Vale SA reports 150% EBITDA decline and 47.0 pp EBITDA Margin decline from 30.1% to -16.9%
25/02/2016 • About Vale SA (
$6210) • By InTwits
Vale SA reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Vale SA doesn't have a profitable business model yet: 2015 ROIC is -11.2%
- EBITDA Margin is quite volatile: -16.9% in 2015, 30.1% in 2014, 40.8% in 2013, 24.2% in 2012, 55.9% in 2011
- Vale SA has high CAPEX intensity: 5 year average CAPEX/Revenue was 30.5%. At the same time it's in pair with industry average of 6.1%.
- CAPEX is quite volatile: 1,077 in 2015, 360 in 2014, 489 in 2013, 599 in 2012, 671 in 2011
- The company has unprofitable business model: ROIC is at -11.2%
- It operates with high leverage: Net Debt/EBITDA is 9.5x while industry average is 3.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Vale SA ($6210) key annual financial indicators
| mln. BRL | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 102,019 | 91,269 | 101,490 | 88,275 | 78,057 | -11.6% |
| Gross Profit | 59,567 | 41,437 | 48,979 | 29,189 | 15,278 | -47.7% |
| SG&A | 3,632 | 3,791 | 2,391 | 2,081 | 1,610 | -22.6% |
| EBITDA | 57,054 | 22,056 | 41,391 | 26,540 | -13,215 | -149.8% |
| Net Income | 37,814 | 9,892 | 115 | 954 | -44,212 | -4,732.5% |
Balance Sheet
|
|---|
| Cash | 6,593 | 11,918 | 12,465 | 10,555 | 14,022 | 32.8% |
| Short Term Debt | 2,847 | 7,093 | 4,158 | 3,768 | 9,788 | 159.8% |
| Long Term Debt | 40,225 | 54,763 | 64,819 | 72,749 | 102,878 | 41.4% |
Cash flow
|
|---|
| Capex | 26,311 | 31,070 | 28,548 | 26,346 | 26,931 | 2.2% |
Ratios
|
|---|
| Revenue growth | 22.6% | -10.5% | 11.2% | -13.0% | -11.6% | |
| EBITDA growth | 23.4% | -61.3% | 87.7% | -35.9% | -149.8% | |
| Gross Margin | 58.4% | 45.4% | 48.3% | 33.1% | 19.6% | -13.5% |
| EBITDA Margin | 55.9% | 24.2% | 40.8% | 30.1% | -16.9% | -47.0% |
| Net Income Margin | 37.1% | 10.8% | 0.1% | 1.1% | -56.6% | -57.7% |
| SG&A, % of revenue | 3.6% | 4.2% | 2.4% | 2.4% | 2.1% | -0.3% |
| CAPEX, % of revenue | 25.8% | 34.0% | 28.1% | 29.8% | 34.5% | 4.7% |
| ROIC | 27.1% | 6.7% | 14.8% | 7.3% | -11.2% | -18.5% |
| ROE | 29.6% | 6.7% | 0.1% | 0.6% | -31.9% | -32.5% |
| Net Debt/EBITDA | 0.6x | 2.3x | 1.4x | 2.5x | | -2.5x |
Revenue and profitability
Vale SA's Revenue dropped on 11.6% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 12.1 pp from 23.6% to 35.7% in 2015.
Gross Margin dropped on 13.5 pp from 33.1% to 19.6% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign dropped on 57.7 pp from 1.1% to -56.6% in 2015.
Capital expenditures (CAPEX) and working capital investments
Vale SA's CAPEX/Revenue was 34.5% in 2015. Vale SA's CAPEX/Revenue showed almost no change from 2012 to 2015. For the last three years the average CAPEX/Revenue was 30.8%.
Return on investment
The company operates at negative ROIC (-11.20%) and ROE (-31.86%). ROIC dropped on 18.5 pp from 7.3% to -11.2% in 2015. ROE dropped on 32.5 pp from 0.65% to -31.9% in 2015.
Leverage (Debt)
Debt level is 9.5x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 2.5x from 2.5x to in 2015. Debt surged on 47.2% in 2015 while cash jumped on 32.8% in 2015.
Management team
Murilo Pinto De Oliveira Ferreira is a Vale SA's CEO. Murilo Pinto De Oliveira Ferreira has spent 7 years at the company. Luciano Siani Pires is a Vale SA's CFO. Luciano Siani Pires has spent 6 years at the company.
Appendix 1: Peers in Iron/Steel
Below we provide Vale SA benchmarking against other companies in Iron/Steel industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pan Asia Mining Ltd ($8173) | | 3,079.7% | -17.1% | 48.9% | -97.4% |
| CAA Resources Ltd ($2112) | | 99.6% | 103.2% | 38.0% | |
| Tiangong International Co Ltd ($826) | 32.5% | 0.2% | 8.9% | 33.5% | |
| Da Ming International Holdings Ltd ($1090) | 33.1% | -2.1% | 29.3% | 29.8% | |
| Xiwang Special Steel Co Ltd ($1266) | 58.5% | -19.3% | 2.0% | 22.9% | |
| |
|---|
| Median (19 companies) | 32.8% | -7.7% | -1.1% | -1.7% | -97.4% |
|---|
| Vale SA ($6210) | | -10.5% | 11.2% | -13.0% | -11.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wanguo International Mining Group Ltd ($3939) | 51.1% | 47.4% | 50.7% | 39.6% | |
| China Hanking Holdings Ltd ($3788) | 66.1% | 53.6% | 54.4% | 35.1% | |
| China Metal International Holdings Inc ($319) | 21.0% | 20.9% | 24.3% | 24.8% | |
| Fosun International Ltd ($656) | 18.6% | 18.0% | 20.3% | 23.7% | |
| Xingda International Holdings Ltd ($1899) | 23.4% | 20.4% | 24.8% | 22.8% | |
| |
|---|
| Median (19 companies) | 18.6% | 14.8% | 12.7% | 11.3% | 16.6% |
|---|
| Vale SA ($6210) | 58.4% | 45.4% | 48.3% | 33.1% | 19.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wanguo International Mining Group Ltd ($3939) | 46.5% | 39.7% | 36.2% | 31.3% | |
| China Hanking Holdings Ltd ($3788) | 63.1% | 40.4% | 40.9% | 30.6% | |
| China Metal International Holdings Inc ($319) | 17.8% | 19.7% | 21.3% | 21.0% | |
| Fosun International Ltd ($656) | 15.8% | 16.7% | 23.0% | 20.9% | |
| Tiangong International Co Ltd ($826) | 22.5% | 25.1% | 25.8% | 19.3% | |
| |
|---|
| Median (19 companies) | 7.6% | 12.6% | 11.7% | 7.1% | -346.0% |
|---|
| Vale SA ($6210) | 55.9% | 24.2% | 40.8% | 30.1% | -16.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newton Resources Ltd ($1231) | 690.4% | | 926.9% | 1,395.7% | |
| Wanguo International Mining Group Ltd ($3939) | 13.2% | 24.0% | 39.3% | 32.5% | |
| Xiwang Special Steel Co Ltd ($1266) | 14.9% | 22.6% | 31.5% | 21.5% | |
| Chongqing Iron & Steel Co Ltd ($1053) | 10.8% | 12.5% | 12.0% | 20.9% | |
| China Vanadium Titano - Magnetite Mining Co Ltd ($893) | 14.2% | 8.9% | 10.5% | 20.4% | |
| |
|---|
| Median (19 companies) | 7.3% | 8.3% | 10.5% | 6.4% | 24.4% |
|---|
| Vale SA ($6210) | 25.8% | 34.0% | 28.1% | 29.8% | 34.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wanguo International Mining Group Ltd ($3939) | 74.9% | 38.4% | 24.4% | 15.0% | |
| China Metal International Holdings Inc ($319) | 11.5% | 11.0% | 12.0% | 12.7% | |
| Xiwang Special Steel Co Ltd ($1266) | 33.5% | 7.8% | 8.7% | 11.5% | |
| Tiangong International Co Ltd ($826) | 14.8% | 14.5% | 13.4% | 10.7% | |
| Golik Holdings Ltd ($1118) | 9.0% | 7.0% | 7.4% | 10.0% | |
| |
|---|
| Median (19 companies) | 10.5% | 6.2% | 7.5% | 3.1% | -6.4% |
|---|
| Vale SA ($6210) | 27.1% | 6.7% | 14.8% | 7.3% | -11.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Fosun International Ltd ($656) | 4.6x | 4.4x | 4.8x | 5.5x | |
| Maanshan Iron & Steel Co Ltd ($323) | 5.0x | 55.2x | 7.3x | 5.3x | |
| China Hanking Holdings Ltd ($3788) | 0.3x | 0.4x | 2.5x | 4.7x | |
| China Oriental Group Co Ltd ($581) | 2.4x | 4.6x | 5.3x | 4.5x | |
| Angang Steel Co Ltd ($347) | 6.6x | 21.4x | 4.0x | 4.3x | |
| |
|---|
| Median (13 companies) | 2.2x | 2.1x | 3.0x | 3.2x | |
|---|
| Vale SA ($6210) | 0.6x | 2.3x | 1.4x | 2.5x | |
