Vale Rises Most Since October After $6 Billion Dividend Plan
January 18, 2012, 2:31 AM ESTBy Juan Pablo Spinetto
(Updates with closing share prices in second paragraph.)
Jan. 17 (Bloomberg) -- Vale SA, the world’s largest iron- ore producer, rose the most in almost three months after saying it will pay at least $6 billion of dividends this year.
The company’s common shares rose 5.1 percent to 42.79 reais in Sao Paulo today, the most since Oct. 24 and the second biggest gain on the Brazilian benchmark Bovespa index. Preferred shares, the most traded type of stock, climbed 4.1 percent to 40.91 reais, also the most since Oct. 24.
Vale’s initial target for dividends compares with $4 billion a year ago and beats a forecast of $5.18 billion from HSBC Holdings Plc. The higher starting goal for dividends this year signals the company may refrain from spending on large acquisitions, said Leonardo Brito, an equity analyst at hedge fund Teorica Investimentos.
“Vale had problems to spend its investment plan in full last year and this may happen again in 2012,” Brito said in a telephone interview from Rio de Janeiro today. That “would free space to boost dividends further.”
Holders of voting and non-voting stock will get about $1.18 per share in two installments on April 30 and on Oct. 31, the Rio-based company said late yesterday in a statement. Vale paid $9 billion of dividends last year after more than doubling its initial goal and bought back $3 billion worth of stock.
Chief Executive Officer Murilo Ferreira said Nov. 28 the company, which plans to invest $21.4 billion on mining projects this year, will prioritize organic growth.
“I have a huge discipline in capital allocation,” Ferreira said in November. “The most important thing for us is to provide the right return to our shareholders.”
Profit Decline
Vale is forecast to post $20.9 billion in net income excluding some items during 2012, 13 percent less than the $24 billion expected for last year, according to 17 analyst estimates in a Bloomberg survey.
“The proposed minimum dividend is consistent with Vale’s financial policy, which aims to provide a strong support to the exploitation of profitable growth,” Vale said in the statement.
The dividend plan is still subject to the approval of the company’s board, Vale said.
Vale has fallen about 23 percent in the past 12 months, more than the 14 percent decline of the Bovespa Index.
--With assistance from Adriana Brasileiro in Rio de Janeiro. Editors: Robin Saponar, Carlos Caminada
To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net
To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net
