By Jeffrey T. Lewis 
 

SÃO PAULO--Brazilian iron ore giant Vale SA said its net income declined in the third quarter from a year earlier because of the effect of the weaker Brazilian real on dollar-denominated debt.

The company reported a net income of $1.37 billion in the third quarter, compared with net income of $2.24 billion in the same quarter a year ago. Net operating revenue increased to $9.54 billion in the quarter, from $9.05 billion a year earlier. Operating income rose in the quarter, to $3.27 billion, from $3.02 billion in the same period a year earlier.

Vale's sales are benefiting from an increase in demand for higher quality, and higher priced, products, which are cleaner to process. The company is increasing output of them just as the Chinese government is pushing steel plants to cut pollution.

Vale is "a clear beneficiary of high-grade demand, and their position in the market is in the sweet spot," said Christopher LaFemina, an analyst at Jefferies.

The company has been boosting output of pellets, which have a high concentration of iron, and the restart of its São Luis pellet plant helped push pellet production to a new record. Vale also is ramping up output at its giant S11D mine, which produces high-quality iron ore.

Underlying earnings, which Vale says is a better measure of its performance than net income because it excludes exchange rate effects, was little changed at $2.06 billion in the third quarter versus $2.09 billion a year ago.

Adjusted earnings before interest, depreciation and amortization from continuing operations increased to $4.37 billion in the third quarter from $4.19 billion in the same period a year earlier.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

(END) Dow Jones Newswires

October 24, 2018 18:38 ET (22:38 GMT)