there is something seriously wrong with the way the markets are working when a company can report massive revenue and profit growth, and it is called a MISS by the STREET!?????
Brazil miner Vale profit soars on new iron pricing
*
Vale S.A.
VALE.N
$27.56
-0.22-0.79%
12:00am EDT
Vale S.A.
VALE5.SA
R$ 42.42
-0.10-0.24%
8:13am EDT
BHP Billiton Limited
BHP.AX
$40.12
-0.34-0.84%
12:00am EDT
Thu Jul 29, 2010 7:28pm EDT
* Vale earnings soar on 344 pct on higher iron prices
* Quarterly pricing system boosts revenues
* Iron production up 32 pct over year earlier
(Recasts, adds details, background)
By Brian Ellsworth and Denise Luna
RIO DE JANEIRO, July 29 (Reuters) - Brazilian mining giant
Vale's second-quarter profits soared more than four-fold from a
year earlier on higher iron prices and a new pricing system
that let the company get higher prices for its ore.
Vale (VALE.N)(VALE5.SA), the world's largest iron ore
producer, in the second quarter boosted prices for its ore by
moving to a quarterly pricing system after the aging annual
benchmark mechanism unraveled amid quarrels with China -- the
world's largest buyer of the metal.
"The implementation of the quarterly system of prices for
iron ore and pellets was reflected in the revenues of the
second quarter of 2010," the company said in a statement.
Global iron prices are now mostly set each quarter based on
the spot prices of the previous three months. Spot market iron
prices .IO62-CNI=SI topped $180 per tonne earlier this year
but have fallen to near $135 as concerns about global growth
pushed commodities down.
The benchmark system, in which steelmakers agreed on iron
prices with top global miners Vale, BHP Billiton (BHP.AX) and
Rio Tinto (RIO.AX), collapsed after the rise of a spot market
spurred by Chinese buyers.
With the two existing side-by-side, speculators for months
were able to buy cheap ore on the benchmark and resell it on
the spot market, costing the miners billions of dollars and
spurring Vale's charge to move toward quarterly pricing.
Benchmark talks unraveled in 2009 after China arrested,
and later convicted, Rio Tinto employees on charges of
accepting bribes and stealing state secrets.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For details on Vale's Q2 production click: [ID:nN29217312]
For a graphic on Vale iron ore production click:
link.reuters.com/gup72k
For a graphic on iron ore, click:
link.reuters.com/zed75j
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Profit jumped to 6.64 billion reais ($3.77 billion), an
increase of 344 percent from 1.49 billion reais in the same
period a year earlier, roughly in line with the average
forecast of six analysts polled by Reuters showing profits of
$3.83 billion.
Earnings before interest, taxes, depreciation and
amortization, a key cash-generation indicator known as EBITDA,
rose 203 percent to 10.43 billion reais, versus the year
earlier period.
Average sale prices for iron ore -- a key indicator watched
by investors -- was $91.93 per metric tonne, compared to $64.76
in the first quarter and $55.86 in the fourth quarter of 2009.
Iron ore production rose around 32 percent to 75.9 tonnes
as Vale was able to restart operations that had been stalled in
2009 in the wake of the global financial crisis.
New projects in the pipeline include a 30 tonne per annum
expansion of the Carajas mine slated for the first half of 2012
and the Carajas Serra Sul project with capacity to produce 90
million tonnes per year with expected startup in the second
half of 2013.
Nickel production fell 37 percent over the previous year
due to a strike by workers at Vale's Inco unit in Canada that
continued through the second quarter.
Workers at the Sudbury and Port Colborne nickel operations
ended a strike in July, though the company has not reached a
deal with workers at the Voisey's Bay facility.
On Thursday Vale said it plans to pay up to 2 billion reais
($1.13 billion) to buy out copper smelter Paranapanema
(PMAM3.SA) as part of plans to diversify its sources of
revenue. [ID:nN29193522]
(Additional reporting by Guillermo Parra-Bernal; Editing by
David Gregorio) |
