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Thursday, February 11, 2010

Overcoming challenges

Vale is reporting a solid operational and financial performance in 2009. It was a year of significant challenges brought by the great recession that caused one of the few episodes of global GDP contraction over the last 140 years of modern economic history.

As a producer of minerals and metals, we have as end consumers of our products primarily the manufacturing and construction industries, two of the most cyclical components of economic activity and thus most severely affected by recessions. In addition, being the only truly global supplier of iron ore, the large fall in capacity utilization of steel mills in the Americas and Europe produced a shock in our sales performance.

If, on the one hand, severe economic downturns usually cause serious negative effects on financial and operational performance, on the other hand they create extraordinary opportunities for companies that embrace change and structural transformation.

Vale has leveraged its competitive advantages - low-cost world-class assets, a healthy balance sheet, a large pool of liquidity, discipline in capital allocation, a highly skilled and motivated labor force and entrepreneurship spirit - to launch several initiatives to make it stronger in the future, seeking to reduce costs on a permanent basis and raise efficiency. No investment project was cancelled, new growth options were identified and our growth potential was enhanced.

Despite the weaker performance compared to previous years, our response to the recessionary environment was very important for heightening our capacity to create sustainable shareholder value.

The main highlights of Vale's performance in 2009 were:

. Operating revenue of US$ 6.5 billion in 4Q09, totaling US$ 23.9 billion in 2009.

. Operational profit, as measured by adjusted EBIT (earnings before interest and taxes) of US$ 1.1 billion in 4Q09 and US$ 6.1 billion in 2009.

. Operational margin in 2009, as measured by adjusted EBIT margin, of 26.0%. In 4Q09, adjusted EBIT margin of 17.4%.

. Cash generation, as measured by adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), of US$ 9.2 billion in 2009. Adjusted EBITDA achieved US$ 2.1 billion in 4Q09.

. Organic growth and maintenance capex reached US$ 9.0 billion in 2009.

. Investment of US$ 796 million in corporate social responsibility in 2009, of which US$ 580 million was allocated to environmental protection and conservation and US$ 216 million to social projects.

. Total dividend distribution of US$ 2.75 billion in 2009.

. Strong financial position, supported by large cash holdings of US$ 11.0 billion, availability of significant medium and long-term credit lines and a low-risk debt portfolio.

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Posted by Media Relations; at 15:48

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Wednesday, October 28, 2009

Returning to growth - Results on 3Q09

Vale announces a strong operational and financial performance in the third quarter of 2009 (3Q09), returning to growth after the impact of the global financial shock. The improved performance reflects the underlying earnings power arising from our world-class assets and strategic positioning, our efforts to weather the global downturn and the broadening of the current economic recovery.

Vale continues to pursue sustainable shareholder value creation, implementing the growth strategy with discipline in capital allocation, consistent with a long-term vision of the mining business. Main highlights and metrics of 3Q09 performance:

Shipments of iron ore and pellets totaled 72.930 million metric tons, a 35.5% increase on a quarter-on-quarter basis.

Operating revenue of US$ 6.9 billion, 35.6% more than the US$ 5.1 billion in 2Q09. Year-to-date (Ytd) revenue reached US$ 17.4 billion.

Operational profit, as measured by adjusted EBIT (earnings before interest and taxes), of US$ 2.3 billion, 134.9% above 2Q09. Ytd adjusted EBIT was US$ 5.0 billion.

Operational margin, as measured by adjusted EBIT margin, of 34.2%, recovering from the 19.7% figure for 2Q09.

Cash generation, as measured by adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), increased to US$ 3.0 billion in 3Q09 from US$ 1.7 billion in 2Q09. Ytd adjusted EBITDA reached US$ 7.0 billion.

Net earnings of US$ 1.7 billion, equal to US$ 0.31 per share on a fully diluted basis, against US$ 790 million in 2Q09. Ytd net earnings totaled US$ 3.8 billion.

Dividend of US$ 1.5 billion to be paid from October 30, 2009. Total dividend distribution of US$ 2.75 billion in 2009, in line with the US$ 2.85 billion dividend in 2008, a year of record cash generation.

Investment reached US$ 8.9 billion in the first nine months of 2009 (9M09). US$ 6.0 billion was spent in sustaining capital, research and development and project execution, and US$ 2.9 billion in acquisitions.

Investment of US$ 567 million in corporate social responsibility in 9M09, of which US$ 413 million was allocated to environmental protection and conservation and US$ 154 million to social projects.

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