Dismal 4Q for Vale - Analyst Blog
28 Febbraio 2013 - 1:40PM
Zacks
Mining giant, Vale
S.A. (VALE) 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 ADR.
Revenue: 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 increase.
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 World.
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.
Margins: 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 costs.
Lower prices of the products pulled
down the adjusted operating income by 51.2% year over year to $2.9
billion in the quarter.
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.
Outlook: 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. (KIROY); holding a Zacks
Rank #1 (Strong Buy), and Commercial Metals
Company (CMC) and Gibraltar Industries
Inc. (ROCK) both of which hold a Zacks Rank #2 (Buy).
COMMERCIAL METL (CMC): Free Stock Analysis Report
KUMBA IRON ORE (KIROY): Get Free Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis Report
VALE SA (VALE): Free Stock Analysis Report
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