Brazil's Vale posts $1.44bn loss in third quarter

GMT 17:30 2014 Thursday ,30 October

Arab Today, arab today Brazil's Vale posts $1.44bn loss in third quarter

Brazilian mining company Vale
Rio de Janeiro - AFP

 Brazil mining giant Vale, the world's largest ore producer, posted Thursday a surprise net loss in the third quarter due to depreciation of the real and a drop in iron-ore prices.
For the July to September period, Vale recorded net losses of $1.44 billion, set against a net profit of $3.5 billion in the same period last year.
The company registered record production of iron ore, with 85.7 million tons produced between July and September, but Vale's chief financial officer Luciano Siani said profits suffered due to slumping sales.
While increased volumes yielded a positive impact, cash flow generation dropped from $4.1 billion to $3 billion due to lower sales.
"We had sold a little less than we could," Siani said in a video on Vale's website.
In the third quarter, the Brazilian real depreciated 11.4 percent against the dollar. That increased the value of Vale's debt, the company explained.
But Siani sought to restore confidence in investors, and said profits are expected to bounce back.
"Going forward, the devaluation of the real actually has a positive impact on value cash flows because it lowers the cost base of the company, it lowers the capital expenditures when expressed in US dollars," Siani said in a video on Vale's website.
"We acknowledge the challenging times, We believe the company is on track delivering solid operational production results, continue reducing cost and expenditures, trimming its capital expenditures, focusing on it quarter business and will deliver more and more value to its shareholders in the near future."
The results surprised the markets, as net profits were projected for the third quarter in line with earlier gains.
In the second quarter of this year, Vale recorded net profits of $1.43 billion.
The global price of iron ore, which accounts for over two thirds of Vale's production, has slipped by about 40 percent this year to $68 per ton, compared to $110 per ton last year.


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