Will be able to maintain ~18% dividendScotia
OUR TAKE: Mixed. EBITDA of US$6.9 billion in Q3/21 (-37% q/q and +14% y/y) came in 23% below our US$9.1 billion forecast driven by a lower realized price at the ferrous minerals division due to provisional pricing. Adjusted EPS of US$1.26 was 3% above our US$1.23 projection. FCF of US$7.8 billion surpassed our US$5.1 billion estimate due to a higher release of working capital related to account receivables collections. Vale's net debt stood at US$2.2 billion in the quarter. Expanded net debt increased from US$11.4 billion in Q2/21 to US$13.9 billion in Q3/21 following a dividend payment of US$7.4 billion and buybacks of US$2.8 billion in the quarter. On the positive side, Vale announced that its Board of Directors approved a new buyback program for a maximum of 200 million shares (US$2.6 billion at the current share price or ~4% of market cap) over the next 18 months. Vale's current buyback program repurchased 268 million shares out of a maximum of 270 million. Despite the disappointing results, we continue to believe Vale's future FCF generation should allow the company to maintain annual dividends of US$12 billion (yield ~18%).