All of this caused the price of iron ore – the product that Vale sells – to fall. And quite a lot: the value of refined iron ore, in dollars, has shrunk 20.2% since January 1, according to data from Elos Ayta.
Actions have reflected this. Since the beginning of the year, VALE3 has already lost 13.99% in value, according to Elos Ayta. According to Goldman Sachs, global investors who like to buy Vale shares are now running away from paper and preferring copper or cellulose companies (especially in the case of local Brazilian investors).
Therefore, some experts already expected this drop in profits and shares. However, the company’s accounts remain “very healthy”, according to Phil Soares, head of stock analysis at Órama. “It was very much in line with what we observed in the first quarter of the previous year,” he says.
What if it weren’t for the price of ore?
Without the drop in ore, Vale would have had a great result. This is what Felipe Moura, analyst at Finacap, says. “The drop occurred due to a macroeconomic narrative. But when we look at the balance sheet, we see that the company has low debt and fantastic cash generation,” he says.
Free cash generation was US$2 billion. In other words, this was the total that entered the company’s cash flow. According to the company, 57% turned into profit. “The cash generation projection for the remainder of the year is equivalent to practically 15% of the company’s market value”, says Moura.
