Today we will comment on the results of mining company Vale (VALE3), one of the largest companies on the Brazilian stock exchange, referring to the first quarter of 2022, as well as the announcement of a new share buyback program by the company.
Below is a comment by Rafael Bevilacqua, chief strategist and founding partner of the analysis house Levante Ideias de Investimento, on the subject. Every day, Bevilacqua brings news and reviews of publicly traded companies for you to make the best investment decisions. This content is accessible to subscribers to UOL. O UOL has an exclusive area for those who want to invest their money safely and profit more than with savings. Meet!
Vale has weaker results than expected
The mining company Vale (VALE3) released its results for the first quarter of 2022 on Wednesday (27), after the markets closed. The numbers came in slightly below estimates, reflecting the drop in production in the period.
As already mentioned in the operational preview (production and sales) last week, the company’s sales volume of ore, pellets, nickel and copper fell in the quarter, mainly due to heavy rains at the beginning of the year and problems in the Northern System operations. .
Vale ended the first quarter with net sales revenue of US$ 10.8 billion, lower than the revenue of US$ 13.1 billion reported a year earlier.
The losses resulting from the reduction in the volume produced were partially offset by the appreciation of iron ore in the international market in the period, whose price rose 29% compared to the fourth quarter of 2021.
The mining company’s earnings before interest, taxes, amortization and depreciation (Ebitda) totaled US$ 6.4 billion, which corresponds to a decrease of 7% in relation to the immediately previous quarter.
Finally, Vale’s net income for the period was US$ 4.4 billion, down 18% compared to the first quarter of the previous year.
The macroeconomic scenario remains uncertain, increasing the volatility of the price of iron ore and Vale in the short term. The unfolding of the war in Ukraine brings more uncertainties, but what has been affecting prices the most in recent days is China, which has large cities in lockdown, reducing demand for ore.
I assess that prices should recover with the end of the lockdown and with indications, by the Chinese government, of measures that aim to give greater support to economic growth, mainly in the form of investments in infrastructure.
A positive point worth mentioning is the announcement of a new share buyback program by Vale. The mining company will be able to buy up to 500 million shares in the next 18 months, which represent around 10% of the number of VALE3 shares in circulation.
The share buyback is seen by the market as a sign of Vale’s confidence in its own potential, which assesses that assets are cheap at the moment.
On Thursday (28), Vale’s shares closed up 2.47%, quoted at R$ 84.20.
