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Cyclical factors explain 54% drop in Vale’s profits

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Vale reported a net profit of R$39.9 billion in 2023, a decrease of almost 54% compared to 2022, according to figures released by the company on Thursday evening (22). The result was determined by cyclical factors, but the company’s fundamentals remain solid, and this assessment was recognized by investment bank analysts in the hours following the release of the results. Valor explains the reasons for the fall in profits and the company’s prospects:Why did Vale’s profit fall?Vale, the country’s largest mining company and one of the largest in the world, reported a 53.6% drop in profits in 2023 compared to the previous year, to R$39.9 billion, the company said on Thursday evening (22). In 2022, the company’s profit had been R$86.1 billion.The company attributed last year’s drop in profit mainly to lower average realized prices and the negative impact of foreign exchange losses.ProvisionsIn the fourth quarter of 2023, Vale made a provision of $1.2 billion in the balance sheet for the commitment of the Renova Foundation and a possible global settlement of the Mariana tragedy, in the state of Minas Gerais, in 2015. The provision was one of the factors that negatively impacted Vale’s earnings in the fourth quarter of last year compared to the previous quarter.From October to December 2023, the mining company’s profit stood at R$11.98 billion, down 7.8% from the same period in 2022.TaxesVale also reported an increase in taxable income in the fourth quarter of 2023, amounting to $1.5 billion, compared to the third quarter of last year, which also affected the mining company’s bottom line.DebtThe provision resulted in an increase in the company’s...

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