VALE Q4: Lower Iron Ore Prices Weigh on Earnings, Stock Buyback Renewal And More

by Lekha Gupta Benzinga Editor

VALE S.A. VALE shares are surging on Thursday. On Wednesday, the company reported net operating revenues decline of 22% year over year to $10.124 billion, beating the consensus of $10.117 billion.

Iron ore shipments declined by 9.1 Mt Y/Y due to portfolio optimization focusing on higher-margin products. The average realized iron ore fines price declined 21% Y/Y to $93/t due to lower benchmark prices.

Copper and nickel all-in costs stood at $1,098/t and $13,881/t, respectively—the lowest since fourth-quarter 2020 for copper and since first-quarter of 2022 for nickel.

Proforma EBITDA declined 40% Y/Y to $4.1 billion in the quarter due to a decline in iron ore prices and sales volumes. Adjusted EPS of 20 cents missed the consensus of 43 cents.

Capital expenditure fell 17% Y/Y to $1.77 billion in the quarter. As of December 31, cash and cash equivalent stood at $4.95 billion.

The company approved $1.984 billion in dividends and interest on capital, set for payment in March 2025, representing an annualized dividend yield of 10.4%. Additionally, Vale renewed the share buyback program for 18 months, allowing for the repurchase of up to 120 million shares.

Gustavo Pimenta, CEO, said, "We are pleased to report a strong operational and financial performance in 2024, underscored by the highest iron ore production since 2018 and record copper production at Salobo. Our disciplined approach to cost and operational effeciency has driven significant improvements, with our C1 at US$ 18.8/t in Q4, the lowest level since 2022.”

”Regarding safety and dam management, we have made meaningful progress by eliminating four additional dams in 2024 and completing 57% of our dam decharacterization program. This year, we expect to remove the last dam at emergency level 3. We begin 2025 highly optimistic about our ability to meet our annual targets and advance our strategic priorities."

Outlook: Vale sees iron ore production of 325-335 Mt for FY25 and 340-360 Mt in FY26, driven by project ramp-ups and the start-up of the Serra Sul +20 project.

For 2025, all-in costs are projected to be $53-$57/t, with a further decline to $50-$54/t in 2026. This reduction is owing to lower C1 cash costs, supported by efficiency improvements, increased production, and a shift toward higher-quality products.

Investors can gain exposure to the stock via VanEck Steel ETF SLX and IShares Latin America 40 ETF ILF.

Price Action: VALE sharse are up 3.75% at $10.11 at the last check Thursday.

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