UPDATE 3-Brazil's Vale profit falls on lower iron ore prices
(Adds analyst comment, additional Vale results, updates prices)
By Jeb Blount
RIO DE JANEIRO, April 30 (Reuters) - Brazilian miner Vale SA said on Wednesday that first-quarter profit fell by nearly a fifth, a result in line with expectations, after the price of iron ore, its main product, fell sharply.
Net income fell 19 percent to $2.52 billion, compared with $3.11 billion in the same quarter of 2013, according to a securities filing. The result was near the $2.59 billion average estimate in a Reuters survey of 13 analysts and comes after a $6.54 billion fourth-quarter loss.
Vale Chief Executive Officer Murilo Ferreira has been working to slash costs and unload unprofitable businesses for more than a year as a slowdown in Chinese growth limits demand for iron ore and other metals. China, the world's largest steel producer, is the biggest market for iron ore, the main ingredient in steel.
Vale is the world's largest iron ore producer and a major miner of nickel, copper and fertilizers.
The average spot iron ore price in the quarter .IO62-CNI=SI fell 23 percent to $120.43 a tonne from $148.20 a year earlier, according to Steel Intelligence and Thomson Reuters. Worse, in the opinion of analysts, was the lower than expected price Vale received for its ore under contracts with its main clients.
"Vale surprisingly reported iron ore selling prices of only $90.50 dollars a tonne," said Adriano Yamamoto, mining company analyst at UBS AG in Sao Paulo. "As iron ore prices continue their decline, we expected Vale's earnings and share price to come under further pressure in the coming quarters."
Yamamoto had expected Vale to report selling prices of as much as $103 a tonne, or 14 percent more than what Vale actually earned. He says there is risk that Vale shares could extend their 17 percent decline so far this year. Continuación...