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Vale (VALE) Earnings and Revenues Miss Estimates in Q1

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Vale S.A. (VALE - Free Report) reported first-quarter 2022 adjusted earnings per share of 78 cents, which missed the Zacks Consensus Estimate of 90 cents. The bottom line decreased 3% from the prior-year quarter. Lower sales volumes for iron ore and pellets, copper and nickel offset the impact of higher prices, leading to the overall decline in earnings in the quarter.

Including one-time items, earnings in the quarter was 93 cents compared with $1.08 in the year-ago quarter.

Revenues

Net operating revenues declined 14% year over year to around $10.8 billion. The top line lagged the Zacks Consensus Estimate of $11.3 billion.

Net operating revenues from Ferrous Minerals declined 16% year over year to $8.7 billion as higher iron ore prices were offset by lower sales volume. Base Metals’ net operating revenues dipped 3% to $1.9 billion as the impact of higher copper and nickel prices were offset by lower sales volume.

VALE S.A. Price, Consensus and EPS Surprise VALE S.A. Price, Consensus and EPS Surprise

VALE S.A. price-consensus-eps-surprise-chart | VALE S.A. Quote

Operating Performance

In the first quarter of 2022, cost of goods sold totaled $4.6 billion, up 7% year over year. Gross profit plunged 25% year over year to $6.2 billion. Gross margin was 57.3% compared with 65.8% in the prior-year quarter.

Selling, general and administrative expenditure moved up 16% year over year to $121 million. Research and evaluation expenses climbed 23% to $121 million from the year-ago quarter.

Adjusted operating income was $5.5 billion in the reported quarter. The figure marked a 29% slump from the prior-year quarter. Adjusted EBITDA was $6.2 billion in the reported quarter compared with $8.5 billion in the prior-year quarter.

Pro-forma adjusted EBITDA (excluding expenses related to Brumadinho and COVID-19) plunged 26% year over year to $6.4 billion, on lower sales volume of iron ore and pellets. The gains from higher iron ore prices were not adequate to negate the impact of lower volumes.

Ferrous Minerals’ EBITDA was $5.8 billion, reflecting a 25% decline from the last-year quarter. Base Metals EBITDA slumped 26% to $751 million from the prior-year quarter.

Balance Sheet & Cash Flow

Vale exited the first quarter of 2021 with cash and cash equivalents of $9.1 billion compared with $11.7 billion at the end of 2021. Cash flow from operations was $2.6 billion in the quarter under review compared with $7.3 billion in the first quarter of 2021.

Gross debt at the first quarter 2021-end was $12.3 billion compared with $12.2 billion at the end of 2021.

Vale paid dividends of around $3.5 billion and advanced its share buyback program during the first quarter, which is 84% completed. Its board of directors approved a new program of up to 500 million shares, equivalent to around 10% of the currently outstanding shares of the company. Under this program, share repurchases will executed in the coming 18 months and the conclusion of the current program.

Price Performance

Zacks Investment Research
Image Source: Zacks Investment Research

In the past year, shares of Vale have fallen 19.3%, compared with the industry’s decline of 22%.

Zacks Rank & Other Stocks to Consider

Vale currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the basic materials space include Commercial Metals Company (CMC - Free Report) , Allegheny Technologies Incorporated (ATI - Free Report) and Nutrien (NTR - Free Report) . All of these stocks carry a Zacks Rank #1 at present.

Commercial Metals has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised upward by 32% in the past 60 days.

Commercial Metals has a trailing four-quarter earnings surprise of 16%, on average. CMC’s shares have surged around 39% in a year.

Allegheny has an expected earnings growth rate of 707.7% for the current year. The Zacks Consensus Estimate for ATI's earnings for the current year has been revised upward by 6.1% in the past 60 days.

Allegheny’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 127.2%. ATI has rallied around 19% over a year.

Nutrien has an expected earnings growth rate of 128% for the current year. The Zacks Consensus Estimate for NTR’s current-year earnings has been revised upward by 34% in the past 60 days.

Nutrien has a trailing four-quarter earnings surprise of 60.3%, on average. NTR has appreciated around 80% in a year.


 


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