Vale S.A. (VALE) on May 5, released its financial results for the first quarter of 2011. The company’s net earnings in the quarter were $1.29 per ADR, up compared with 30 cents per ADR in the year-ago quarter and the Zacks Consensus Estimate of $1.16 per ADR.


Operating revenue jumped 97.8% year over year to US$13,548 million but registered a sequential decline of 10.9%. The sequential decline was due to lower sales volume, which was offset partially by higher product prices.

Of the total revenue, sales of ferrous minerals accounted for 69.1%; coal sales 1.1%; base metals 20.3%; fertilizer nutrients 5.8%; logistics services 2.4%; and the rest 1.2% came from miscellaneous sources.

Sales volume of iron ore shipments, responsible for 53.8% of total revenue in the quarter amounted to 57.7 million metric tons, down 0.2% year over year and 17.3% sequentially. Geographically, 20.5% of revenue was generated from South America, 49.6% of revenue from Asia, 7.1% from North America, 19.5% from Europe, and 3.4% from the rest of the world.


In the first quarter, cost of goods sold totaled US$5,576 million, down 7.7% sequentially, due primarily to lower sales. Operating expenses, including SG&A and R&D expenses were US$761 million, up from US$465 million in the year-ago quarter.

Adjusted EBIT of US$6,456 million in the quarter was above US$2,062 million in the year-ago quarter with operating margin of 48.9%. Adjusted EBITDA was US$7,663 million in the quarter.

Balance Sheet/Cash Flow

Exiting the first quarter 2011, Vale’s cash and cash equivalents shot up 1.3% year over year and 48.6% sequentially to US$11,271 million. Long-term debt increased sequentially to US$41,624 million from US$39,498 million in the previous quarter.

Net cash flow from operating activities was US$6,008 million, up from US$1,406 million in the year-ago quarter and down from US$7,708 million in the previous quarter. Capital expenditure increased 54.8% year over year but decreased 40.7% sequentially to US$2,813 million.

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