VALE'S PERFORMANCE IN 2Q16
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Investor Relations Department
André Figueiredo Carla Albano Miller
Fernando Mascarenhas Andrea Gutman
Bruno Siqueira Claudia Rodrigues Denise Caruncho Mariano Szachtman Renata Capanema
BM&F BOVESPA: VALE3, VALE5 NYSE: VALE, VALE.P
EURONEXT PARIS: VALE3, VALE5 LATIBEX: XVALO, XVALP
Except where otherwise indicated the operational and financial information in this release is based on the consolidated figures in accordance with IFRS and, with the exception of information on investments and behavior of markets, quarterly financial statements are reviewed by the company's independent auditors. The main subsidiaries that are consolidated are the following: Companhia Portuária da Baía de Sepetiba, Compañia Minera Miski Mayo S.A.C., Mineração Corumbaense Reunida S.A., Minerações Brasileiras Reunidas S.A., Salobo Metais S.A., Vale International Holdings GmbH, Vale Canada Holdings Inc., Vale Canada Limited, Vale Fertilizantes S.A., Vale International S.A., Vale Malaysia Minerals Sdn. Bhd., Vale Manganês S.A., Vale Moçambique S.A., Vale Nouvelle-Calédonie S.A.S. and Vale Shipping Holding Pte. Ltd.
Contents
Operating revenues 9
Costs and expenses 11
Adjusted earnings before interest, taxes, depreciation and amortization 14
Net income 15
Investments 23
Free cash flow 29
Debt indicators 30
Performance of the business segments 32
Ferrous minerals 33
Base metals 45
Coal 55
Fertilizer nutrients 59
Conference call and webcast 62
Rio de Janeiro, July 28, 2016 - Vale S.A. (Vale) delivered a sound operational performance in 2Q16, reaching several production records for a second quarter, namely: (i) Carajás iron ore production of 36.5 Mt; (ii) nickel production of 78.5 kt, (iii) copper production of 105.6 kt; and (iv) gold production of 109,000 oz.
Net revenues totaled US$ 6.626 billion in 2Q16, increasing US$ 907 million vs. 1Q16 as a result of higher sales volumes of iron ore fines (US$ 462 million) and higher sales prices for iron ore fines (US$ 129 million) and pellets (US$ 98 million).
Costs and expenses increased to US$ 5.287 billion in 2Q16 from the US$ 4.565 billion recorded in 1Q16, mainly due to the impact of higher sales volumes (US$ 457 million) and exchange rate (US$ 283 million), being partially offset by cost reduction initiatives (US$ 165 million).
Adjusted EBITDA was US$ 2.383 billion in 2Q16, 18.9% higher than in 1Q16 mainly driven by Ferrous Minerals (US$ 398 million) and Base Metals (US$ 47 million). Adjusted EBITDA margin was 36.0% in 2Q16, increasing from the 35.1% recorded in 1Q16.
Adjusted EBITDA amounted to US$ 4.388 billion in 1H16 against US$ 3.585 billion1 in 1H15, increasing US$ 803 million, despite the US$ 860 million decrease in net operating revenues driven by lower sales prices (US$ 1.533 billion). The increase in adjusted EBITDA was mainly driven by our efforts to reduce costs2 (US$ 1.193 billion) and expenses¹² (US$ 564 million).
Capital expenditures totaled US$ 1.368 billion in 2Q16, decreasing by US$ 81 million vs. 1Q16. Investments in project execution totaled US$ 905 million in 2Q16, with expenditures associated with the S11D project accounting for US$ 540 million. Sustaining capex totaled US$ 463 million in 2Q16, decreasing US$ 66 million from the US$ 529 million recorded in 1Q16.
Net income totaled US$ 1.106 billion in 2Q16 vs. US$ 1.776 billion in 1Q16, decreasing US$ 670 million mostly as a result of a US$ 1.038 billion Samarco related provision3. Underlying earnings (after adjusting net income for one-off effects) were US$ 709 million in 2Q16, mainly after the adjustments for exchange rate (US$ 1.960 billion), provision for Samarco liabilities (US$ 1.038 billion) and currencies and interest rate swaps (US$ 483 million).
1 Net of US$ 230 million of the goldstream transaction in 1H15.
2 Net of depreciation
3 For more information on the Samarco related provision, please see the section " Update on Samarco Mineração S.A." of this release.
Vale SA published this content on 28 July 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 28 July 2016 09:06:05 UTC.
Original documenthttp://www.vale.com/EN/investors/information-market/Press-Releases/ReleaseDocuments/2016_2Q _Vale _IFRS _USD_i.pdf
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