Brazilian miner and iron ore producer Vale has announced its financial results for the first quarter this year. The company went from a $1.5 billion net loss in the previous quarter and a $1.64 billion net loss in the same quarter last year to a $239 million net profit in the first quarter of this year. The company’s net revenues in the first quarter this year reached $6.97 billion, down by 30 percent quarter on quarter and by 15 percent year on year. Vale attributed the net profit to the recognition of one-off expenses in the last quarter of the previous year.
Adjusted EBITDA in the first quarter of 2020 was $2.88 billion, down from $3.5 billion in the last quarter of the previous year. The company’s adjusted EBITDA margin in the given period increased to 41 percent from 35 percent in the last quarter of 2019.
Vale stated that the investments presented in the first quarter of this year are expected to decelerate over the year and that the continuity of investments will largely depend on the developments relating to the coronavirus. For that reason and due to the depreciation of the Brazilian currency, it plans to lower its capital expenditure from $5 billion to $4.6 billion this year. Vale also said that it could make additional downward capital spending revisions which should not be considered as savings, as the company may decide to make these expenditures in 2021.
Vale noted that most Chinese steel demand was for long products, coming from the construction sector and that demand for flat products is weak, due to lower global trade and decreasing demand for steel products. However, Vale indicated that it expects the construction sector to compensate for the weakness in the flat steel market, owing to the higher relevance of construction in steel demand.
Vale said it is likely that increased absenteeism due to quarantining measures will affect its production negatively and that it will postpone the restart of idled iron ore mines due to delays in inspections, assessments and authorizations. The company said that there are also uncertainties regarding the recovery level in response to how consumer demand and trade flows will recover, although European manufacturing is expected to restart in May.