(Image: Reuters/Adriano Machado)
Vale (Vale3) shares retreated more than 2% on Friday (25), after the company reported a balance of the first quarter in part evaluated as weak. Analysts follow with the recommendation of purchase or maintenance of the papers.
The company dropped 17% in net income, at $ 1.39 billion, slightly below expected. Company’s adjusted EBITDA retreated 9%, $ 3.11 billion, while net sales revenue was low of 4%to US $ 8.11 billion.
Analysts already expected a slightly weaker result – with the drop in the price of iron ore weighing on the revenue – After the production and sales report.
However, the cash generation in the period It turned out to be a negative surprise. The fear of part of the market, analysts say, is that this can impact dividends.
“The moment is not the best, but the current level is interesting, offering a safety margin and making room for positive surprises,” said Empiricus Research analyst Ruy Hungary.
“This is not a high growth thesis, but a Investment with attractive yield“.
What happened with Vale cash flow
In the annual comparison, Vale Free Cash Flow (FCF) fell 78%, mainly due to the Worse in working capitalwhich consumed about $ 250 million – reversing the positive contribution of US $ 1.5 billion registered in the first quarter of 2024.
The reversal was caused by lower cash conversion from the energy alliance, seasonal factors such as bonus and inventory recompositionin addition to the payment of US $ 2 billion in dividends and JCP. Despite the $ 670 million net capture, liquid cash dropped $ 1.1 billion in the quarter.
Genius investments said that the main differential in relation to its projections was the Capex below expectedwhich totaled US $ 1.2 billion, a 14.3% reduction compared to the broker’s estimate. This smaller disbursement helped preserve the operational cash.
“This difference may be related to a slower pace in investments in ongoing projects, such as Serra Sul +20, Shark and Crusher of Compact S11D, which follow physically advancing, with 73%, 96% and 69% of progress, respectively,” he said.
The genius sees Vale3 as discounted action, maintains purchase recommendation and target price of R $ 61.50, with a potential of 11.2%.
XP Investimentos maintains a neutral recommendation For Vale actions, indicating that, despite the potential for valuing actions, it is not very high, there are factors that can contribute to relatively good performance in the short term.
What was positive
XP points out that Vale has shown positive performance in its Energy Transition Divisionreflected by higher prices made and revenues of by -products in the copper division.
In addition, the recovery of results in the nickel division should also contribute to a better performance of the company.
Another positive point is the good cost control In iron ore solutions, with cost C1/T (production cost per ton) falling to US $ 21.0/t, which represents a 4% reduction compared to XP expectations and a 11% drop compared to the same period last year.
Also valid reiterated Guidance to 2025maintaining the C1 production cost forecast between US $ 20.5-22.0/t, which is considered competitive, as the cost was $ 23.1/t in the first trimester of 2025, a 7% reduction compared to last year, said XP.
Bradesco BBI says that the recent joint venture alliance energy, from which Vale should receive $ 1 billion by the end of the year, should contribute to the company from which keep your net debt closer to the midpoint of the target track of $ 10 to 20 billion.
This is seen as a positive factor for the company cash flow and, consequently, for your assessment.
The bank reaffirmed the purchase recommendation for the actions of the mining company.
Trade war
Vale closely monitors business war issues, but has no relevant impacts on operations and sales at this time, the mining president, Gustavo Pimenta, said on Friday, during a teleconference to comment on the company’s results.
Mining executives also commented that they consider it early to talk about impacts of commercial disputes on iron ore prices, in the face of uncertainties.
An executive of the company said in the teleconference that if China decides to encourage the domestic industry, which is possible in an eventually weaker global market, much exported steel can be destined to the Chinese market.
According to comments made by executives in the teleconference with analysts and investors, Vale evaluates that this is not the time to discuss extraordinary dividends, considering uncertainties.
*With information from Reuters
Source: Moneytimes
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