Brazil's Vale 1st-qtr profit slumps by a third as costs rise
Vale SA, the world's largest iron ore producer, posted a 36 percent slump in first-quarter profit compared to the same quarter a year earlier, missing estimates, as costs rose and iron ore prices slipped, results showed on Wednesday.
In a securities filing, Brazil's Vale said quarterly net income totaled $1.59 billion, below a consensus estimate of $1.926 billion and the $2.49 billion reached a year ago.
Adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, slumped to $3.971 billion, below a consensus estimate of $4.387 billion compiled by Thomson Reuters and the $4.308 billion posted in the year-ago quarter.
The world's top nickel producer said costs and expenses rose by nearly 10 percent compared to the year-earlier period while a benchmark index of spot iron ore prices showed a 13.2 percent drop over the same period.
However, Vale slashed net debt to $14.9 billion in the quarter from over $18 billion at the close of 2017, reaching the lowest level in nearly seven years. The company promised to lower its debt to $10 billion in the "short term," after saying in January it hoped to reach the target by mid-2018.
Capital expenditure slid to $890 million in the first three months of the year, the smallest such outlay for a first quarter since 2005, Vale said.
Net operating revenue rose just 1 percent to $8.603 billion from the first quarter of last year, but did not reach analysts' expectations of $8.698 billion.
Earlier this month, Vale said total iron ore output slipped in the first quarter due to heavy rains, but kept its output goal for the year on hold at 390 million tonnes.
Reporting by Marta Nogueira and Alexandra Alper, editing by G Crosse and Grant McCool.