1Q20 - Financial Result

Business

1Q20 - Financial Result

Vale released this Tuesday, April 28th, its Financial Result for the first quarter of 2020. The company remains committed to safety.

Vale is facing the challenging times brought by the COVID-19 pandemic with responsibility, discipline and sense of urgency. We designed a response plan to this crisis, with actions that prioritize: the health and safety of our people and communities in which we operate; the support to the battle against the virus, honoring our new pact with the society; and the continuity of our business. Nevertheless, we keep advancing with Brumadinho reparation and risk management initiatives and our goal remains intact, we are transforming Vale in one of the safest and most reliable mining companies in the world.

Eduardo Bartolomeo, Chief Executive Officer.

COVID-19

Since March 2020, Vale has been adjusting its way to operate to battle the COVID-19 pandemic effects. In all of its sites Vale has adopted world-class safety standards such as: implementation of home-office regime to all employees considered in risk groups and those for which the function does not require physical presence, access to operations by essential personnel only, suspension of all non-essential construction works at the sites, adjustments to operational sites and transportation procedures, safeguarding social distancing, daily symptoms checklists and continuous monitoring for potential symptoms,body temperature scan at operational sites entrances, among others.

So far, Vale has been weathering the COVID-19 outbreak with limited impact to its operations. Up to this moment, the adoption of three restrictive measures were necessary: in the Iron Ore business, Vale temporarily halted operations in the Teluk Rubiah Maritime Terminal in Malaysia, with no impact on production; in the Base Metals business, Vale ramped down its Voisey's Bay mining operation and placed it on care and maintenance for up to 4 months; and in the Coal business, Vale decided to postpone plans for the coal processing plant maintenance revamp in Mozambique.

Vale is also working to keep the ecosystem of suppliers and contractors around its operations healthy during this crisis. Programs to advance payments to more than 3 thousand small and medium-sized suppliers have been implemented in countries where Vale operate, with an injection of more than R$ 900 million in the Brazilian economy. Contractors and workers who were allocated to projects suspended by Vale are also receiving financial support.

Reparation

Efforts to mitigate the impacts of COVID-19 do not compete with Vale's initiatives to repair Brumadinho. Indemnification agreements signed reached approximately 7,000 people and, together with emergency payments, are equivalent to approximately R$ 3.6 billion. Vale is also proceeding with the improvements of its risk management practices and, in January 2020, the Engineer of Record (EoR) role was implemented as an additonal step to strengthen the governance of its Tailing Management System. Also in March 2020, the Board of Directors decided for the continuity of the Committee for Dam Safety, as relevant discussions around the dam safety standards are still ongoing in the mining industry.

Results

In 1Q20, proforma adjusted EBITDA totaled US$ 3.041 billion, US$ 1.636 billion lower than in 4Q19, mainly as a result of: seasonal lower volumes in the first quarter, the partial stoppage of Brucutu plant, lower nickel and copper realized prices and lower base metals sales volumes, which were partially offset by the positive effect of the Brazilian real devaluation.

Adjusted EBITDA of the Ferrous Minerals business segment was US$ 2.847 billion in 1Q20, US$ 1.691 billion lower than in 4Q19, mainly due to sales volumes 34% lower than in 4Q19.

Vale generated US$ 380 million in Free Cash Flow from Operations in 1Q20, US$ 947 million lower than in 4Q19, mainly due to the lower proforma adjusted EBITDA in the quarter (US$ 1.636 billion) which was partially offset by seasonaly lower CAPEX (US$ 348 million) and lower payments related to Brumadinho (US$ 248 million).

To check financial and production reports, click below. On Wednesday, April 29th, will be held webcasts for investor at 10am (Portuguese) and 12pm (English) – Brasilia time.