By Paul Kiernan 

RIO DE JANEIRO -- Brazilian mining giant Vale SA reported a sharp drop in its earnings during the second quarter despite record iron-ore production, as asset write-downs, higher costs and financial losses weighed on its bottom line.

Vale, the world's largest iron-ore producer, said its net profit fell to $16 million, down from $1.11 billion in the second-quarter of 2016.

The company's revenue rose 17% in the quarter to $7.24 billion amid higher prices for iron ore and increased sales of other minerals like copper and coal. Adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 16% to $2.73 billion, Vale said.

But Vale, which is located thousands of miles away from its main iron-ore market in China, suffered from sharply higher freight costs in the April-to-June period. Its derivatives on commodities, currencies and interest rates, after bringing in a hefty profit a year earlier, produced a loss in the second quarter, as did currency fluctuations.

Vale also recorded asset write-downs of $414 million related to discontinued operations, such as fertilizer assets sold in December in exchange for shares of The Mosaic Co., which fell during the second quarter.

Write to Paul Kiernan at paul.kiernan@wsj.com

 

(END) Dow Jones Newswires

July 27, 2017 08:29 ET (12:29 GMT)

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