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Vale Reports Loss in Q4 due to Strong Dollar and Low Prices

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Mining giant Vale S.A.VALE reported weak results for fourth-quarter 20Array5. The company suffered a loss of 20 cents per share for the quarter, missing the Zacks Consensus Earnings Estimate of 2 cents per share of earnings. The quarterly loss per share was wider than the loss of 5 cents per share recorded a year ago.

For full-year 20Array5, the company reported loss per share of 33 cents as against earnings of 86 cents per share recorded at 20Array4-end.

Depreciation of the Brazilian currency with respect to the U.S. dollar and unfavorable product prices were primarily responsible for Vale's dismal performance in fourth-quarter 20Array5.

Revenues

Net operating revenue dropped 35% year over year and 9.3% sequentially to $5.9 billion. The top line also lagged the Zacks Consensus Estimate of $7.3 billion. Of total gross revenue, sales of ferrous minerals accounted for 64.9%; coal Array.8%; base metals 24.3%; fertilizer nutrients 8.6%; and the remaining 0.4% was sourced miscellaneously.

Geographically, Array6.Array% of revenues were generated from South America, 53.3% from Asia, 7.5% from North America, Array9.Array% from Europe, 2.8% from the Middle East and Array.2% from Rest of the World.

For full-year 20Array5, net operating revenue came in at $25.6 billion compared with $37.5 billion generated at 20Array4-end.

Expenses

In the fourth quarter, cost of goods sold totaled $5.Array billion, down 25.7% year over year. Selling, general and administrative expenditure was $Array67 million, while research and development expenses amounted to $ArrayArray9 million; down 45.4% and 49.4% year over year, respectively.

Balance Sheet/Cash Flow

Exiting fourth-quarter 20Array5, Vale had cash and cash equivalents of $3.6 billion compared with $4 billion recorded in the year-ago period. Non-current liabilities came in at $42.2 billion, down from $49.4 billion recorded a year ago.

Net cash generated from operating activities totaled $Array.3 billion compared with $Array.2 billion in the year-ago quarter. Capital spending totaled $2.2 billion compared with $3.4 billion in third-quarter 20Array4.

Outlook

Vale expects to improve its business with the help of specialized cost-saving plans, productivity enhancement schemes, growth projects and superior yield from the N4WS mine, going forward. Moreover, supported by efficient disinvestment programs and suitable capital-deployment strategies, the company aims to stabilize its absolute debt level in the coming quarters.

Stocks to Consider

Vale presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Cliffs Natural Resources Inc. CLF , AK Steel Holding Corporation AKS and American Vanguard Corp. AVD . All three stocks currently hold a Zacks Rank #2 (Buy).

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AMER VANGUARD (AVD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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