Vale To Report Q4 Earnings: What's In The Offing?

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Vale S.A. (VALE - Free Report) is scheduled to report fourth-quarter 2023 results on Feb 22, after the closing bell.

Q4 Estimates

The Zacks Consensus Estimate for Vale’s fourth-quarter sales is pegged at $12.95 billion, indicating an 8.4% increase from the year-ago quarter's reported figure.

The consensus mark for earnings has moved up 16% over the past 30 days and is pegged at $1.04 per share. The figure suggests 27% growth from the year-ago quarter's reported number.

Q3 Results

In the last reported quarter, Vale witnessed a year-over-year decline in earnings per share despite higher revenues, mainly due to higher costs and expenses. The company’s top and bottom line, however, beat the Zacks Consensus Estimate.

In the last four quarters, VALE has missed the consensus estimate in two occasions and beat the mark in the other two quarters. The company has an average surprise of negative 12.99% in the trailing four quarters.

VALE S.A. Price and EPS Surprise

VALE S.A. Price and EPS Surprise

VALE S.A. price-eps-surprise | VALE S.A. Quote

Factors to Note

Vale recently provided a fourth-quarter 2023 production update, which can indicate how the company is likely to fare in the to-be-reported quarter. Iron ore production was around 89.4 Mt in the quarter, which was up 11% year over year.The figure came in higher than the Zacks Consensus Estimate of 83 Mt.
Iron ore fines and pellet sales were flat compared with the year-ago quarter at 88.2 Mt in the fourth quarter. The company also reported that the average realized iron ore fines price was $118.3 per ton in the fourth quarter, up 23.7% year over year, mainly due to higher benchmark iron ore prices and a positive impact from forward price adjustments.

The Iron Solutions segment accounts for around 93% of Vale’s revenues. The Zacks Consensus Estimate for iron ore revenues for the to-be-reported quarter is around $9.16 billion, indicating 18% growth year over year, reflecting the higher prices. The consensus mark for pellets revenues is $1.6 billion, suggesting 10% growth from the year-ago quarter.

Nickel sales were down 17.7% year over year to 47.9 kt. This was mainly due to lower production as the segment bore the impact of the ongoing transitioning of Voisey’s Bay mine to underground operations as well as the planned furnace rebuild at Onça Puma. The figure was higher than the consensus estimate of 45 kt. Average realized nickel prices declined 24.7% year over year to $18,420 per ton due to lower LME prices. The Zacks Consensus Estimate for nickel revenues for the quarter is $767 million.

Vale sold 97.5 kt of copper, in which was 26% higher than the last year’s quarter. The figure also surpassed the Zacks Consensus Estimate of 69 kt.

The average realized price for copper operations only (Salobo and Sossego) was $7,941 per ton for the quarter, down 9.5% year over year. The average realized copper price for all operations (including copper sales originating from nickel operations) was $7,867 per ton in the fourth quarter of 2023. The consensus estimate for copper revenues is $1.03 billion.

Overall, Vale’s revenues in the fourth quarter are likely to have reflected the improvement in iron ore prices and improved copper volumes. This is expected to have been partially offset by lower nickel sales volume and nickel prices as well as the year-over-year dip in copper prices.

The company has been facing higher input costs, particularly diesel and freight costs in the past few quarters. This is likely to have weighed on its margins in the quarter to be reported. However, cost-control efforts are expected to have negated some of this impact.

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