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Vale's 4th quarter profit falls short of expectations, but there's a reason

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2024-02-26

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Brazilian miner Vale surprised investors with a fourth-quarter profit much weaker than expected, reporting a $US2.42 billion net profit, down from the $US3.72 billion reported in the final quarter of 2022—the second-biggest iron ore exporter globally after Rio Tinto.

Analysts had anticipated $US4.15 billion, making the report a bit of a shock.

However, the reason for the weaker-than-expected figure shouldn't be a worry—a $US1.2 billion provision related to charges from the 2015 collapse of the Samarco tailings dam, causing a giant mudslide that killed 19 people and severely polluted the Rio Doce river.

BHP, Vale's partner in the Samarco joint venture that owned the dam, took another $US3.2 billion provision against costs related to the collapse.

Recurring adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 37% in the quarter from a year earlier to $6.33 billion, slightly exceeding analysts' estimates of $6.32 billion reais.

Sales revenue rose 9.3% to $US13.05 billion from $US11.941 billion in the final quarter of 2022.

For the full year, profit halved to $US7.93 billion from $US16.73 billion, with revenue falling to $US41.784 billion from $US43.84 billion. Full-year adjusted EBITDA totaled $US17.96 billion against $US19.76 billion for 2022.

Despite the decline, Rio retained the largest iron ore profit among majors, reporting $23.892 billion, down from $US26.272 billion in 2022.

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