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2010 Results

2010 Results. February 25, 2011. Disclaimer.

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2010 Results

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  1. 2010 Results February 25, 2011

  2. Disclaimer “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.”

  3. Agenda • An extraordinary performance • A promising outlook

  4. An extraordinary performance

  5. An outstanding operational performance All-time high production 2010Mt YoY% • Iron ore 308.0 29.4 • Pellets 49.0 105.4 • Coal 6.9 27.1 • Bauxite 14.3 15.0 • Carajás surpassed the 100 Mtpy threshold for the first time: 101.1 Mt in 2010 • Strong recovery in nickel output: 2H10 / 1H10 = + 58.0% 2H10 / 2H09 = + 73.0%

  6. An outstanding financial performance 2010US$ billion 2008US$ billion ∆% All-time high figures Revenues 45.293 37.426 21.0% EBIT 21.695 15.698 38.2% EBIT margin 47.9% 41.9% +600 bps EBITDA 26.116 19.018 37.3% Net earnings 17.264 13.218 30.6% • Net earnings highest ever in the mining industry

  7. Financial performance in 2H10: Vale #1 among peers1 EBIT EBITDA US$ 17.7 billion US$ 15.0 billion EBIT margin Net earnings US$ 12.0 billion 51.7% 1 Peer group includes BHP Billiton, Rio Tinto, Xstrata and Anglo American. Source: Companies reports

  8. Allocating capital to create value Capital allocation Other Divestitures Asset liability management2 Capex Acquisitions Operational cash flow1 Total Return of capital to shareholders 1 Net of interest and taxes. 2 Debt increase and reduction of cash and short-term investments.

  9. Continuing to build up our growth platform guided by a long-term view of minerals and metals fundamentals Investments US$ billion 19.4 12.7 10.3

  10. Six new projects delivered in 2010 • Iron ore Carajás Additional 20 Mtpy 20 Mtpy • Pellets Oman 9.0 Mtpy • Nickel Onça Puma 53,000 tpy • Copper Tres Valles 18,500 tpy • Phosphate rock Bayóvar 3.9 Mtpy • Steel TKCSA 5.0 Mtpy1 1 8.5 Mtpy of iron ore & pellets.

  11. Projects recently approved by the Board of Directors1 Capex US$ billion • Iron ore Carajás Serra Sul S11D 90 Mtpy 6.776 • Iron ore Carajás Additional 40 Mtpy 40 Mtpy2 2.9682 • Iron ore Simandou phase 1 15 Mtpy 1.260 • Iron ore3 Teluk Rubiah 30 Mtpy 1.371 (mine + processing plant) 1 November 2010 to January 20112 Approval refers to capacity increase to 40 Mtpy from 30 Mtpy, adding US$ 490 million to total capex.3 Distribution center for handling up to 30 Mtpy of iron ore.

  12. Iron ore & pellets Nickel Coal Copper Fertilizers Logistics Energy Steel From 2011 to 2015, 33 major projects will be delivered, contributing to significant shareholder value creation CSU Greenfield CSP Biofuels Salitre Cristalino Teluk Rubiah Karebbe Long-Harbour Simandou I Estreito ALPA Nacala Serra Leste Apolo Salobo Konkola North Tubarão VIII Moatize Serra Sul (S11D) Ellensfield Rio Colorado 2011 2012 2013 2014 2015 Carajás 40 Mtpy Conceição Itabiritos Conceição Itabiritos II Totten Vargem Grande Itabiritos Bayovar II CLN S11D CLN 150 Mtpy Cauê Itabiritos Simandou II Moatize II Brownfield Salobo II

  13. Vale: # 1 in shareholder value creation among large mining companies TSR 10yr¹ 2001-2010 TSR 5yr¹ 2006-2010 Source: Bloomberg ¹ In US$

  14. Maintaining a sound balance sheet with a low-risk debt portfolio Total debt Debt cost and maturity ¹,² % Years 9.6 5.5 9.1 4.9 ¹ at end of quarter. ² cash and cash equivalent.

  15. A promising outlook

  16. After a mid-year soft patch, global IP growth is reaccelerating, adding strength to the demand for minerals and metals Global industrial production % 3mma, saar¹ ¹ Seasonally adjusted annualized rate Source: Vale and J.P. Morgan

  17. Leading indicators are signaling the continuation of IP growth in the near future Global PMI, sa¹ New orders/Inventories ratio, sa¹ ¹ Seasonally adjusted Sources: Vale and JP Morgan

  18. Global growth is supported by strong fundamentals • Global accommodative monetary policy. • Fast growing consumption expenditures – emerging economies and the US. • Recovery of corporate investment. • Geographical broadening of growth => DE recovery enhances EM growth sustainability. • Sectorial broadening of growth => recovery of services sector reinforces IP growth sustainability.

  19. Headline inflation indices will continue to reflect the temporary effect of energy and food prices rises, which are not capable of changing inflationary trend Global monthly inflation CPI % m/m Average 2000-2010 Source: Haver Analytics

  20. Global economy is expected to grow at an above-trend pace in the short-term Global real GDP growth rate1 %y/y 1 Purchasing power parity basis Source: IMF, Vale Forecast Long-term trend

  21. Global carbon steel output has regained momentum, following the growth path of global IP. It has already surpassed the previous peak Global China 1.49 billion Obs: annualized monthly data, seasonally adjusted. Sources: Vale and World Steel Association 3 month moving average

  22. Strong steel production growth and a tight supply of iron ore underpin iron ore price increase Platts IODEX¹ US$/metric ton 189.5 ¹ Platts Iron Ore Index, 62% Fe content Fonte: Platts

  23. In face of a tight supply of iron ore, China has been accessing an increasing number of small-scale suppliers Share of large scale suppliers1 in Chinese imports 2000-2010 Number of countries exporting iron ore to China 2000-2010 1 : Brazil, Australia and India

  24. Iron ore supply is likely to remain tight over the next couple of years India exports to China are losing ground • No major projects coming on stream. • Capacity must increase to meet repletion. • Chinese production failed to accelerate. • Indian exports losing steam.

  25. The increase in relative scarcity of iron units is driving an upward long-term trend for iron ore prices 1900 - 2010 ¹ prices in 1998 US$/ton, deflated by the CPI, log scale. Sources: USGS and Vale

  26. Global stainless steel production reached 7.8 Mt in 4Q10, implying a 23.4% growth in 2010, its highest ever recorded annual expansion Global stainless steel production Obs: quarterly data, seasonally adjusted. Source: Vale Quarterly growth rate, sa

  27. Nickel price behavior is mostly reflecting a strong demand stemming from both SS and non-SS applications Inventories Nickel prices Source: Bloomberg

  28. Differently from steel and copper, nickel intensity of EM is still converging to the level of advanced economies, indicating a high growth potential Nickel consumption intensity kilos / US$ million of real GDP Source: WBMS, IMF and Vale

  29. Copper prices reaching all-time highs against a backdrop of strong demand and structural supply constraints Inventories Copper prices Source: Bloomberg

  30. The surge in grain prices has raised farming profitability, stimulating the recovery in fertilizer demand Corn US$/bushel Soybeans US$/bushel Source: Bloomberg

  31. Potash prices are rallying from the lows of mid-2010 Monthly average potash prices1 US$/metric ton ¹ Fob Vancouver Source: Vale and Fertilizer Week

  32. Vale: a global leader

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