April 25, 2012 / 12:37 AM / 8 years ago

Vale Q1 net seen falling 45 pct on prices, volumes

* Company to announce Q1 results late Wednesday

* Vale sales volumes hurt by rains and “force majeure”

* Iron ore price fell by a fifth from a year earlier

By Jeb Blount and Sabrina Lorenzi

RIO DE JANEIRO, April 24 (Reuters) - First-quarter profit at Vale, the world’s biggest iron-ore producer, likely fell by nearly half from a year earlier due to lower prices for its main products, heavy rain and spending on new mines, analysts surveyed by Reuters said.

The Rio de Janeiro-based company is expected to announce late Wednesday net income of $3.8 billion for the quarter ending March 31, according to the average estimate of six analysts surveyed by Reuters. That’s 45 percent less than the same quarter in 2011 and 19 percent less than in the previous quarter.

The impact of heavy rains on Vale’s mines and railways forced the company to declare “force majeure” on Jan. 11, allowing it to break supply contracts. The rains helped cut iron ore shipments by 2.3 percent, or 1.6 million tonnes in the quarter, Vale said.

The decline in earnings “reflects a combination of historically heavier-than-normal rains, a railway bridge accident and increased costs related to the beginning of operations of new projects,” said Marcelo Aguiar, metals and mining analyst with Goldman Sachs in Sao Paulo.

T hose projects include the Goro nickel mine on the French Pacific Island of New Caledonia and expansion of the Moatize coal mine in Mozambique. Goro is expected to become the world’s largest nickel mine. Moatize is the largest coal project in the Southern Hemisphere.

Meanwhile the price of the company’s main products fell. The average price of iron ore on the spot market, which is used to adjust prices on 85 percent of the company’s sales, IODBZ00-PLT fell by a fifth to an average of $143.46 a tonne in the quarter from a year earlier.

Nickel fell 27 percent to an average $19,709 a tonne and copper fell 13 percent to 8,329 a tonne.

Net sales are seen falling 3.9 percent to $12.7 billion. Adjusted Ebitda, or earnings before interest, taxes, depreciation and amortization, are expected to fall 35 percent to $5.9 billion, according to the analyst survey.

The figures represent a fall of 12 percent in sales compared with the fourth quarter and a drop in adjusted Ebitda of 20 percent over the same period.

Vale adjusts its Ebitda figure to exclude currency variations, profits from share holdings and joint ventures not consolidated on its balance sheet and other factors.

================================================================ VALE REVENUE EBITDA EBITDA NET INCOME (VALE5.SA) (ADJUSTED) MARGIN (%) =============================================================== Q1 2012 (E) $12.7 bln $5.9 bln 46.6 pct $3.8 bln Q1 2011 $13.2 bln $9.2 bln 69.5 pct $6.8 bln (y/y pct) -3.9 pct -35.4 pct n.a. -44.9 pct Q4 2011 $14.4 bln $7.4 bln 51.3 pct $4.7 bln (q/q pct) -12.0 pct -19.9 pct n.a. -19.4 pct ================================================================

Reporting By Jeb Blount and Sabrina Lorenzi. Editing by Paulo Prada and Richard Pullin

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