CORRECTED-UPDATE 2-Vale vows spending austerity as metals price outlook improves
(Corrects paragraph 21 freight cost savings to $7 instead of $10)
By Jeb Blount and Guillermo Parra-Bernal
RIO DE JANEIRO/SAO PAULO Feb 27 (Reuters) - Vale SA , the world's largest iron ore producer, will continue reining in costs this year even as the outlook for prices and sales volumes is improving, its chief executive officer said on Thursday.
"We plan to continue with austerity," Murilo Ferreira, the company's CEO told investors at a conference call to discuss fourth-quarter earnings.
The company will also continue efforts to sell underperforming units and control investments as it sharpens its business focus on iron ore, responsible for about three-quarters of revenue and nearly all of its profit.
His remarks come as Vale reported a net loss of $6.45 billion in the quarter, its largest since Brazil's government sold control to investors in 1997 and more than twice the shortfall of the year-earlier period. The loss was due to non-recurring events such as a one-time income tax settlement and the write-off of an abandoned potash project in Argentina.
Despite the non-operational losses, Ferreira managed to cut costs, write off bad investments and wring more cash from its mines, railways, processing plants, ports and ships while focusing more on Vale's main iron-ore business.
"Vale is doing a good job controlling costs," said Edmo Chagas, mining company analyst at Grupo BTG Pactual in Rio de Janeiro in a client note.
The company's adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, a measure of the company's ability to generate cash from operations, rose 50 percent in the quarter to $6.64 billion. The result beat the average analyst estimate of $5.85 billion. The EBITDA result was the third-highest in the company's history. Continuación...