Iron ore majors ramp up supply even as China faces challenges
Iron ore is one of the year’s worst performing major commodities, slumping by almost a quarter as China’s property crisis drags on.
The world’s second biggest miner Vale released its first quarterly report for 2013 on Wednesday.
Vale said it showed increases in operating income, operating margin, earnings and cash generation.
The company’s underlying earnings were $3.2 billion — $1.2 billion above the last quarter.
Cash generation, measured by adjusted EBITDA, was 18.1% higher, reaching 5.2 billion. It was second only to the figure for the first quarter of 2011.
Operating income, at $4.2 billion, was 41.4% higher than in the fourth quarter of 2012, while operating margin increased to 38.%.
Capital, research and development expenditures were $4 billion, 8.4% higher than in the first quarter of 2012.
Other financial highlights in 1Q13
• Operating revenues totaled US$ 11.2 billion, decreasing 10.7% over 4Q12. The
reduction was primarily due to the effect of lower volumes.• Income from existing operations, as measured by adjusted EBIT(a) (earnings before
interest and taxes), was US$ 4.2 billion, rising from an adjusted EBIT – excluding the
effects of non-cash non-recurring items – of US$ 2.9 billion in 4Q12 and US$ 3.9
billion in 1Q12.• Operating income margin of 38.0%, as measured by adjusted EBIT margin.
• Underlying earnings in 1Q13 were US$ 3.2 billion, equal to US$ 0.62 per share on a
fully diluted basis, against US$ 2.0 billion in 4Q12, net of the accounting effects of
non-cash non-recurring items and US$ 3.6 billion in 1Q12. Higher tax payments and
lower monetary and exchange variations are the main reasons for the yearly
decrease in underlying earnings, more than offsetting the higher adjusted EBIT.• Cash generation, as measured by adjusted EBITDA(b) (earnings before interest, taxes,
depreciation and amortization) – excluding the effects of non-cash non-recurring
items – of US$ 5.2 billion, 18.2% above 4Q12.• Capex – excluding acquisitions – in 1Q13 equaled to US$ 4.0 billion, 8.4% higher
than 1Q12.• Investments in corporate social responsibility reached US$ 210 million, US$ 163
million of which was destined to environmental protection and conservation and
US$ 47 million to social projects.• Maintenance of a strong balance sheet, with low debt leverage, measured by total
debt/LTM adjusted EBITDA, equal to 1.6x, long average maturity, 10.0 years, and low
average cost, 4.6% per year as of March 31, 2013.
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