São Paulo – The depreciation of Brazil’s currency, the real, against the US dollar was the reason given by mining company Vale for posting US$ 3.118 billion in losses in quarter one (Q1) this year. Financial statements issued this Thursday (30th) show that gross revenues also dropped as a result of falling commodity prices. Vale reported US$ 6.3 billion in Q1 revenues, down 34.3% from US$ 9.6 billion in Q1 2014.
In Q1 last year, the corporation had posted a net income of US$ 2.5 billion, which has now turned negative. Vale ascribed the performance to a 20.8% year-on-year drop in value of the real against the dollar. According to the company, in Q1 2014, US$ 1 was worth R$ 2.66. In Q1 this year, US$ 1 was equivalent to R$ 3.21.
The company’s revenues declined due to low prices and lower iron ore and iron ore pellet sales. Vale owns two pelletizing plants in Oman. Output at the unit was higher than in Q1 2014, but lower than in Q4 2014 due to maintenance. This caused pellet sales to go down.
Vale’s Middle East revenues stood at US$ 286 million in Q1 2015, and US$ 338 million in Q1 2014. Revenues reached US$ 566 million in North America, US$ 1.280 billion in South America, US$ 3.013 billion in Asia and US$ 1.127 billion in Europe. The company grossed US$ 86 million in all other destinations combined.
The company’s debt was reduced by US$ 320 million, to US$ 24.487 billion, mostly as a consequence of asset sales, projects and deals. Vale said 2015 will be a year in which to lay the foundation for an “even more competitive, lucrative company” as it cuts more costs and steps up productivity and production volumes. Q1 iron ore production already hit an all-time high at 74.5 million tons, the highest Q1 result ever.
Despite the loss, which the financial market already expected, the company’s shares were slightly down at the São Paulo Stock Exchange (Bovespa) this Thursday. At 12:38 pm, common shares (with voting rights) were selling for R$ 21.03, down 0.38%. Preferred shares were down 1.58% to R$ 16.82.
*Translated by Gabriel Pomerancblum
