Vale SA Net Income surged on 130% in 2016 and Revenue surged on 21.2%
23/02/2017 • About Vale SA (
$6210) • By InTwits
Vale SA reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 38.1% in 2016, -16.9% in 2015, 30.1% in 2014, 40.8% in 2013, 24.2% in 2012
- Vale SA has high CAPEX intensity: 5 year average CAPEX/Revenue was 29.0%. At the same time it's a lot of higher than industry average of 19.0%.
- CAPEX is quite volatile: 1,432 in 2016, 1,594 in 2015, 1,879 in 2014, 3,298 in 2013, 4,912 in 2012
- The company has business model with average profitability: ROIC is at 10.8%
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 | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 91,269 | 101,490 | 88,275 | 78,057 | 94,633 | 21.2% |
| Gross Profit | 41,437 | 48,979 | 29,189 | 15,278 | 33,490 | 119.2% |
| SG&A | 3,791 | 2,391 | 2,081 | 1,610 | 1,367 | -15.1% |
| EBITDA | 22,056 | 41,391 | 26,540 | -13,215 | 36,069 | |
| Net Income | 9,892 | 115 | 954 | -44,212 | 13,312 | |
Balance Sheet
|
|---|
| Cash | 11,918 | 12,465 | 10,555 | 14,022 | 13,891 | -0.9% |
| Short Term Debt | 7,093 | 4,158 | 3,768 | 9,788 | 5,410 | -44.7% |
| Long Term Debt | 54,763 | 64,819 | 72,749 | 102,878 | 90,154 | -12.4% |
Cash flow
|
|---|
| Capex | 31,070 | 28,548 | 26,346 | 26,931 | 17,343 | -35.6% |
Ratios
|
|---|
| Revenue growth | -10.5% | 11.2% | -13.0% | -11.6% | 21.2% | |
| EBITDA growth | -61.3% | 87.7% | -35.9% | -149.8% | -372.9% | |
| Gross Margin | 45.4% | 48.3% | 33.1% | 19.6% | 35.4% | 15.8% |
| EBITDA Margin | 24.2% | 40.8% | 30.1% | -16.9% | 38.1% | 55.0% |
| Net Income Margin | 10.8% | 0.1% | 1.1% | -56.6% | 14.1% | 70.7% |
| SG&A, % of revenue | 4.2% | 2.4% | 2.4% | 2.1% | 1.4% | -0.6% |
| CAPEX, % of revenue | 34.0% | 28.1% | 29.8% | 34.5% | 18.3% | -16.2% |
| ROIC | 6.7% | 14.8% | 7.3% | -11.2% | 10.8% | 22.0% |
| ROE | 6.7% | 0.1% | 0.6% | -31.9% | 10.3% | 42.2% |
| Net Debt/EBITDA | 2.3x | 1.4x | 2.5x | | 2.3x | 2.3x |
Revenue and profitability
The company's Revenue surged on 21.2%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 55.0 pp from -16.9% to 38.1% in 2016.
Gross Margin jumped on 15.8 pp from 19.6% to 35.4% in 2016. SG&A as a % of Revenue decreased slightly on 0.62 pp from 2.1% to 1.4% in 2016.
Net Income marign jumped on 70.7 pp from -56.6% to 14.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 18.3% in 2016. Vale SA's CAPEX/Revenue decreased on 9.8 pp from 28.1% in 2013 to 18.3% in 2016. It's average CAPEX/Revenue for the last three years was 27.6%.
Return on investment
The company operates at low ROIC (10.77%) and ROE (10.30%). ROIC jumped on 22.0 pp from -11.2% to 10.8% in 2016. ROE surged on 42.2 pp from -31.9% to 10.3% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is 2.6x. Net Debt / EBITDA jumped2.3x from to 2.3x in 2016. Debt dropped on 15.2% while cash decreased slightly on 0.94%.
Management team
The company's CEO is Murilo Pinto De Oliveira Ferreira. Murilo Pinto De Oliveira Ferreira has 7 years tenure at the company. The company's CFO is Luciano Siani Pires. Luciano Siani Pires has 6 years tenure 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CAA Resources Ltd ($2112) | 99.6% | 103.2% | 38.0% | 261.2% | |
| Newton Resources Ltd ($1231) | | | -41.6% | 170.9% | |
| Fosun International Ltd ($656) | -8.9% | -1.4% | 21.0% | 27.6% | |
| Wanguo International Mining Group Ltd ($3939) | -1.0% | -11.0% | -16.2% | 0.7% | |
| Da Ming International Holdings Ltd ($1090) | -2.1% | 29.3% | 29.8% | -8.1% | |
| |
|---|
| Median (19 companies) | -8.9% | -1.1% | -1.7% | -21.1% | -86.2% |
|---|
| Vale SA ($6210) | | 11.2% | -13.0% | -11.6% | 21.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Newton Resources Ltd ($1231) | | -223.7% | 15.7% | 37.5% | |
| Wanguo International Mining Group Ltd ($3939) | 47.4% | 50.7% | 39.6% | 29.2% | |
| China Metal International Holdings Inc ($319) | 20.9% | 24.3% | 24.8% | 25.5% | |
| China Hanking Holdings Ltd ($3788) | 53.6% | 54.4% | 35.1% | 23.8% | |
| Fosun International Ltd ($656) | 18.0% | 20.3% | 23.7% | 22.4% | |
| |
|---|
| Median (19 companies) | 14.8% | 12.7% | 11.3% | 8.5% | -16.6% |
|---|
| Vale SA ($6210) | 45.4% | 48.3% | 33.1% | 19.6% | 35.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wanguo International Mining Group Ltd ($3939) | 39.7% | 36.2% | 31.3% | 26.7% | |
| Fosun International Ltd ($656) | 16.7% | 23.0% | 20.9% | 22.2% | |
| China Metal International Holdings Inc ($319) | 19.7% | 21.3% | 21.0% | 22.0% | |
| Xingda International Holdings Ltd ($1899) | 17.3% | 22.2% | 19.1% | 13.6% | |
| Tiangong International Co Ltd ($826) | 25.1% | 25.8% | 19.3% | 11.6% | |
| |
|---|
| Median (19 companies) | 12.6% | 11.7% | 7.1% | 2.1% | 6,443.1% |
|---|
| Vale SA ($6210) | 24.2% | 40.8% | 30.1% | -16.9% | 38.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Newton Resources Ltd ($1231) | | 926.9% | 1,395.7% | 197.0% | |
| China Hanking Holdings Ltd ($3788) | 38.0% | 35.7% | 20.2% | 30.5% | |
| Pan Asia Mining Ltd ($8173) | 1.5% | 0.4% | 2.4% | 24.4% | 7.6% |
| China Vanadium Titano - Magnetite Mining Co Ltd ($893) | 8.9% | 10.5% | 20.4% | 24.1% | |
| Xiwang Special Steel Co Ltd ($1266) | 22.6% | 31.5% | 21.5% | 22.9% | |
| |
|---|
| Median (19 companies) | 8.3% | 10.5% | 6.4% | 7.2% | 7.6% |
|---|
| Vale SA ($6210) | 34.0% | 28.1% | 29.8% | 34.5% | 18.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Metal International Holdings Inc ($319) | 11.0% | 12.0% | 12.7% | 11.4% | |
| Wanguo International Mining Group Ltd ($3939) | 38.4% | 24.4% | 15.0% | 11.1% | |
| Golik Holdings Ltd ($1118) | 7.0% | 7.4% | 10.0% | 10.8% | |
| CAA Resources Ltd ($2112) | 69.2% | 33.5% | 2.2% | 6.9% | |
| Fosun International Ltd ($656) | 6.1% | 7.9% | 6.8% | 6.9% | |
| |
|---|
| Median (19 companies) | 6.2% | 7.5% | 3.1% | -3.0% | 57.1% |
|---|
| Vale SA ($6210) | 6.7% | 14.8% | 7.3% | -11.2% | 10.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Angang Steel Co Ltd ($347) | 21.4x | 4.0x | 4.3x | 29.1x | |
| China Hanking Holdings Ltd ($3788) | 0.4x | 2.5x | 4.7x | 27.3x | |
| Tiangong International Co Ltd ($826) | 2.5x | 3.0x | 3.2x | 6.9x | |
| Fosun International Ltd ($656) | 4.4x | 4.8x | 5.5x | 4.4x | |
| China Oriental Group Co Ltd ($581) | 4.6x | 5.3x | 4.5x | 3.3x | |
| |
|---|
| Median (11 companies) | 2.1x | 3.0x | 3.2x | 2.1x | 6.1x |
|---|
