SAO PAULO (Reuters) -Brazilian miner Vale reported on Thursday a 35% drop in fourth quarter net profit, missing analyst expectations by almost half, following higher provisions related to its Samarco joint venture and more taxable income.
Vale, one of the world's largest iron ore producers, reported a $2.42 billion net profit for the quarter ended in December, compared to $4.15 billion expected by analysts polled by LSEG.
Vale's bottom line took a hit from $1.2 billion tacked on to its provision related to the 2015 collapse of a tailings dam, which caused a giant mudslide that killed 19 people and severely polluted the Rio Doce river.
The total provision now stands at $4.21 billion, up 40% from the third quarter.
BHP, Vale's partner in the Samarco joint venture that owned the dam, said last week it would record another $3.2 billion impairment related to the case.
Other results tracked analyst expectations. Recurring adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew 37% in the quarter, and sales revenue rose more than 9%.
Analysts at RBC Europe Limited said they anticipated a positive response, noting that Vale's guidance remains unchanged and free cash flow beat its expectations.
Also on Thursday, Vale said its board approved a payout to shareholders of about $0.55 per share.
Over the quarter, the miner said its iron ore prices had averaged $118.30 per metric ton, up from the $95.60 per ton in the year-earlier quarter.
Vale boosted investments by about a fifth from October to December compared to the same period a year before, spending $2.1 billion in projects focused on iron ore as well as energy transition metals such as nickel and copper.
Vale's earnings come amid uncertainty over succession at the helm of the company, with its board divided between re-electing current chief executive Eduardo Bartolomeo and choosing a new name.
As well, Vale this week said its operating licenses at two mines were suspended by environmental authorities, which RBC Europe Limited said could pose "risks around operational continuity."
(Reporting by Andre Romani, Peter Frontini and Marta Nogeuira; Additional reporting by Daina Beth Solomon; Editing by Anthony Esposito and Michael Perry)
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