Investing.com -- Vale SA ADR (NYSE:VALE) reported a $694 million net loss for the fourth quarter, missing expectations and reversing from a strong profit a year earlier, as the Brazilian miner took impairments on some of its Canadian base metals assets. The company also lowered its planned capital expenditures (capex) for the year.
Vale's reported quarterly loss was well below the $1.95 billion profit analysts had forecast in an LSEG poll and a sharp drop from the $2.4 billion profit posted in the same period last year. The decline was largely driven by impairments, including $1.4 billion on its Thompson nickel operations and $540 million on an expansion project at Voisey’s Bay mine in Canada.
However, the iron ore production giant announced new shareholder returns through dividends and a share buyback program, offsetting the profit miss and sending its US-listed shares rising more than 1% in premarket trading Thursday.
Vale said the impairments stemmed from a reassessment of assets at Vale Base Metals, which last month announced it had begun a "strategic review" of its nickel operations in Thompson, including a possible sale.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 41% to $3.79 billion, below the $3.96 billion analysts had expected.
Without the impairments and one-off items, net profit for the quarter would have been $872 million, still down 64% from a year earlier due to weaker iron ore prices and lower sales volumes.
The company declared a dividend of 2.14 reais per share and launched a share buyback program for up to 120 million shares, representing 3% of its outstanding stock, to be executed over 18 months.
Vale’s sales and production report, released last month, showed that iron ore output dropped nearly 5% in the fourth quarter compared to the previous year, as the company focused on higher-margin products. Despite the decline, Vale achieved its highest annual production since 2018.
Fourth-quarter net revenue came in at $10.1 billion, down 22%, roughly in line with expectations.
In a separate filing, Vale reduced its 2025 capital expenditure forecast from $6.5 billion to $5.9 billion, citing lower planned investments in growth and energy-transition metals.
"We expect a positive reaction to today's results," RBC (TSX:RY) Capital Markets analysts commented in a post-earnings note.
"The -9% decrease to 2025 capex guidance will likely lead to consensus upgrades while the new share buyback program should add 3% to the total shareholder distribution for the year," they added.
The analysts said they "expect Vale to re-rate" as the company's free cash flow (FCF) yield bottoms in 2025, before rebounding to above-sector levels in 2026.
Morgan Stanley (NYSE:MS) analysts shared similar comments, expecting Vale stock "to react favorably to 4Q24 results, announced dividends and updated 2025 capex guidance."
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