Vale Has Record Quarterly Loss on $5.66 Billion Writedowns – by Juan Pablo Spinetto ( – February 27, 2013)

Vale SA (VALE3), the world’s largest iron- ore producer, posted a record quarterly loss after writing down the value of some of its assets. Profit missed analysts’ estimates on an adjusted basis.

Vale posted a fourth-quarter net loss of $2.65 billion, or 51 cents a share, compared with a profit of $4.67 billion, or 91 cents, a year earlier, the Rio de Janeiro-based company said today in a regulatory filing. Earnings before interest, taxes, depreciation and amortization, or adjusted Ebitda, declined to $4.39 billion, missing a $4.79 billion average estimate by 14 analysts compiled by Bloomberg.

Last year brought “big challenges” for the company, Chief Executive Officer Murilo Ferreira said on a conference call with reporters tonight after the report was released.

Ferreira is selling assets, cutting investments and writing down unprofitable projects as falling metal and mineral prices led last year to its lowest annual profit since 2009. The company failed to boost iron-ore output in 2012, ceding its title as the world’s second-largest miner by market value to Rio Tinto Group in October and losing market share to its Australian rivals.

“One of the consequences of the adverse macroeconomic environment was a generalized decline in minerals and metals prices. Iron ore prices became much more volatile, particularly showing large downward volatiliy in the third quarter of the year,” Vale said in the filing, which was released after the close of regular trading in Brazil. “Against this backdrop, our financial performance was negatively affected.”

Onca Puma Writedown

Vale’s quarterly loss includes $5.66 billion in charges after lowering the valuation of its Onca Puma project by $2.85 billion, a $1.03 billion charge on Australian coal assets, $975 million writedown on its Norsk Hydro ASA (NHY) stake, $583 million charge on ThyssenKrupp AG (TKA)’s CSA steel plant.

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