By Nayara Figueiredo and Roberto Samora
SAO PAULO (Reuters) – Mining company Vale posted net income of $4.5 billion in the first quarter of 2022, down 19.6% from the same period a year ago, amid lower prices and sales of its main commodity, iron ore, the company said on Wednesday.
The company also reported an increase of US$4.3 billion in expanded net debt, on a quarterly basis, to US$19.37 billion, mainly due to the effect of the appreciation of the real on commitments denominated in local currency.
The exchange rate in the quarter was also a villain in the aggregate value of provisions for reparations for the Brumadinho (MG) disaster, which increased by US$1.2 billion to US$8.267 billion.
“Despite the challenging quarter in our operations, we are on track to meet our commitments for 2022,” Vale’s president, Eduardo Bartolomeo, said in a note.
Last week, the mining company had already reported a 6% drop in its iron ore production, with an even greater decline in sales volume, of almost 10%, compared to the same period in 2021.
Bartolomeo cited heavy rains in Minas Gerais, licensing delays in the North and lower-than-expected performance in some assets.
“However, we take advantage of seasonally lower volumes to carry out maintenance activities that will lead to safer operations and solid production going forward.”
He said he was “confident” from the business perspective, highlighting a third buyback program, “as an additional lever to generate value for our shareholders”.
LEVERAGE REVIEW
Amid a growth in debt driven by currency factors, Vale said that during this quarter it reviewed and approved by the Board of Directors a change in its “optimal leverage” from 15 billion dollars to a range between 10 billion and 20 billion dollars. , “under the concept of expanded net debt”.
“This decision reflects the proactive management of liabilities carried out in recent months without relevant financial amortizations until 2024, a sustainable increase in our production capacity and a very disciplined management of costs and investments”, he highlighted.
Despite the reduction in the quarter, net income came in slightly above the average projected by analysts consulted in a survey by Refinitiv, which indicated 4.24 billion dollars.
The company’s total net sales revenue reached $10.8 billion in the quarter, versus $12.55 billion a year earlier.
Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) reached US$6.37 billion in the first three months of the year, against US$8.6 billion in the same period in 2021. market for Ebitda was 6.68 billion dollars.
According to the company, the realized price of iron ore fines (CFR/FOB) rose from US$157.2 per metric ton in the first quarter of 2021 to US$141.4 in the first three months of this year.
But there was a recovery in the realized price of iron ore compared to the fourth quarter of 2021 (107.2 dollars/ton).
Even so, in comparison with the last quarter of last year, profit fell 17.8%, sales revenue dropped 17.5% and Ebitda dropped 7%, according to the financial statement.
Vale said the main factors that contributed to the quarter’s performance compared to the last three months of 2021 were the lower sales volume of iron ore and pellets, mainly due to the intense rainy season at the beginning of this year and the weaker performance of the Northern System – with an impact of 2.192 billion dollars.
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