Votorantim Metais' core earnings up by 74% in Q1

Votorantim Metais' (VM) core earnings jumped 74% year-on-year in the first quarter of 2014, on higher aluminium and zinc operating margins and depreciation of the Brazilian real, the company said.

Votorantim Metais' (VM) core earnings jumped 74% year-on-year in the first quarter of 2014, on higher aluminium and zinc operating margins and depreciation of the Brazilian real, the company said.

Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) were 431 million Reais ($194.4 million) from January to March, compared with 248 million reais in the corresponding period of 2013.

Ebitda for aluminium operations almost doubled year-on-year, reaching 220 million reais in the first quarter of 2014, compared with 113 million reais a year earlier.

The increase of aluminium core earnings reflects “the improved sales mix, resulting in higher sales prices following the strategy of focusing on the Brazilian market, and to surplus energy sales,” the Brazilian company said on Tuesday May 20.

The company has “reduced primary aluminium production in the first quarter” in face of slower exports and it has been selling the “small surplus” of energy in the Brazilian market, João Miranda, ceo of Votorantim Industrial – parent group of VM – said in a conference call with analysts.

VM sold 92,000 tonnes of aluminium from January to March 2014, compared with 96,000 tonnes a year before. The company focused on higher value-added products in the Brazilian market during the period, and saw domestic sales increase by 5%, while exports fell 57% year-on-year.

The average aluminium price for the quarter was 4,038 reais per tonne, from an average of 3,997 reais per tonne in the corresponding period of last year.

Zinc sales volumes remained almost stable at 165,000 tonnes in the first quarter of 2014, while the average price advanced 18% year-on-year, to 4,798 reais per tonne.

Nickel sales dropped to 4,000 tonnes in the first quarter, from 9,000 tonnes a year before, due to the temporary closure of VM’s Fortaleza de Minas plant. The average price was 34,379 reais per tonne, from 34,832 reais per tonne in the January-March 2013 period.

VM net revenues amounted to 2 billion reais ($902 million) in the first quarter, 4% lower than in the same period of 2013. Zinc revenues totalled 1.1 billion reais, while aluminium revenues amounted to 700 million reais and nickel responded for the remaining 200 million reais.

Milpo results
Votorantim's Peru-based miner Milpo's core earnings were up 37% year-on-year at 168 million reais in the first quarter, according to Votorantim quarterly report.

Net revenue increased by 29% from a year earlier, to $446 million reais in the first quarter.

VM said that higher production and sales volumes of zinc, copper and lead concentrates that resulted from the consolidation at Cerro Lindo and El Porvenir operations, and depreciation of the currencyl in the period helped to offset lower metal prices.

Milpo's zinc concentrates production was 121,000 tonnes in the first quarter of 2014, up 2% year-on-year.

Lead output was 16,000 tonnes, up from 11,000 tonnes a year before.

Copper output totalled 35,000 tonnes, up 25% year-on-year.

Danielle Assalve
danielle.assalve@metalbulletin.com
Twitter: #!/dassalve_mb

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