Vale Q2 Profit Plunges 84%

(RTTNews) - Brazilian mining giant Vale S.A. (VALE) Wednesday reported an 84 percent decline in profit for the second quarter, amid foreign exchange losses as well as declining minerals and metals prices. The stock fell more than 5 percent in extended trade on the NYSE.

Net earnings for the quarter plunged to $424 million or $0.08 per share from $2.640 billion or $0.52 per share in the previous year. The prior year results included $1.24 billion in reversal of deferred income tax.

Underlying earnings per share were $0.64, while it totaled $0.80 last year. On average, 12 analysts polled by Thomson Reuters expected earnings of $0.42 per share for the quarter. Analysts' estimates typically exclude special items.

Adjusted Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA fell 10 percent to $4.96 billion

Gross operating revenue dropped to $11.277 billion from $12.726 billion. Net operating revenue fell to $11.032 billion from $12.469 billion in the previous year. Analysts expected revenues of $11.32 billion.

Revenues generated from the Bulk materials and Base Metals businesses declined year-over-year.

Revenue from Bulk materials fell 16 percent to $8.031 billion while Base Metals generated $1.699 billion, down 5 percent from last year.

Vale, the world's largest iron ore producer, produced 73.2 million metric tons or Mt of iron ore in the quarter, and sales of iron ore and pellets were 72.123 Mt.

Net foreign exchange losses were $1.96 billion, compared to $1.82 billion last year.

Vale said the depreciation of the Brazilian real generates positive effects on its cash flow, which is the real source of value creation, although with the opposite effect on accounting earnings.

VALE closed up 2 percent at $14.03 on Wednesday, but dropped 5.3 percent in the extended trade.