Vale SA (ADR) (NYSE: VALE)’s Positive Lies In Its Core Operational Improvement

by James Karedelli | Friday, Feb 28, 2014 | 1264 views

Boston, MA, 02/28/2014 – Vale SA (ADR) (NYSE:VALE) traded higher side on the previous day after the Brazil’s mineral miner fourth quarter results. Though it appeared to have doubled its loss in the fourth quarter, but the core results remain solid sending a positive outlook to its investor’s.

More On The Results

During the earnings call, Vale SA (ADR) (NYSE:VALE) mentioned that its strong performance in its core operations were undercut by an enormous tax settlement and an impairment charge, resulting in a wider loss, which doubled year-over-year in the fourth quarter. Vale had to pay nearly $9.36 billion (22.3 billion reais) in November to the Brazilian government as a part of the tax settlement, which arose due to its alleged profits from the overseas operations. In addition to this, the company’s books also wrote off an impairment charge of $2.3 billion associated with its Argentina Rio Colorado potash project, which was suspended. The two major charged has impacted the company’s earnings tremendously, with its net loss touching a high of $6.45 billion, double than $2.65 billion posted in the previous year same quarter.

Apart from the two mentioned one-time charges, Vale SA (ADR) (NYSE:VALE)’s core results appear to be robust as its adjusted EBITDA for the quarter grew 50% year-over-year to $6.64 billion and sales growth rate of 8.5% too was remarkable at $13.61 billion. The company’s realization from both iron-ore and iron-ore pellets grew 13% to $112.97 per metric and 16% to $150.17 respectively.

China’s Acceptance

On Thursday, the company’s Director Jose Carlos Martins expressed possibility that China might accept its giant Valemax vessels in the light of the increasing growth of bigger ships in world markets. This expectations come as Vale SA (ADR) (NYSE:VALE)’s CEO MuriloFerreira said that despite the non-operational losses, the company managed to reduce costs, write off bad investments and bring in more cash from its mines, ships, ports and other assets.

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