) recently released its financial results for the fourth quarter
and full-year 2012. Underlying earnings per ADR declined 57.8%
year over year and 83.0% sequentially to 38 cents per share (on a
fully diluted basis) in the quarter.
Results also failed to meet the Zacks Consensus Estimate of 50
cents per ADR. Weak global economy as well as low prices for most
of its products severely impacted revenue.
For 2012, Vale reported earnings per ADR of $2.20, declining
almost 50.3% compared with the year-ago earnings of $4.43.
However, earnings beat the Zacks Consensus Estimate of $2.07 per
: Operating revenue plunged 18.7% year over year to $12.0
billion. However, it increased by 9.5% sequentially and also beat
the Zacks Revenue Estimate of $11.4 billion by 5.1%. The
year-over-year decrease in revenue was a result of lower prices
for its products other than gold. However, the prices were
slightly better sequentially. Also, an increase in volume of
production, especially iron ore, helped the sequential
Of the total revenue, sales of ferrous minerals accounted for
70.2%; coal sales 1.7%; base metals sales 15.1%; fertilizer
nutrients sales 7.7%; logistics services sales 3.2%; and the
remaining 2.1% came from sales of miscellaneous sources.
Geographically, 18.3% of revenue was generated from South
America, 56.8% from Asia, 4.6% from North America, 16.3% from
Europe, 2.8% from the Middle East and 1.2% from Rest of the
Revenue dropped 23.1% year over year in 2012 to $46.5 billion,
resulting from a decline in the prices of metals and minerals
across the year. However, revenues slightly beat the Zacks
Consensus Estimate of $45.0 billion.
: In the fourth quarter, cost of goods sold totaled $6.5 billion,
increasing 720 basis points year over year, due to an increase in
the freight costs. SG&A and R&D expenses were $577.0
million and $460.0 million declining 30.2% and 13.0% year over
year, respectively. This resulted from Vale's initiatives to curb
Lower prices of the products pulled down the adjusted
operating income by 51.2% year over year to $2.9 billion in the
Balance Sheet/Cash Flow
: Exiting the fourth quarter of 2012, Vale's cash and cash
equivalents were recorded at $5.8 billion versus $8.0 billion in
the previous quarter. Long-term debt increased to $43.0 billion
compared with $42.4 billion in the previous quarter.
Net cash generated from operating activities was $3.4 billion
versus $7.5 billion in the year-ago quarter while capital
spending came in at $4.8 billion versus $6.1 billion in the
fourth quarter of 2011.
: In the coming quarters, management expects its cost saving
strategies to pay-off, which in turn will increase the earnings
of the company.
The stock currently bears a Zacks Rank #3 (Hold). Other stocks
in the minerals industry worth a look are
Kumba Iron Ore Ltd.
); holding a Zacks Rank #1 (Strong Buy), and
Commercial Metals Company
Gibraltar Industries Inc.
) both of which hold a Zacks Rank #2 (Buy).
COMMERCIAL METL (CMC): Free Stock Analysis
KUMBA IRON ORE (KIROY): Get Free Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis
VALE SA (VALE): Free Stock Analysis Report
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