Vale Swings to a Loss After Impairment Charges on Mines
February 20 2020 - 7:02PM
Dow Jones News
By Jeffrey T. Lewis
SÃO PAULO -- Brazilian iron-ore miner Vale SA posted a net loss
in the fourth quarter after taking impairment charges on a nickel
mine in New Caledonia and a coal mine in Mozambique.
Vale reported a fourth quarter loss of $1.56 billion, compared
with income of $3.79 billion a year earlier and income of $1.65
billion in the third quarter of 2019. Adjusted earnings before
interest, taxes depreciation and amortization reached $3.54
billion, down from $4.47 billion a year earlier.
Revenue rose to $9.96 billion from $9.81 billion in the fourth
quarter of 2018.
The company said in November it was analyzing the performance of
the nickel mine in the Pacific Ocean island of New Caledonia. Vale
took an impairment charge of $2.5 billion on the operation in the
fourth quarter, citing challenging issues during 2019 mostly
related to production and processing.
The company wrote down another $1.7 billion in the quarter for
the coal mine in Mozambique and recorded $898 million in charges
related to the tailings dam collapse in the small, rural town of
Brumadinho in January of last year.
Vale is still working to re-open some mines that were shut down
after the dam failed, sending a wave of thick sludge over nearby
offices and a Vale lunch facility and killing 270 people. Shortly
after the tragedy, the company closed operations near similar dams
around Brazil, while authorities ordered the closing of more of
Vale's mines.
Some of those mines restarted last year, and Vale said it
expects more to open this year. Vale produced 312.5 million metric
tons of iron ore and pellets in 2019, squeaking past the upper end
of its guidance of 307 million metric tons to 312 million tons. It
forecast output of 340 million tons to 355 million tons this year,
after reducing its guidance for the first quarter.
"They say they'll catch up in the following quarters," said Yuri
Pereira, an analyst at XP Investimentos in São Paulo. "But even if
the company can deliver the production, we think sales will come in
a bit less" than the increase in output because Vale will also be
replenishing stocks it ran down in the aftermath of the disaster in
Brumadinho.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com
(END) Dow Jones Newswires
February 20, 2020 18:47 ET (23:47 GMT)
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