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UPDATE 3-Vale Q3 profit surges, sees pickup in 2018 iron ore output

UPDATE 3-Vale Q3 profit surges, sees pickup in 2018 iron ore output
From Reuters - October 26, 2017

RIO DE JANEIRO/SAO PAULO (Reuters) - Iron ore output at Brazils Vale SA (VALE5.SA) should rise to 390 million tonnes next year, the worlds largest iron ore producer said on Thursday, after a surge in third quarter profit on rising prices fell shy of analyst estimates.

Vale, which has forecast production of around 360 million tonnes this year, also said it saw output rising to 400 million in 2019.

The estimates came after the company reported a 287 percent jump in net income in the third quarter to $2.23 billion above the $575 million it posted during the same period last year. It missed an average consensus estimate of $2.439 billion.

That may be due to lower shipping volumes, as Vale held back iron ore inventories in expectation of higher prices ahead, and a weak quarter for the coal business, said Amos Fletcher, a Barclays analyst, adding that profit still beat Barclays forecast by 3 percent.

Despite frustration that debt did not decline further, the miner is on track to meet its target debt goal of $15 to $17 billion by year end, he said. Vale posted net debt of $21.066 billion, down from $22.122 billion in the second quarter.

Vale executives said that the company would continue cutting debt next year.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) hit $4.192 billion, just below a consensus estimate of $4.384 billion compiled by Thomson Reuters.

Shares in the company fell almost 2 percent, a day after Brazilian congressional committees approved proposals to raise mining royalties.

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