Vale (VALE3) profits US$ 1.68 billion in the 1st quarter, a drop of 9% and below expectations

Vale (VALE3) recorded a net profit of US$1.679 billion (attributable to shareholders) in the first quarter of 2024 (1Q24). A year earlier, profit was US$1.837 billion, representing a drop of 9% on an annual basis. Other than that, the number was below the market consensus, which saw a profit of US$ 1.83 billion.

The mining company’s revenue was US$8.459 billion, remaining practically stable in the year and below the US$8.64 billion consensus. Vale’s adjusted Ebitda (Earnings before interest, taxes, depreciation and amortization) was US$ 3.438 billion, down 7% on an annual basis and also falling short of the consensus, of US$ 3.6 billion .

According to the report, the performance is due to lower prices for fines
iron ore.

The adjusted EBITDA margin, in turn, reached 41% in the first quarter of 2024, an annual drop of 3 percentage points.

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The C1 cash cost of iron ore fines, excluding third-party purchases, was slightly lower year-on-year, reaching US$23.5 per ton in 1Q, despite the negative effect of the appreciation of the real.

Sales, general and administrative expenses totaled R$140 million in 1Q24, an increase of 19% compared to the same period in 2023.

The net financial result was negative at R$437 million in the first quarter of 2024, an 18% reduction over the financial losses in the same stage of 2023.

On March 31, 2024, the company’s net debt was R$10.105 billion, an increase of 23% compared to the same stage in 2023.

Investments in maintaining operations totaled US$ 1.028 billion in the first quarter, US$ 224 million higher on an annual basis, mainly due to greater disbursements in the Voisey’s Bay mine extension project (VBME) and greater investments in improving operations .

Free Cash Flow generation was US$2.0 billion in the quarter, representing an EBITDA-to-cash conversion of 57%, positively impacted by the strong receipt of sales in 4Q23.