By Rogerio Jelmayer
SÃO PAULO--Brazilian mining giant Vale SA said profit increased
17.3% in the second quarter, as lower debt-service costs helped to
offset lower revenue in the period, while it announced the sale of
certain assets to present its financial strength.
Vale, the world's largest iron-ore producer, on Thursday
reported a second-quarter net profit of $1.68 billion, up from
$1.43 billion a year ago.
The company's debt-service costs totaled $215 million in the
second quarter, down from $983 million the previous year.
Vale's net revenue dropped 29.7% to $6.96 billion.
Its earnings before interest, taxes, depreciation and
amortization, or Ebitda, tumbled 46.1% in the period to $2.2
billion.
Vale was able to reduce its cost and expenses in the period, to
$4.93 billion, compared with $6 billion in the second quarter of
2014. This reduction also helped Vale to compensate for the drop in
iron ore price in the period.
The company invested a total of $2.1 billion in its operations
in the period, down from $2.47 billion one year ago.
In a separate statement, Vale said it concluded a previously
announced sale of four Valemax ships--each capable of hauling
400,000 tons of iron ore--to China Merchants Energy Shipping Co.
Ltd. for a total of $448 million. Vale said it expects to receive
this amount upon the delivery of the ships expected to take place
in September.
The sale is part of the company's disinvestment plan from
certain noncore assets. In the second quarter, Vale sold four
Valemax ships to China Ocean Shipping Co., or Cosco, for a total
amount of $445 million.
Vale is the world's largest iron-ore producer, and China is the
biggest consumer and Vale's top customer.
In addition, Vale said it agreed to sell a 36.4% stake in its
unit called Minerações Brasileiras Reunidas, or MBR, to an
investment fund for 4 billion Brazilian reais ($1.19 billion).
The stake will be acquired by a fund called Participações
Multisetorial Plus II, which is controlled by Brazil's giant bank
Banco Bradesco SA."This transaction reinforces Vale's commitment to
preserve its financial strength, especially in this moment as it
completes the largest investment program in its history," Vale said
in a statement.
On Thursday morning session, Vale's share was up 5.03% at
BRL15.87 in São Paulo, while the local stock exchange main index,
the Ibovespa, was up 0.52%.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires