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3Q08 Result. Reaching New Records. Rio de Janeiro – October 24 th , 2008. Record Net Profit. Greatest net profit of a Brazilian company in a quarter *. BR GAAP: BRL 12.4 billion. US GAAP: USD 4.8 billion. * In Brazilian Reals BR GAAP.
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3Q08 Result Reaching New Records Rio de Janeiro – October 24th, 2008
Record Net Profit Greatest net profit of a Brazilian company in a quarter * BR GAAP: BRL 12.4 billion US GAAP: USD 4.8 billion * In Brazilian Reals BR GAAP
Net profit record in reais supported by strong fundamentals • Record production • Record operational results: R$ 10,1 billions • Record EBITDA: R$ 11,4 billions • Record investment in 9 months: US$ 6,7 billions • Real depreciation has a positive effect in our profit: R$ 2,8 billions
Production record: Iron ore Pellets Nickel Bauxite Alumina Aluminium Cobalt Thermal coal Sales record: Iron ore and pellets Copper Alumina Cobalt Thermal coal Operational excellence
Financial excellence in achallenging scenario 3Q07 3Q08Δ% Gross revenue 8,124 12,122 49.2 Operational profit 3,430 5,535 61.4 Net profit 2,940 4,821 64.0 EBITDA 4,001 6,374 59.3 In USD millions Record Record Record
+ 10.6 % + 9.4 % Vale’s iron ore and pellet sales Millions of metric tons
Vale is Brazil’s biggest net exporter 70% of the Brazilian trade surplus in 3Q08 USD billion * exports - imports
Vale does not gain or lose with derivatives • Goal is promoting the stability of the US Dollar cash flow • It is forbidden to use directional bids and speculative transactions with derivatives • Use of only simple and non-leveraged derivatives: swaps, forwards and zero cost collars • We control and measure our positions with derivatives every point in time • On September 30th, our position with derivatives marked at market price was USD 32.6 million, representing only 0.08% of the revenue of the last 12 months
Vale’s debt subject to tax swap transactions Debt value in USD Debt value in R$ Debt Interest rate value in R$ Debt reduction USD 180 Fair value variation USD 932 9,697 9,697 9.877 6,092 5,160 913 July 30, 2008 September 30, 2008 ¹ Debt contract in reais (CDI+TJLP) swaped to USD with avarage annual interest rate of 5.18%. ² Market-to-market variation of swap transactions.
Excellent financial position: high liquidity in an illiquidity world • Amount available in cash: USD 15.3 billion • Long term facilities (10 years): approximately USD 10 billion • Medium term facilities (3 years): USD 1.9 billion • Low leveraging: total debt/EBITDA = 1.0x • High index of interest coverage: EBITDA/interest payment = 15.0x • Long indebtedness average term: 9.3 years • Low average debt cost: 5.8% per year
+ 52 % Investment reaches USD 6.7 billion in 9M08 USD millions * * Excludes purchases
+ 52 % Record shareholders return * Second installment of 2008 (US$ 1.6 billion) payment starting at 10/31 In USD millions * Dividends and interests on own capital
Corporate social responsibility is a strategic commitment Socio-environmental investments in 3Q08: US$ 256.5 million Investments US$ million * Includs Vale Inco
GRI Sustainable company • On September 26th, Vale launched its Sustainability Report, for the first time, in the GRI (Global Reporting Initiative) model, and its guidelines on Climate Changes and Carbon • The report complies with the most recent issue of the GRI: G3, level B+, and counts on external verification by KPMG consultancy • Fifty-one economic, social and environmental indicators have been reported, with data relative to the period from 2005 through 2007 • The Goldman Sachs 2008 Report places Vale among the 3 best, in the sector of Mining and Metals, to invest in three categories: ESG performance, Industry Themes and Capital Return
Job creation * Vale’s activities generate 20,000 direct and indirect jobs, in one year * In addition to these direct jobs, approximately 5,000 jobs are created in Vale’s affiliate companies
Vale: the most admired company in Brazil Source: Carta Capital magazine www.vale.com/pressoffice Rio de Janeiro – October 24th, 2008