) recently released its financial results for the first quarter
2013. Underlying earnings per ADR declined 10.1% year over year
and improved 63.2% sequentially to 62 cents (on a fully diluted
basis) in the quarter.
Results beat the Zacks Consensus Estimate of 40 cents per ADR
by 55.0%. Improvements in the company's cost structure and
margins helped boost the earnings which were offset by the lower
volumes of production.
: Operating revenue dropped 5.4% year over year and 10.7%
sequentially to $11.2 billion. It also lagged the Zacks Revenue
Estimate of $11.4 billion by 2.0%. The year-over-year decrease in
revenue was a result of lower volumes of production of its
products, mainly iron ore. However, the commodity prices were
slightly better sequentially.
Of Vale's total revenue, sales of ferrous minerals accounted
for 69.7%; coal sales 1.9%; base metals sales 16.4%; fertilizer
nutrients sales 6.9%; logistics services sales 3.2%; and the
remaining 1.9% came from the sale of miscellaneous sources.
Geographically, 20.4% of revenue was generated from South
America, 51.3% from Asia, 5.6% from North America, 18.5% from
Europe, 3.1% from the Middle East and 1.1% from Rest of the
: In the first quarter, cost of goods sold totaled $5.7 billion,
down 6.9% year over year. SG&A and R&D expenses were
$374.0 million and $176.0 million, declining 29.3% and 41.1%
year-over-year, respectively. This was a consequence of Vale's
initiatives to mitigate its presence geographically with fewer
projects and reduction of discretionary expenses.
These cost control efforts by Vale increased the adjusted
operating income by 6.8% year over year to $4.2 billion in the
Balance Sheet/Cash Flow
: Exiting the first quarter of 2013, Vale's cash and cash
equivalents were recorded at $6.0 billion versus $5.8 billion in
the previous quarter. Long-term debt increased to $44.2 billion
compared with $43.1 billion in the previous quarter.
Net cash generated from operating activities was $3.9 billion
versus $3.2 billion in the year-ago quarter while capital
spending came in at $3.5 billion versus $3.0 billion in the first
quarter of 2012.
: In the coming quarters, management expects that both supply and
demand will play their role and maintain an average price for
iron ore. Also, Vale's cost saving strategies are expected to
pay-off, which in turn will increase the earnings of the company.
Vale also reaffirmed its expenses for project and exploration
studies at about $1.1 billion for 2013.
The stock currently bears a Zacks Rank #3 (Hold). Other stocks
in the metals and minerals industry worth a look are
Gibraltar Industries Inc.
); both holding a Zacks Rank #1 (Strong Buy), while
Atlatsa Resources Corporation
) holds a Zacks Rank #2 (buy).
ATLATSA RESRCS (ATL): Free Stock Analysis
CAMECO CORP (CCJ): Free Stock Analysis Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis
VALE SA (VALE): Free Stock Analysis Report
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