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Vale S.A. (VALE - Free Report) reported second-quarter 2024 adjusted earnings per share of 43 cents, which beat the Zacks Consensus Estimate of 38 cents. The bottom line marked a 115% surge from earnings of 20 cents per share reported in the year-ago quarter. The improvement in earnings was attributed to higher iron ore shipments, increased copper sales, as well improved copper and iron ore prices. However, this was somewhat offset by a decline in nickel sales volumes and prices.
Revenues
Net operating revenues were up 3% year over year to around $9.92 billion. The top line missed the Zacks Consensus Estimate of $9.97 billion.
The Iron Solutions segment generated net operating revenues of $8.3 billion, which marked a 7% increase from last year’s comparable quarter. The segment witnessed a 7% improvement in sales volume, attributed to higher production and inventory sales. During the quarter, the S11D mine delivered record production of 19.5 Mt, bolstered by ongoing asset reliability initiatives. Average realized prices for iron ore were up 1%.
The Energy Transition Metals segment’s net operating revenues declined 13% year over year to $1.6 billion. Nickel revenues plunged 31% year over year to $0.64 billion due to a 15% decline in sales volume and a 19% decline in prices. Copper revenues surged 35% to $0.7 billion aided by a 3% improvement in sales volumes and a 32% jump in prices.
In the second quarter, the cost of goods sold was around $6.3 billion, which marked a 7% increase from the year-ago quarter. The gross profit declined 4% year over year to $3.6 billion. The gross margin was 36% compared with 38.6% in the year-ago quarter.
Selling, general and administrative expenditures were down 1% year over year to $137 million. Research and development expenses were $189 million, 15% higher than the year-ago quarter.
Adjusted operating income was $3.2 billion. The figure marked a 1% decline from the year-ago quarter. Adjusted EBITDA was around $4 billion, flat compared with the year-ago quarter.
Pro-forma adjusted EBITDA (including associates and joint ventures and excluding expenses related to Brumadinho) was down 6% year over year to approximately $4 billion. The downfall was mainly due to higher costs and expenses, which were partially offset by improved iron ore sales.
The Iron Solutions segment’s adjusted EBITDA was $3.89 billion, which was 5% lower than the second quarter of 2023, mainly reflecting higher freight costs and the impact of maintenance activities to improve performance in the second half of 2024.
Energy Transition Metals’ EBITDA was down 14% to $407 million compared with $476 million in the year-ago quarter. Copper operations witnessed a 49% year-over-year improvement in adjusted EBITDA to $351 million attributed to increased sales volumes and prices that offset increased maintenance costs of both Salobo and Sossego operations. Adjusted EBITDA for nickel slumped 54% year over year to $108 million due to declining average prices and lower volumes sold.
Balance Sheet & Cash Flows
Vale exited the second quarter with cash and cash equivalents of around $6.48 billion compared with $5 billion at the end of the prior-year quarter. Cash flow generated from operations was $1.2 billion compared with $1.9 billion in the year-ago quarter.
Gross debt and leases at the end of the quarter were $15.1 billion compared with $13.9 billion at the end of the second quarter of 2023.
Other Updates
Vale has recently entered into a partnership to build an iron ore concentration plant in Sohar, Oman. It is expected to start operations in 2027. The plant will have an initial production capacity of 12 Mtpa of high-grade iron ore concentrates, primarily suitable for direct reduction agglomerates, and will feed Vale’s pellet plants and future briquette plants in the region.
The partner will wholly own and operate the plant and Vale will invest in the infrastructure to connect the concentration plant to its agglomeration facilities in the region. This is an important step in Vale’s strategy to develop low-carbon solutions for the steel industry. The company aims to replicate this asset-light investment model for metallics production in the Mega Hubs.
In April, Vale completed a strategic partnership with Manara Minerals, a joint venture between Ma’aden and Saudi Arabia’s Public Investment Fund. Manara invested $2.5 billion for a 10% equity interest in Vale Base Metals Limited (“VBM”), the holding company of Vale’s Energy Transition Metals business.
The Onça Puma nickel mine and the Sossego copper mine resumed operations in June after the Pará State environmental authority reinstated their operating licenses. The Salobo 3 processing plant operations restarted in July, after being suspended for 31 days due to a fire at the conveyor belt.
Price Performance
In the past year, shares of Vale have lost 25.8% compared with the industry’s 25.7% decline.
Teck Resources (TECK - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of 58 cents, which surpassed the Zacks Consensus Estimate of 47 cents by a margin of 23%. The bottom line marked a 37% plunge from earnings of 91 cents per share reported in the year-ago quarter.
Gains from increased copper sales from QB, elevated copper prices and higher steelmaking coal sales volumes were offset by lower steelmaking coal prices. Teck’s earnings were also impacted by increased depreciation expense as it has started taking the depreciation of QB assets into account.
Freeport-McMoRan Inc. (FCX - Free Report) reported adjusted EPS of 46 cents in the second quarter, which topped the Zacks Consensus Estimate of 39 cents. The bottom line was 31% higher than the year-ago quarter’s EPS of 35 cents. Including one-time items, earnings were 42 cents per share, up around 83% from 23 in the year-ago quarter.
Revenues rose roughly 15% year over year to $6,624 million. The figure surpassed the Zacks Consensus Estimate of $5,985.9 million. The company witnessed higher copper and gold prices in the quarter, which helped offset the impact of lower sales volumes.
Southern Copper’s (SCCO - Free Report) second-quarter EPS was $1.23, which marked a 73% improvement year over year. The bottom line beat the Zacks Consensus Estimate of $1.13.
The quarter’s sales were $3.12 billion, 35.5% higher than the year-ago quarter, attributed to higher sales volumes and prices of copper, molybdenum, silver and zinc.
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VALE Q2 Earnings Surpass Estimates, Revenues Increase Y/Y
Vale S.A. (VALE - Free Report) reported second-quarter 2024 adjusted earnings per share of 43 cents, which beat the Zacks Consensus Estimate of 38 cents. The bottom line marked a 115% surge from earnings of 20 cents per share reported in the year-ago quarter. The improvement in earnings was attributed to higher iron ore shipments, increased copper sales, as well improved copper and iron ore prices. However, this was somewhat offset by a decline in nickel sales volumes and prices.
Revenues
Net operating revenues were up 3% year over year to around $9.92 billion. The top line missed the Zacks Consensus Estimate of $9.97 billion.
The Iron Solutions segment generated net operating revenues of $8.3 billion, which marked a 7% increase from last year’s comparable quarter. The segment witnessed a 7% improvement in sales volume, attributed to higher production and inventory sales. During the quarter, the S11D mine delivered record production of 19.5 Mt, bolstered by ongoing asset reliability initiatives. Average realized prices for iron ore were up 1%.
The Energy Transition Metals segment’s net operating revenues declined 13% year over year to $1.6 billion. Nickel revenues plunged 31% year over year to $0.64 billion due to a 15% decline in sales volume and a 19% decline in prices. Copper revenues surged 35% to $0.7 billion aided by a 3% improvement in sales volumes and a 32% jump in prices.
VALE S.A. Price, Consensus and EPS Surprise
VALE S.A. price-consensus-eps-surprise-chart | VALE S.A. Quote
Operating Performance
In the second quarter, the cost of goods sold was around $6.3 billion, which marked a 7% increase from the year-ago quarter. The gross profit declined 4% year over year to $3.6 billion. The gross margin was 36% compared with 38.6% in the year-ago quarter.
Selling, general and administrative expenditures were down 1% year over year to $137 million. Research and development expenses were $189 million, 15% higher than the year-ago quarter.
Adjusted operating income was $3.2 billion. The figure marked a 1% decline from the year-ago quarter. Adjusted EBITDA was around $4 billion, flat compared with the year-ago quarter.
Pro-forma adjusted EBITDA (including associates and joint ventures and excluding expenses related to Brumadinho) was down 6% year over year to approximately $4 billion. The downfall was mainly due to higher costs and expenses, which were partially offset by improved iron ore sales.
The Iron Solutions segment’s adjusted EBITDA was $3.89 billion, which was 5% lower than the second quarter of 2023, mainly reflecting higher freight costs and the impact of maintenance activities to improve performance in the second half of 2024.
Energy Transition Metals’ EBITDA was down 14% to $407 million compared with $476 million in the year-ago quarter. Copper operations witnessed a 49% year-over-year improvement in adjusted EBITDA to $351 million attributed to increased sales volumes and prices that offset increased maintenance costs of both Salobo and Sossego operations. Adjusted EBITDA for nickel slumped 54% year over year to $108 million due to declining average prices and lower volumes sold.
Balance Sheet & Cash Flows
Vale exited the second quarter with cash and cash equivalents of around $6.48 billion compared with $5 billion at the end of the prior-year quarter. Cash flow generated from operations was $1.2 billion compared with $1.9 billion in the year-ago quarter.
Gross debt and leases at the end of the quarter were $15.1 billion compared with $13.9 billion at the end of the second quarter of 2023.
Other Updates
Vale has recently entered into a partnership to build an iron ore concentration plant in Sohar, Oman. It is expected to start operations in 2027. The plant will have an initial production capacity of 12 Mtpa of high-grade iron ore concentrates, primarily suitable for direct reduction agglomerates, and will feed Vale’s pellet plants and future briquette plants in the region.
The partner will wholly own and operate the plant and Vale will invest in the infrastructure to connect the concentration plant to its agglomeration facilities in the region. This is an important step in Vale’s strategy to develop low-carbon solutions for the steel industry. The company aims to replicate this asset-light investment model for metallics production in the Mega Hubs.
In April, Vale completed a strategic partnership with Manara Minerals, a joint venture between Ma’aden and Saudi Arabia’s Public Investment Fund. Manara invested $2.5 billion for a 10% equity interest in Vale Base Metals Limited (“VBM”), the holding company of Vale’s Energy Transition Metals business.
The Onça Puma nickel mine and the Sossego copper mine resumed operations in June after the Pará State environmental authority reinstated their operating licenses. The Salobo 3 processing plant operations restarted in July, after being suspended for 31 days due to a fire at the conveyor belt.
Price Performance
In the past year, shares of Vale have lost 25.8% compared with the industry’s 25.7% decline.
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Zacks Rank
Vale currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Performances
Teck Resources (TECK - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of 58 cents, which surpassed the Zacks Consensus Estimate of 47 cents by a margin of 23%. The bottom line marked a 37% plunge from earnings of 91 cents per share reported in the year-ago quarter.
Gains from increased copper sales from QB, elevated copper prices and higher steelmaking coal sales volumes were offset by lower steelmaking coal prices. Teck’s earnings were also impacted by increased depreciation expense as it has started taking the depreciation of QB assets into account.
Freeport-McMoRan Inc. (FCX - Free Report) reported adjusted EPS of 46 cents in the second quarter, which topped the Zacks Consensus Estimate of 39 cents. The bottom line was 31% higher than the year-ago quarter’s EPS of 35 cents. Including one-time items, earnings were 42 cents per share, up around 83% from 23 in the year-ago quarter.
Revenues rose roughly 15% year over year to $6,624 million. The figure surpassed the Zacks Consensus Estimate of $5,985.9 million. The company witnessed higher copper and gold prices in the quarter, which helped offset the impact of lower sales volumes.
Southern Copper’s (SCCO - Free Report) second-quarter EPS was $1.23, which marked a 73% improvement year over year. The bottom line beat the Zacks Consensus Estimate of $1.13.
The quarter’s sales were $3.12 billion, 35.5% higher than the year-ago quarter, attributed to higher sales volumes and prices of copper, molybdenum, silver and zinc.