Vale tops industry with US$17B profit in 2010

Vale was the most profitable mining company in 2010, says an earnings report released this week by the Brazilian diversified mining giant.

Sao Paulo-based Vale reported annual net income of US$17.3 billion, or $3.25 per share, on operating revenue of $46.5 billion. That compares to a $5.3  billion profit the firm made in 2009 on operating revenues of $23.9 billion.

Vale's capital expenditures of US$12.7 billion also hit a record as the largest capex in the mining industry, according to the company's numbers made public on Thursday.

"We are living through our best days," said Vale CEO Roger Agnelli, who added that the company can look forward to even better times ahead, considering the growing demand from emerging markets for iron ore used for steelmaking, which is keeping prices around US$190 a tonne, as well as the company's  expanding pipeline of projects, with Vale's investments totalling US$12.7 billion in 2010.

"Given the size and quality of our pipeline of growth projects amid a scenario of sustained global demand growth for our products, I strongly believe that even better days are ahead of us," Agnelli said.

Highlights of the earnings report:

– Record operating revenues of US$ 15.2 billion in 4Q10 and US$ 46.5 billion in 2010.

– Record annual operating income, as measured by adjusted EBIT(a) (earnings before interest and taxes), of US$ 21.7 billion in 2010. Operating income totaled US$ 7.2 billion in 4Q10.

– Record operational margin, as measured by adjusted EBIT margin, of 47.9% in 2010, which was the best among peers. In 4Q10, the operational margin reached 48.0%.

– Record cash generation, as measured by adjusted EBITDA(b) (earnings before interest, taxes, depreciation and amortization) of US$ 26.1 billion in 2010 and US$ 8.9 billion in 4Q10.

– Record annual net earnings of US$ 17.3 billion, the largest ever in the mining industry, equal to US$ 3.25 per share on a fully diluted basis. Net earnings of US$ 5.9 billion in 4Q10, an all-time high figure in a fourth quarter.

–  Record capital expenditures – excluding acquisitions – of US$ 12.7 billion in 2010 and also the largest capex in the global mining industry.

–  Record return of capital to shareholders of US$ 5.0 billion in 2010, through a dividend distribution of US$ 3.0 billion, equal to US$ 0.57 per share, and the execution of the share buyback program of US$ 2.0 billion.

–  Total debt/adjusted EBITDA ratio of 1.0x, at the end of 2010, against 2.5x in December 2009.