Vale S.A.
VALE
reported fourth-quarter 2021 adjusted earnings per share of $1.42, which surpassed the Zacks Consensus Estimate of 85 cents. The bottom line improved 30% from $1.09 in the prior-year quarter.
Including one-time items, earnings in the quarter was $1.07 compared with 14 cents in the year-ago quarter.
Revenues
Net operating revenues declined 10.5% year over year to around $13.1 billion. The top line surpassed the Zacks Consensus Estimate of $12.98 billion.
VALE S.A. Price, Consensus and EPS Surprise
VALE S.A. price-consensus-eps-surprise-chart
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VALE S.A. Quote
Net operating revenues from Ferrous Minerals declined 11% year over year to $10.8 billion primarily due to lower iron ore prices. Base Metals’ net operating revenues dipped 2% to $2.2 billion as the impact of higher copper and nickel prices was offset by lower sales volume.
Operating Performance
In fourth-quarter 2021, cost of goods sold totaled $6.5 billion, up 22% year over year. Gross profit plunged 29% year over year to $6.6 billion. Gross margin was 50.4% compared with 63.6% in the prior-year quarter.
Selling, general and administrative expenditure inched up 1% year over year to $131 million. Research and evaluation expenses climbed 19% to $177 million from the year-ago quarter.
Adjusted operating income was $3.9 billion in the reported quarter, reflecting growth of 5.7% from the prior-year quarter. Adjusted EBITDA was $4.7 billion in the reported quarter compared with $4.5 billion in the prior-year quarter.
Pro-forma adjusted EBITDA (excluding expenses related to Brumadinho and COVID-19) slumped 24% year over year to $6.96 billion.
Ferrous Minerals’ EBITDA was $6.4 billion, reflecting a 28% decline from the last-year quarter. Base Metals EBITDA slumped 31% to $811 million from the last-year quarter.
Balance Sheet & Cash Flow
Vale exited 2021 with cash and cash equivalents of $11.7 billion compared with $13.5 billion at the end of the last year. Cash flow from operations was $33.4 billion compared with $18.9 billion in 2020.
Gross debt at the quarter-end was $12.2 billion compared with $13.4 billion at the end of the last year.
2021 Results
Vale’s adjusted earnings per share in 2021 was $5.40, beating the Zacks Consensus Estimate of $4.16. Including one-time items, earnings was $4.47 in 2021 compared with 95 cents in 2020. Sales surged 38% year over year to $54.5 billion, which surpassed the Zacks Consensus Estimate of $54.1 billion.
Outlook
Vale expects the ongoing progress in global vaccination and the less-harmful effects of new variants to lead to further opening of economies. World steel production is anticipated to increase on the back of pent-up demand and rising business and consumer confidence. Rising inflation and deceleration in China, however, remain a headwind. Barring China, both the construction and automotive sectors will bolster steel demand. This will continue to support iron ore demand.
For nickel, growth in stainless steel production and a shift toward the electrification of the world economies will continue to support demand for the metal. The copper market is expected to ride on robust demand and persisting supply issues.
Price Performance
In the past year, shares of Vale have gained 1.8%, compared with the
industry
’s growth of 1.7%.
Image Source: Zacks Investment Research
Zacks Rank & Other Stocks to Consider
Vale currently sports a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here
Some other top-ranked stocks in the basic materials space include
Commercial Metals Company
CMC
,
AdvanSix Inc.
ASIX
and
Allegheny Technologies Incorporated
ATI
. All of these stocks carry a Zacks Rank #1 at present.
Commercial Metals has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC’s current fiscal year earnings has been revised upward by 23% in the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 13.1%. CMC’s shares have surged around 38% in a year.
AdvanSix has an expected earnings growth rate of 14.6% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised upward by 9.7% in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 23.6%. ASIX has appreciated around 33% in a year.
Allegheny has an expected earnings growth rate of 661.5% for the current year. The Zacks Consensus Estimate for ATI’s current-year earnings has been revised upward by 45.6% in the past 60 days.
Allegheny beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 127.2%. ATI has rallied around 22% over a year.
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