it stopped payouts in late 2008. During that time, it halted payouts to reduce debt following its acquisition of Fording Canadian Coal Trust. The company warned in February that it could cut the dividend payout if industry-wide reduction in the steel-making coal production will fail to lift prices from existing low levels.
The interest
When asked about merger and acquisition prospects, the management showed interest towards copper. Although the assert prices have fallen, there was tough competition for them from other mining companies as well as private equity groups. Lindsay said that the company is looking out for opportunities but as of now there is not a lot out there in the market. In March, Teck Resources declined that it was in discussions to acquire or merge with Chilean copper miner Antofagasta Plc. The company’s net profit dropped to C$68 million in the first quarter from C$69 million a year earlier.
