Vale Summed up Performance in 2Q
OREANDA-NEWS. July 29, 2011. Vale
Our 2Q11 operational and financial performance demonstrates a significant improvement when compared to the previous quarter, and has generated a positive momentum. Given the normalization of our existing operations and the successful ramp up of projects recently delivered against a backdrop of benign seasonal and cyclical factors, we are positioned to obtain even further improvements in Vale's performance.
Revenues and cash generation reached all-time high levels, while operating income, operating margin and net earnings were the highest for a second quarter.
The strong cash generation allows Vale to deal successfully with the trilemma faced by growth companies, which is to satisfy simultaneously the demand for financing investment opportunities, maintain a sound balance sheet and return excess free cash flow to shareholders.
The commitment to discipline in capital allocation and shareholder value creation was evidenced once again by decisions made up to now to return to shareholders a record amount of cash in 2011. The Board of Directors has approved a buyback program of up USD 3.0 billion to be concluded until November 25th,
As a consequence of a Brazilian court decision in a case related to the exemption of Social Contribution tax ("Contribuigao Social sobre o Lucro Liquido"), at a rate of 9% on earnings generated from exports, on July 29, 2011, Vale will make a payment of BRL 5.83 billion, equivalent to approximately USD 3.8 billion, corresponding to the tax obligation due. There will be no impact on net earnings as the value of the tax payment was already provisioned in our books.
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