1Q11 Results. May 6, 2011. Disclaimer.
May 6, 2011
“This presentation may include statements that present Vale's expectations about future events or results. All statements, when based upon expectations about the future and not on historical facts, involve various risks and uncertainties. Vale cannot guarantee that such statements will prove correct. These risks and uncertainties include factors related to the following: (a) the countries where we operate, especially Brazil and Canada; (b) the global economy; (c) the capital markets; (d) the mining and metals prices and their dependence on global industrial production, which is cyclical by nature; and (e) global competition in the markets in which Vale operates. To obtain further information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission (SEC), the Brazilian Comissão de Valores Mobiliários (CVM), the French Autorité des Marchés Financiers (AMF), and The Stock Exchange of Hong Kong Limited, and in particular the factors discussed under “Forward-Looking Statements” and “Risk Factors” in Vale’s annual report on Form 20-F.”
∆ 1Q11/1Q10in %
An outstanding financial performance performance
The best first quarter ever
Operating income 13.543 6.848 97.8
Adjusted EBIT¹ 6.456 2.062 213.1
Adjusted EBIT margin¹ 48.9% 31.2% +1,770 bps
Adjusted EBITDA¹ 7.663 2.855 168.6
Net earnings 6.826 1.604 325.6
1 figures excluding the gain from the sale of assets of US$ 1.513 billion, a non-recurring event.
Main cost pressures 1Q11 vs. 4Q10
Cyclical / political
¹ Net of volume and FX impacts
Cost and expenses¹
Gain on sale of assets
1 SG&A + COGS + other operating expenses
² Dividends received from affiliated non-consolidated companies
LTM Adjusted EBITDA
Debt cost and maturity
¹ at end of quarter.
² cash and cash equivalent.
Continued growth ahead with a low-risk debt portfolio
Global industrial production
% 3mma, saar¹
¹ Seasonally adjusted annualized rate
Source: Vale and J.P. Morgan
New orders/inventories ratio, sa¹
Global manufacturing PMI, sa¹
¹ Seasonally adjusted
Sources: Vale and JP Morgan
Chinese GDP growth
Both fixed asset investment and industrial production are showing signs of reacceleration in China
FAI and IP growth
¹ Seasonally adjusted annualized rate
Source: Haver Analytics
China’s 12th FYP 2011-2015 – priorities are supportive of the demand for Vale’s iron ore
Targeted affordable housing starts in China of the demand for Vale’s iron ore
Global carbon steel output is running at 1.5 billion metric tons per year, expanding by 7.6% over 4Q10. Although China is the main growth driver with 50%, expansion has broadened.
1 monthly data, on a seasonally adjusted basis.
Sources: Vale and World Steel.
3-month moving average
Iron ore prices continue to hover around a high level in face of strong global demand growth and supply constraints
Platts IODEX 62% Fe
US$/dry metric ton
May 3, 2011
Global SS production reached an all-time high at 8.6 Mt in 1Q11. Fast expansion in consumption expenditures in EM countries will drive long-term demand growth
Global stainless steel output 1
SA quarterly rate of change.
1 seasonally adjusted.
Despite the expansion of NPI/FeNi production, the nickel market remains tight due to the broad based global demand growth
According to analyst estimates, Vale has the highest growth potential among large mining companies
Copper equivalent volume growth (C2010-20, rebased)
Source: J.P. Morgan
Iron ore & pellets potential among large mining companies
From 2011 to 2015, 34 additional major projects will be delivered, contributing to shareholder value creation
Serra Sul (S11D)
Carajás 40 Mtpy
Conceição Itabiritos II
Vargem Grande Itabiritos
CLN 150 Mtpy
Discipline in capital allocation: return on invested capital has returned to the pre-crisis level and it is far above the cost of capital
1 ROIC LTM = return on invested capital for last twelve-month periods.
Strengthening infrastructure has returned to the pre-crisis level and it is far above the cost of capital
Ramping up production has returned to the pre-crisis level and it is far above the cost of capital
Global leadership in iron ore pellets: capacity to reach 80.0 million metric tons by 2014¹
19 pellet plants around the world
Oman 2 plants
Tubarão 7 plants
Samarco 3 plants
To come on stream
¹ 61.8 Mt from wholly-owned and leased plants and 18.2 Mt from affiliated companies (attributable share).
Acquisition of 9% of the Belo Monte hydropower plant project 80.0 million metric tons by 2014¹
¹ cost with electric energy in 2010 was US$ 1.2 billion.
Vale: a global leader 80.0 million metric tons by 2014¹