Vale S.A. (VALE), on February 24, released its financial results for the fourth quarter and the fiscal year 2010.
The company’s net earnings in the fourth quarter were $1.12 per ADR, up compared with 28 cents per ADR in the year-ago quarter and the Zacks Consensus Estimate of $1.00 per ADR. However, the results were a cent below $1.13 per ADR earned in the previous quarter.
In the fiscal year 2010, earnings per ADR were $3.25, up from $1.00 reported in the fiscal year 2009 and above the Zacks Consensus Estimate of $3.04 per ADR.
Revenue
Operating revenue in the fourth quarter jumped 132.5% year over year to US$15,207 million and also registered a sequential increase of 4.9%. Strong growth in sales volume was the prime contributor to revenue growth, offset partially by a negative impact from lower prices. The results also surpassed the Zacks Consensus Estimate of US$13,783 million.
Revenue generated from the sales of ferrous minerals accounted for 70.1% of total revenue, while non-ferrous minerals contributed 19.9%; logistics services 2.2%; coal 1.6% and the rest accounted for about 6.2% of revenue.
Sales volume of iron ore shipments, responsible for 55.7% of total revenue in the quarter amounted to 69.86 million metric tons, up 2.7% from the previous quarter. Geographically, 18.3% of revenue was generated from the domestic market, 54.5% of revenue from Asia, 5.4% from North America, 17.6% from Europe, and 4.1% from the rest of the world.
In the fiscal year, operating revenue was US$46,481 million, 94.2% year over year and above the Zacks Consensus Estimate of US$43,204 million.
In the fourth quarter 2010, cost of goods sold totaled US$6,040 million, an increase of US$927 million sequentially. The costs were inflated primarily due to an increment in depreciation in costs, purchase of goods from third parties, costs from resumption of nickel operations.
Adjusted EBIT of US$7,167 million in the quarter was above US$1,103 million in the year-ago quarter but below US$7,836 million in the previous quarter. Operating margin improved 30.6% year over year to 48% in the quarter but plummeted 7.6% sequentially.
The sequential drop in margin was attributed to lower iron ore and pellets sales prices, higher cost of goods sold and expenses. Adjusted EBITDA was US$8,869 million in the quarter.
Balance Sheet/Cash Flow
Exiting the fourth quarter 2010, Vale’s cash and cash equivalents shot up 4% year over year to US$7,584 million, but plummeted 22% sequentially. Long-term debt increased sequentially to US$39,498 million from US$38,131 million in the previous quarter.
Net cash flow from operating activities was US$7,708 million, up from US$1,411 million in the year-ago quarter and US$6,879 million in the previous quarter. Capital expenditure increased 72.1% year over year and 23.1% sequentially to US$4,742 million.
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