United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934
For the month of
July 2018
Vale S.A.
Avenida das Américas, No. 700 – Bloco 8, Sala 218
22640-100 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
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(Check One) Form 20-F x Form 40-F o |
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))
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(Check One) Yes o No x |
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))
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(Check One) Yes o No x |
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
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(Check One) Yes o No x |
(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82- .)
Vale S.A. Interim Financial Statements
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2. Basis for preparation of the interim financial statements |
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15 | |
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17 | |
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17 | |
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17 | |
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18 | |
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12. Non-current assets and liabilities held for sale and discontinued operations |
18 |
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20 | |
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22 | |
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22 | |
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16. Loans, borrowings, cash and cash equivalents and financial investments |
23 |
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25 | |
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26 | |
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26 | |
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26. Additional information about derivative financial instruments |
39 |
KPMG Auditores Independentes
Rua do Passeio, 38 - Setor 2 - 17º andar - Centro
20021-290 - Rio de Janeiro/RJ - Brasil
Caixa Postal 2888 - CEP 20001-970 - Rio de Janeiro/RJ - Brasil
Telefone +55 (21) 2207-9400, Fax +55 (21) 2207-9000
www.kpmg.com.br
Report of independent registered public accounting firm
To the Stockholders and Board of Directors of
Vale S.A.
Rio de Janeiro - RJ
Results of review of interim financial information
We have reviewed the accompanying condensed consolidated statement of financial position of Vale S.A. and subsidiaries (“the Company”) as of June 30, 2018, the related condensed consolidated statements of income, comprehensive income (loss) and cash flows for the three and six-month periods ended June 30, 2018 and 2017, and the related condensed consolidated statement of changes in equity for the six-month periods ended on June 30, 2018 and 2017 and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial information for it to be in conformity with IAS 34 — Interim Financial Reporting as issued by the International Accounting Standards Board (IASB).
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of financial position of the Company as of December 31, 2017, and the related consolidated statements of income and comprehensive income, changes in equity and cash flows for the year then ended (not presented herein); and in our report dated February 27, 2018, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2017, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.
Basis for review results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
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KPMG Auditores Independentes |
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Rio de Janeiro, Brazil |
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July 25, 2018 |
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KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (“KPMG International”), uma entidade suíça. |
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KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. |
In millions of United States dollars, except earnings per share data
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Three-month period ended |
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Six-month period ended |
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Notes |
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2018 |
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2017 |
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2018 |
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2017 |
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Continuing operations |
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|
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Net operating revenue |
|
3(c) |
|
8,616 |
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7,235 |
|
17,219 |
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15,750 |
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Cost of goods sold and services rendered |
|
5(a) |
|
(5,377 |
) |
(5,102 |
) |
(10,601 |
) |
(9,836 |
) |
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Gross profit |
|
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|
3,239 |
|
2,133 |
|
6,618 |
|
5,914 |
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|
|
|
|
|
|
|
|
|
|
|
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Operating expenses |
|
|
|
|
|
|
|
|
|
|
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Selling and administrative expenses |
|
5(b) |
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(122 |
) |
(132 |
) |
(246 |
) |
(256 |
) |
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Research and evaluation expenses |
|
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(92 |
) |
(80 |
) |
(161 |
) |
(145 |
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Pre operating and operational stoppage |
|
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|
(67 |
) |
(90 |
) |
(145 |
) |
(205 |
) |
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Other operating expenses, net |
|
5(c) |
|
(109 |
) |
(88 |
) |
(234 |
) |
(165 |
) |
|
|
|
|
|
(390 |
) |
(390 |
) |
(786 |
) |
(771 |
) |
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Impairment and other results on non-current assets |
|
4 |
|
5 |
|
(220 |
) |
(13 |
) |
292 |
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Operating income |
|
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2,854 |
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1,523 |
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5,819 |
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5,435 |
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|
|
|
|
|
|
|
|
|
|
|
|
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Financial income |
|
6 |
|
172 |
|
185 |
|
409 |
|
564 |
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Financial expenses |
|
6 |
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(1,178 |
) |
(871 |
) |
(1,854 |
) |
(2,020 |
) |
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Other financial items |
|
6 |
|
(2,049 |
) |
(653 |
) |
(2,234 |
) |
(496 |
) |
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Equity results in associates and joint ventures |
|
13 |
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41 |
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(24 |
) |
126 |
|
49 |
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Impairment and other results in associates and joint ventures |
|
17 |
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(411 |
) |
(34 |
) |
(425 |
) |
(95 |
) |
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Income (loss) before income taxes |
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(571 |
) |
126 |
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1,841 |
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3,437 |
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|
|
|
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|
|
|
|
|
|
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Income taxes |
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7 |
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|
|
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Current tax |
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(127 |
) |
(69 |
) |
(220 |
) |
(570 |
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Deferred tax |
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|
791 |
|
118 |
|
163 |
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(104 |
) |
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|
664 |
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49 |
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(57 |
) |
(674 |
) |
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|
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|
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Net income from continuing operations |
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|
93 |
|
175 |
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1,784 |
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2,763 |
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Net income attributable to noncontrolling interests |
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7 |
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31 |
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26 |
|
46 |
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Net income from continuing operations attributable to Vale’s stockholders |
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|
86 |
|
144 |
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1,758 |
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2,717 |
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Discontinued operations |
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12 |
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Loss from discontinued operations |
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(10 |
) |
(125 |
) |
(92 |
) |
(207 |
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Net income attributable to noncontrolling interests |
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— |
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3 |
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— |
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4 |
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Loss from discontinued operations attributable to Vale’s stockholders |
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(10 |
) |
(128 |
) |
(92 |
) |
(211 |
) |
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Net income |
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|
83 |
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50 |
|
1,692 |
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2,556 |
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Net income attributable to noncontrolling interests |
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7 |
|
34 |
|
26 |
|
50 |
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Net income attributable to Vale’s stockholders |
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|
|
76 |
|
16 |
|
1,666 |
|
2,506 |
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|
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Earnings per share attributable to Vale’s stockholders: |
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|
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|
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Basic and diluted earnings per share (restated): |
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8 |
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|
|
|
|
|
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Common share (US$) |
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0.01 |
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— |
|
0.32 |
|
0.48 |
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The accompanying notes are an integral part of these interim financial statements.
Consolidated Statement of Comprehensive Income
In millions of United States dollars
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Three-month period ended |
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Six-month period ended |
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2018 |
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2017 |
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2018 |
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2017 |
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Net income |
|
83 |
|
50 |
|
1,692 |
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2,556 |
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Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
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Items that will not be reclassified subsequently to the income statement |
|
|
|
|
|
|
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Translation adjustments |
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(6,318 |
) |
(1,753 |
) |
(6,548 |
) |
(639 |
) |
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Retirement benefit obligations |
|
(55 |
) |
(195 |
) |
(2 |
) |
(218 |
) |
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Fair value adjustment to investment in equity securities |
|
77 |
|
— |
|
42 |
|
— |
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Transfer to retained earnings |
|
4 |
|
— |
|
(16 |
) |
— |
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Total items that will not be reclassified subsequently to the income statement, net of tax |
|
(6,292 |
) |
(1,948 |
) |
(6,524 |
) |
(857 |
) |
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|
|
|
|
|
|
|
|
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Items that may be reclassified subsequently to the income statement |
|
|
|
|
|
|
|
|
|
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Translation adjustments |
|
3,906 |
|
1,253 |
|
3,895 |
|
618 |
|
|
Net investments hedge |
|
(538 |
) |
(259 |
) |
(565 |
) |
(84 |
) |
|
Transfer of realized results to net income |
|
— |
|
— |
|
(78 |
) |
— |
|
|
Total of items that may be reclassified subsequently to the income statement, net of tax |
|
3,368 |
|
994 |
|
3,252 |
|
534 |
|
|
Total comprehensive income (loss) |
|
(2,841 |
) |
(904 |
) |
(1,580 |
) |
2,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to noncontrolling interests |
|
(87 |
) |
4 |
|
(70 |
) |
41 |
|
|
Comprehensive income (loss) attributable to Vale’s stockholders |
|
(2,754 |
) |
(908 |
) |
(1,510 |
) |
2,192 |
|
|
From continuing operations |
|
(2,741 |
) |
(888 |
) |
(1,502 |
) |
2,221 |
|
|
From discontinued operations |
|
(13 |
) |
(20 |
) |
(8 |
) |
(29 |
) |
|
|
|
(2,754 |
) |
(908 |
) |
(1,510 |
) |
2,192 |
|
Items above are stated net of tax and the related taxes are disclosed in note 7.
The accompanying notes are an integral part of these interim financial statements.
Consolidated Statement of Cash Flows
In millions of United States dollars
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|
Three-month period ended |
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Six-month period ended |
| ||||
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|
|
2018 |
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2017 |
|
2018 |
|
2017 |
|
|
Cash flow from operating activities: |
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes from continuing operations |
|
(571 |
) |
126 |
|
1,841 |
|
3,437 |
|
|
Continuing operations adjustments for: |
|
|
|
|
|
|
|
|
|
|
Equity results in associates and joint ventures |
|
(41 |
) |
24 |
|
(126 |
) |
(49 |
) |
|
Impairment and other results on non-current assets and associates and joint ventures |
|
406 |
|
254 |
|
438 |
|
(197 |
) |
|
Depreciation, amortization and depletion |
|
861 |
|
904 |
|
1,734 |
|
1,812 |
|
|
Financial results, net |
|
3,055 |
|
1,339 |
|
3,679 |
|
1,952 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
201 |
|
1,380 |
|
218 |
|
1,678 |
|
|
Inventories |
|
(262 |
) |
(223 |
) |
(206 |
) |
(444 |
) |
|
Suppliers and contractors |
|
(37 |
) |
244 |
|
(377 |
) |
326 |
|
|
Provision - Payroll, related charges and others remunerations |
|
175 |
|
199 |
|
(366 |
) |
(43 |
) |
|
Proceeds from cobalt stream transaction |
|
690 |
|
— |
|
690 |
|
— |
|
|
Other assets and liabilities, net |
|
(440 |
) |
(162 |
) |
(545 |
) |
(331 |
) |
|
|
|
4,037 |
|
4,085 |
|
6,980 |
|
8,141 |
|
|
Interest on loans and borrowings paid |
|
(274 |
) |
(412 |
) |
(655 |
) |
(927 |
) |
|
Derivatives paid, net |
|
12 |
|
(3 |
) |
(13 |
) |
(110 |
) |
|
Interest on participative stockholders’ debentures paid |
|
(72 |
) |
(70 |
) |
(72 |
) |
(70 |
) |
|
Income taxes |
|
(46 |
) |
(37 |
) |
(286 |
) |
(405 |
) |
|
Income taxes - Settlement program |
|
(113 |
) |
(120 |
) |
(238 |
) |
(241 |
) |
|
Net cash provided by operating activities from continuing operations |
|
3,544 |
|
3,443 |
|
5,716 |
|
6,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities: |
|
|
|
|
|
|
|
|
|
|
Financial investments redeemed (invested) |
|
(8 |
) |
34 |
|
(24 |
) |
(19 |
) |
|
Loans and advances - net receipts (payments) (note 25) |
|
(99 |
) |
(100 |
) |
2,541 |
|
(244 |
) |
|
Additions to property, plant and equipment, intangibles and investments |
|
(711 |
) |
(1,251 |
) |
(1,618 |
) |
(2,367 |
) |
|
Proceeds from disposal of assets and investments (note 12) |
|
259 |
|
8 |
|
1,360 |
|
523 |
|
|
Dividends and interest on capital received from associates and joint ventures |
|
136 |
|
82 |
|
146 |
|
82 |
|
|
Others investments activities |
|
(17 |
) |
(19 |
) |
(2 |
) |
(21 |
) |
|
Net cash provided by (used in) investing activities from continuing operations |
|
(440 |
) |
(1,246 |
) |
2,403 |
|
(2,046 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities: |
|
|
|
|
|
|
|
|
|
|
Loans and borrowings |
|
|
|
|
|
|
|
|
|
|
Additions |
|
765 |
|
300 |
|
765 |
|
1,450 |
|
|
Repayments |
|
(2,599 |
) |
(1,852 |
) |
(4,876 |
) |
(2,970 |
) |
|
Transactions with stockholders: |
|
|
|
|
|
|
|
|
|
|
Dividends and interest on capital paid to stockholders |
|
— |
|
(1,454 |
) |
(1,437 |
) |
(1,454 |
) |
|
Dividends and interest on capital paid to noncontrolling interest |
|
(6 |
) |
(5 |
) |
(97 |
) |
(8 |
) |
|
Transactions with noncontrolling stockholders |
|
— |
|
— |
|
(17 |
) |
255 |
|
|
Net cash used in financing activities from continuing operations |
|
(1,840 |
) |
(3,011 |
) |
(5,662 |
) |
(2,727 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in discontinued operations (note 12) |
|
(2 |
) |
(45 |
) |
(46 |
) |
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
1,262 |
|
(859 |
) |
2,411 |
|
1,565 |
|
|
Cash and cash equivalents in the beginning of the period |
|
5,368 |
|
6,716 |
|
4,328 |
|
4,262 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(247 |
) |
(137 |
) |
(253 |
) |
(93 |
) |
|
Effects of disposals of subsidiaries and merger, net on cash and cash equivalents |
|
(14 |
) |
— |
|
(117 |
) |
(14 |
) |
|
Cash and cash equivalents at end of the period |
|
6,369 |
|
5,720 |
|
6,369 |
|
5,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash transactions: |
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment - capitalized loans and borrowing costs |
|
44 |
|
83 |
|
104 |
|
186 |
|
The accompanying notes are an integral part of these interim financial statements.
Consolidated Statement of Financial Position
In millions of United States dollars
|
|
|
Notes |
|
June 30, 2018 |
|
December 31, 2017 |
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
16 |
|
6,369 |
|
4,328 |
|
|
Accounts receivable |
|
9 |
|
2,348 |
|
2,600 |
|
|
Other financial assets |
|
11 |
|
482 |
|
2,022 |
|
|
Inventories |
|
10 |
|
3,999 |
|
3,926 |
|
|
Prepaid income taxes |
|
|
|
657 |
|
781 |
|
|
Recoverable taxes |
|
|
|
1,023 |
|
1,172 |
|
|
Others |
|
|
|
590 |
|
538 |
|
|
|
|
|
|
15,468 |
|
15,367 |
|
|
|
|
|
|
|
|
|
|
|
Non-current assets held for sale |
|
12 |
|
— |
|
3,587 |
|
|
|
|
|
|
15,468 |
|
18,954 |
|
|
Non-current assets |
|
|
|
|
|
|
|
|
Judicial deposits |
|
22(c) |
|
1,744 |
|
1,986 |
|
|
Other financial assets |
|
11 |
|
3,042 |
|
3,232 |
|
|
Prepaid income taxes |
|
|
|
505 |
|
530 |
|
|
Recoverable taxes |
|
|
|
564 |
|
638 |
|
|
Deferred income taxes |
|
7(a) |
|
6,535 |
|
6,638 |
|
|
Others |
|
|
|
304 |
|
267 |
|
|
|
|
|
|
12,694 |
|
13,291 |
|
|
|
|
|
|
|
|
|
|
|
Investments in associates and joint ventures |
|
13 |
|
3,226 |
|
3,568 |
|
|
Intangibles |
|
14 |
|
7,989 |
|
8,493 |
|
|
Property, plant and equipment |
|
15 |
|
48,710 |
|
54,878 |
|
|
|
|
|
|
72,619 |
|
80,230 |
|
|
Total assets |
|
|
|
88,087 |
|
99,184 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Suppliers and contractors |
|
|
|
3,587 |
|
4,041 |
|
|
Loans and borrowings |
|
16 |
|
1,822 |
|
1,703 |
|
|
Other financial liabilities |
|
11 |
|
795 |
|
986 |
|
|
Taxes payable |
|
7(c) |
|
640 |
|
697 |
|
|
Provision for income taxes |
|
|
|
255 |
|
355 |
|
|
Liabilities related to associates and joint ventures |
|
17 |
|
273 |
|
326 |
|
|
Provisions |
|
21 |
|
1,005 |
|
1,394 |
|
|
Dividends and interest on capital |
|
|
|
— |
|
1,441 |
|
|
Others |
|
|
|
809 |
|
992 |
|
|
|
|
|
|
9,186 |
|
11,935 |
|
|
Liabilities associated with non-current assets held for sale |
|
12 |
|
— |
|
1,179 |
|
|
|
|
|
|
9,186 |
|
13,114 |
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Loans and borrowings |
|
16 |
|
16,084 |
|
20,786 |
|
|
Other financial liabilities |
|
11 |
|
2,994 |
|
2,894 |
|
|
Taxes payable |
|
7(c) |
|
4,071 |
|
4,890 |
|
|
Deferred income taxes |
|
7(a) |
|
1,678 |
|
1,719 |
|
|
Provisions |
|
21 |
|
6,567 |
|
7,027 |
|
|
Liabilities related to associates and joint ventures |
|
17 |
|
895 |
|
670 |
|
|
Deferred revenue - Gold stream |
|
|
|
1,725 |
|
1,849 |
|
|
Others |
|
|
|
1,999 |
|
1,463 |
|
|
|
|
|
|
36,013 |
|
41,298 |
|
|
Total liabilities |
|
|
|
45,199 |
|
54,412 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
24 |
|
|
|
|
|
|
Equity attributable to Vale’s stockholders |
|
|
|
41,948 |
|
43,458 |
|
|
Equity attributable to noncontrolling interests |
|
|
|
940 |
|
1,314 |
|
|
Total stockholders’ equity |
|
|
|
42,888 |
|
44,772 |
|
|
Total liabilities and stockholders’ equity |
|
|
|
88,087 |
|
99,184 |
|
The accompanying notes are an integral part of these interim financial statements.
Consolidated Statement of Changes in Equity
In millions of United States dollars
|
|
|
Share capital |
|
Results on |
|
Capital reserve |
|
Results from |
|
Profit |
|
Treasury |
|
Unrealized |
|
Cumulative |
|
Retained |
|
Equity |
|
Equity |
|
Total |
|
|
Balance at December 31, 2017 |
|
61,614 |
|
(152 |
) |
1,139 |
|
(954 |
) |
7,419 |
|
(1,477 |
) |
(1,183 |
) |
(22,948 |
) |
— |
|
43,458 |
|
1,314 |
|
44,772 |
|
|
Net income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1,666 |
|
1,666 |
|
26 |
|
1,692 |
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement benefit obligations |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(2 |
) |
— |
|
(16 |
) |
(18 |
) |
— |
|
(18 |
) |
|
Net investments hedge (note 20c) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(565 |
) |
— |
|
(565 |
) |
— |
|
(565 |
) |
|
Fair value adjustment to investment in equity securities |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
42 |
|
— |
|
— |
|
42 |
|
— |
|
42 |
|
|
Translation adjustments |
|
— |
|
— |
|
— |
|
— |
|
(1,055 |
) |
— |
|
47 |
|
(1,627 |
) |
— |
|
(2,635 |
) |
(96 |
) |
(2,731 |
) |
|
Transactions with stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends of noncontrolling interest |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(83 |
) |
(83 |
) |
|
Acquisitions and disposal of noncontrolling interest |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(225 |
) |
(225 |
) |
|
Capitalization of noncontrolling interest advances |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
4 |
|
4 |
|
|
Balance at June 30, 2018 |
|
61,614 |
|
(152 |
) |
1,139 |
|
(954 |
) |
6,364 |
|
(1,477 |
) |
(1,096 |
) |
(25,140 |
) |
1,650 |
|
41,948 |
|
940 |
|
42,888 |
|
|
|
|
Share capital |
|
Results on |
|
Capital reserve |
|
Results from |
|
Profit |
|
Treasury |
|
Unrealized |
|
Cumulative |
|
Retained |
|
Equity |
|
Equity |
|
Total |
|
|
Balance at December 31, 2016 |
|
61,614 |
|
(152 |
) |
— |
|
(699 |
) |
4,203 |
|
(1,477 |
) |
(1,147 |
) |
(23,300 |
) |
— |
|
39,042 |
|
1,982 |
|
41,024 |
|
|
Net income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
2,506 |
|
2,506 |
|
50 |
|
2,556 |
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement benefit obligations |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(218 |
) |
— |
|
— |
|
(218 |
) |
— |
|
(218 |
) |
|
Net investments hedge (note 20c) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(84 |
) |
— |
|
(84 |
) |
— |
|
(84 |
) |
|
Translation adjustments |
|
— |
|
— |
|
— |
|
— |
|
(63 |
) |
— |
|
5 |
|
149 |
|
(103 |
) |
(12 |
) |
(9 |
) |
(21 |
) |
|
Transactions with stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and interest on capital of Vale’s stockholders |
|
— |
|
— |
|
— |
|
— |
|
(658 |
) |
— |
|
— |
|
— |
|
— |
|
(658 |
) |
— |
|
(658 |
) |
|
Dividends of noncontrolling interest |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(107 |
) |
(107 |
) |
|
Acquisitions and disposal of noncontrolling interest |
|
— |
|
— |
|
— |
|
(105 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
(105 |
) |
(512 |
) |
(617 |
) |
|
Capitalization of noncontrolling interest advances |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
26 |
|
26 |
|
|
Balance at June 30, 2017 |
|
61,614 |
|
(152 |
) |
— |
|
(804 |
) |
3,482 |
|
(1,477 |
) |
(1,360 |
) |
(23,235 |
) |
2,403 |
|
40,471 |
|
1,430 |
|
41,901 |
|
The accompanying notes are an integral part of these interim financial statements.
Selected Notes to the Interim Financial Statements
Expressed in millions of United States dollar, unless otherwise stated
Vale S.A. (the “Parent Company”) is a public company headquartered in the city of Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo — B3 S.A. (Vale3), New York - NYSE (VALE), Paris - NYSE Euronext (Vale3) and Madrid — LATIBEX (XVALO).
Vale S.A. and its direct and indirect subsidiaries (“Vale” or “Company”) are global producers of iron ore and iron ore pellets, key raw materials for steelmaking, and producers of nickel, which is used to produce stainless steel and metal alloys employed in the production of several products. The Company also produces copper, metallurgical and thermal coal, manganese ore, ferroalloys, platinum group metals, gold, silver and cobalt. The information by segment is presented in note 3.
2. Basis for preparation of the interim financial statements
a) Statement of compliance
The condensed consolidated interim financial statements of the Company (“interim financial statements”) have been prepared and are being presented in accordance with IAS 34 Interim Financial Reporting of the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
b) Basis of presentation
The interim financial statements have been prepared to update users about relevant events and transactions occurred in the period and should be read in conjunction with the financial statements for the year ended December 31, 2017. The accounting policies, accounting estimates and judgments, risk management and measurement methods are the same as those applied when preparing the last annual financial statements, except for new accounting policies related to the application of IFRS 9 — Financial instrument and IFRS 15 — Revenue from contracts with customers, which are adopted by the Company from January 1, 2018. The accounting policy for recognizing and measuring income taxes in the interim period is described in note 7.
The interim financial statements of the Company and its associates and joint ventures are measured using the currency of the primary economic environment in which the entity operates (“functional currency”), which in the case of the Parent Company is the Brazilian real (“R$”). For presentation purposes, these interim financial statements are presented in United States dollars (“US$”) as the Company believes that this is the relevant currency used by international investors.
The exchange rates used by the Company to translate its foreign operations are as follows:
|
|
|
|
|
|
|
Average rate |
| ||||||
|
|
|
Closing rate |
|
Three-month period ended |
|
Six-month period ended |
| ||||||
|
|
|
June 30, 2018 |
|
December 31, 2017 |
|
June 30, 2018 |
|
June 30, 2017 |
|
June 30, 2018 |
|
June 30, 2017 |
|
|
US Dollar (“US$”) |
|
3.8558 |
|
3.3080 |
|
3.6056 |
|
3.2174 |
|
3.4274 |
|
3.1807 |
|
|
Canadian dollar (“CAD”) |
|
2.9344 |
|
2.6344 |
|
2.7928 |
|
2.3937 |
|
2.6807 |
|
2.3847 |
|
|
Australian dollar (“AUD”) |
|
2.8529 |
|
2.5849 |
|
2.7280 |
|
2.4154 |
|
2.6407 |
|
2.3986 |
|
|
Euro (“EUR” or “€”) |
|
4.5032 |
|
3.9693 |
|
4.2944 |
|
3.5480 |
|
4.1430 |
|
3.4479 |
|
The issue of these interim financial statements was authorized by the Board of Directors on July 25, 2018.
c) Accounting standards issued but not yet effective
The standards and interpretations issued by IASB relevant to the Company but not yet effective are the same as those applicable when preparing the financial statements for the year ended December 31, 2017.
3. Information by business segment and by geographic area
The information presented to the Executive Board on the performance of each segment is derived from the accounting records, adjusted for reclassifications between segments.
a) Adjusted EBITDA
Management uses adjusted EBITDA to assess each segment’s contribution to the Company’s performance and to support the decision making process. Adjusted EBITDA is calculated for each segment using operating income or loss plus dividends received and interest from associates and joint ventures, and adding back the amounts charged as (i) depreciation, depletion and amortization and (ii) special events (additional information can be found in note 4).
In 2018, the Company has allocated general and corporate expenses to “Others” as these expenses are not directly related to the performance of each business segment. Therefore, “Others” includes unallocated corporate expenses. The comparative period was restated in order to reflect this change in the criteria for allocation.
|
|
|
Three-month period ended June 30, 2018 |
| ||||||||||||
|
|
|
Net operating |
|
Cost of goods |
|
Sales, |
|
Research and |
|
Pre operating |
|
Dividends |
|
Adjusted |
|
|
Ferrous minerals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Iron ore |
|
4,570 |
|
(2,144 |
) |
(26 |
) |
(25 |
) |
(27 |
) |
1 |
|
2,349 |
|
|
Iron ore Pellets |
|
1,518 |
|
(808 |
) |
(6 |
) |
(6 |
) |
(6 |
) |
105 |
|
797 |
|
|
Ferroalloys and manganese |
|
115 |
|
(65 |
) |
(2 |
) |
(1 |
) |
— |
|
— |
|
47 |
|
|
Other ferrous products and services |
|
118 |
|
(84 |
) |
1 |
|
— |
|
— |
|
— |
|
35 |
|
|
|
|
6,321 |
|
(3,101 |
) |
(33 |
) |
(32 |
) |
(33 |
) |
106 |
|
3,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal |
|
356 |
|
(327 |
) |
(7 |
) |
(6 |
) |
— |
|
29 |
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base metals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nickel and other products |
|
1,340 |
|
(810 |
) |
(18 |
) |
(8 |
) |
(7 |
) |
— |
|
497 |
|
|
Copper |
|
530 |
|
(245 |
) |
— |
|
(4 |
) |
— |
|
— |
|
281 |
|
|
|
|
1,870 |
|
(1,055 |
) |
(18 |
) |
(12 |
) |
(7 |
) |
— |
|
778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others |
|
69 |
|
(67 |
) |
(133 |
) |
(42 |
) |
(6 |
) |
30 |
|
(149 |
) |
|
Total of continuing operations |
|
8,616 |
|
(4,550 |
) |
(191 |
) |
(92 |
) |
(46 |
) |
165 |
|
3,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations (Fertilizers) |
|
32 |
|
(36 |
) |
(3 |
) |
— |
|
— |
|
— |
|
(7 |
) |
|
Total |
|
8,648 |
|
(4,586 |
) |
(194 |
) |
(92 |
) |
(46 |
) |
165 |
|
3,895 |
|
(i) Adjusted for the special events occurred in the period, which represents a loss of US$27.
|
|
|
Three-month period ended June 30, 2017 |
| ||||||||||||
|
|
|
Net operating |
|
Cost of goods |
|
Sales, |
|
Research and |
|
Pre operating |
|
Dividends |
|
Adjusted |
|
|
Ferrous minerals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Iron ore |
|
3,544 |
|
(1,885 |
) |
(26 |
) |
(23 |
) |
(40 |
) |
— |
|
1,570 |
|
|
Iron ore Pellets |
|
1,331 |
|
(712 |
) |
3 |
|
(5 |
) |
(1 |
) |
37 |
|
653 |
|
|
Ferroalloys and manganese |
|
117 |
|
(81 |
) |
(1 |
) |
— |
|
(1 |
) |
— |
|
34 |
|
|
Other ferrous products and services |
|
122 |
|
(77 |
) |
13 |
|
— |
|
— |
|
— |
|
58 |
|
|
|
|
5,114 |
|
(2,755 |
) |
(11 |
) |
(28 |
) |
(42 |
) |
37 |
|
2,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal |
|
481 |
|
(305 |
) |
(2 |
) |
(4 |
) |
(4 |
) |
— |
|
166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base metals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nickel and other products |
|
1,009 |
|
(818 |
) |
(9 |
) |
(11 |
) |
(12 |
) |
— |
|
159 |
|
|
Copper |
|
503 |
|
(247 |
) |
(1 |
) |
(2 |
) |
— |
|
— |
|
253 |
|
|
|
|
1,512 |
|
(1,065 |
) |
(10 |
) |
(13 |
) |
(12 |
) |
— |
|
412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others |
|
128 |
|
(125 |
) |
(175 |
) |
(35 |
) |
(2 |
) |
45 |
|
(164 |
) |
|
Total of continuing operations |
|
7,235 |
|
(4,250 |
) |
(198 |
) |
(80 |
) |
(60 |
) |
82 |
|
2,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations (Fertilizers) |
|
401 |
|
(372 |
) |
(20 |
) |
(3 |
) |
(10 |
) |
— |
|
(4 |
) |
|
Total |
|
7,636 |
|
(4,622 |
) |
(218 |
) |
(83 |
) |
(70 |
) |
82 |
|
2,725 |
|
|
|
|
Six-month period ended June 30, 2018 |
| ||||||||||||
|
|
|
Net operating |
|
Cost of goods |
|
Sales, |
|
Research and |
|
Pre operating |
|
Dividends |
|
Adjusted |
|
|
Ferrous minerals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Iron ore |
|
9,273 |
|
(4,222 |
) |
(39 |
) |
(45 |
) |
(62 |
) |
1 |
|
4,906 |
|
|
Iron ore Pellets |
|
3,103 |
|
(1,621 |
) |
(7 |
) |
(11 |
) |
(9 |
) |
105 |
|
1,560 |
|
|
Ferroalloys and manganese |
|
239 |
|
(139 |
) |
(3 |
) |
(1 |
) |
— |
|
— |
|
96 |
|
|
Other ferrous products and services |
|
233 |
|
(157 |
) |
(2 |
) |
— |
|
— |
|
— |
|
74 |
|
|
|
|
12,848 |
|
(6,139 |
) |
(51 |
) |
(57 |
) |
(71 |
) |
106 |
|
6,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal |
|
736 |
|
(662 |
) |
(5 |
) |
(9 |
) |
— |
|
89 |
|
149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base metals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nickel and other products |
|
2,472 |
|
(1,515 |
) |
(33 |
) |
(17 |
) |
(15 |
) |
— |
|
892 |
|
|
Copper |
|
1,032 |
|
(493 |
) |
(1 |
) |
(8 |
) |
— |
|
— |
|
530 |
|
|
|
|
3,504 |
|
(2,008 |
) |
(34 |
) |
(25 |
) |
(15 |
) |
— |
|
1,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others |
|
131 |
|
(137 |
) |
(286 |
) |
(70 |
) |
(12 |
) |
40 |
|
(334 |
) |
|
Total of continuing operations |
|
17,219 |
|
(8,946 |
) |
(376 |
) |
(161 |
) |
(98 |
) |
235 |
|
7,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations (Fertilizers) |
|
121 |
|
(120 |
) |
(4 |
) |
— |
|
— |
|
— |
|
(3 |
) |
|
Total |
|
17,340 |
|
(9,066 |
) |
(380 |
) |
(161 |
) |
(98 |
) |
235 |
|
7,870 |
|
(i) Adjusted for the special events occurred in the period, which represents a loss of US$72.
|
|
|
Six-month period ended June 30, 2017 |
| ||||||||||||
|
|
|
Net operating |
|
Cost of goods |
|
Sales, |
|
Research and |
|
Pre operating |
|
Dividends |
|
Adjusted |
|
|
Ferrous minerals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Iron ore |
|
8,370 |
|
(3,562 |
) |
43 |
|
(39 |
) |
(81 |
) |
— |
|
4,731 |
|
|
Iron ore Pellets |
|
2,790 |
|
(1,364 |
) |
3 |
|
(8 |
) |
(2 |
) |
37 |
|
1,456 |
|
|
Ferroalloys and manganese |
|
203 |
|
(125 |
) |
(2 |
) |
— |
|
(4 |
) |
— |
|
72 |
|
|
Other ferrous products and services |
|
248 |
|
(153 |
) |
10 |
|
(1 |
) |
— |
|
— |
|
104 |
|
|
|
|
11,611 |
|
(5,204 |
) |
54 |
|
(48 |
) |
(87 |
) |
37 |
|
6,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal |
|
805 |
|
(553 |
) |
(6 |
) |
(7 |
) |
(4 |
) |
— |
|
235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base metals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nickel and other products |
|
2,141 |
|
(1,680 |
) |
(23 |
) |
(20 |
) |
(50 |
) |
— |
|
368 |
|
|
Copper |
|
968 |
|
(477 |
) |
(1 |
) |
(4 |
) |
— |
|
— |
|
486 |
|
|
|
|
3,109 |
|
(2,157 |
) |
(24 |
) |
(24 |
) |
(50 |
) |
— |
|
854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others |
|
225 |
|
(224 |
) |
(392 |
) |
(66 |
) |
(3 |
) |
45 |
|
(415 |
) |
|
Total of continuing operations |
|
15,750 |
|
(8,138 |
) |
(368 |
) |
(145 |
) |
(144 |
) |
82 |
|
7,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations (Fertilizers) |
|
771 |
|
(711 |
) |
(35 |
) |
(5 |
) |
(21 |
) |
— |
|
(1 |
) |
|
Total |
|
16,521 |
|
(8,849 |
) |
(403 |
) |
(150 |
) |
(165 |
) |
82 |
|
7,036 |
|
Adjusted EBITDA is reconciled to net income (loss) as follows:
From continuing operations
|
|
|
Three-month period ended June 30, |
|
Six-month period ended June 30, |
| ||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
Adjusted EBITDA from continuing operations |
|
3,902 |
|
2,729 |
|
7,873 |
|
7,037 |
|
|
Depreciation, depletion and amortization |
|
(861 |
) |
(904 |
) |
(1,734 |
) |
(1,812 |
) |
|
Dividends received and interest from associates and joint ventures |
|
(165 |
) |
(82 |
) |
(235 |
) |
(82 |
) |
|
Special events (note 4) |
|
(22 |
) |
(220 |
) |
(85 |
) |
292 |
|
|
Operating income |
|
2,854 |
|
1,523 |
|
5,819 |
|
5,435 |
|
|
Financial results, net |
|
(3,055 |
) |
(1,339 |
) |
(3,679 |
) |
(1,952 |
) |
|
Equity results in associates and joint ventures |
|
41 |
|
(24 |
) |
126 |
|
49 |
|
|
Impairment and other results in associates and joint ventures |
|
(411 |
) |
(34 |
) |
(425 |
) |
(95 |
) |
|
Income taxes |
|
664 |
|
49 |
|
(57 |
) |
(674 |
) |
|
Net income from continuing operations |
|
93 |
|
||||||