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Highlights
- Vale reported a 15% drop in Q3 net profit to AU$2.41 billion, affected by lower iron ore prices and provisions related to the Mariana dam collapse.
- The company experienced a 10% decline in net revenue year-on-year, totaling AU$9.55 billion, which was in line with analysts' expectations.
- New CEO Gustavo Pimenta aims to enhance product quality and expand Vale’s base metal unit, especially in copper, signaling a strategic shift for the company.
Brazilian mining giant Vale, one of the world’s leading iron ore producers, announced on Thursday that its net profit for the third quarter fell by 15% compared to the same period last year. The decline was primarily attributed to lower prices for the steel-making ingredient and additional provisions related to the tragic Mariana dam collapse.
Despite the drop, Vale's net profit for the quarter ending September was reported at AU$2.41 billion, significantly exceeding analysts' expectations of AU$1.65 billion, according to a poll by LSEG. However, the company did see a 10% decrease in net revenue year-on-year, totaling AU$9.55 billion, which was close to analysts' forecasts of AU$9.44 billion.
Earlier this month, Vale had already provided details on its third-quarter sales and output, which revealed the highest iron ore production for a quarter since 2018. Nevertheless, the realized prices for iron ore fines fell by 14%, which weighed heavily on the company’s profit margins.
Vale's core profit, as indicated by adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), was AU$3.62 billion for the quarter. This figure represents an 18% decrease from the previous year but aligns with analysts’ estimates of AU$3.61 billion.
In its earnings report, Vale disclosed an additional provision of AU$956 million associated with the 2015 collapse of a dam at its Samarco iron ore mine, a joint venture with BHP near the Brazilian city of Mariana. The company had already signaled a similar impact last week, as it approached a final compensation agreement. Vale is set to sign the deal, which includes a payment plan amounting to 170 billion reais (around AU$30 billion), with 100 billion reais designated for public authorities over a span of 20 years.
With a focus on restructuring, Vale's new CEO, Gustavo Pimenta, who previously served as the company’s chief financial officer, highlighted the firm's goal of enhancing its product quality and client focus. In the earnings report, Pimenta emphasized plans to accelerate the delivery of high-quality iron ore products while also expanding Vale's base metals unit, particularly in the copper sector.
In a separate announcement on Thursday evening, Vale revised its all-in cost guidance for copper for the year, reflecting its commitment to evolving its portfolio to better meet market demands.
