February 16, 2012 / 2:27 AM / in 6 years

CORRECTED-UPDATE 2-Vale quarterly net falls on lower prices, higher costs

* Q4 net falls 21 pct to $4.67 bln, in line with forecasts

* Lower prices offset output gains in iron ore, other metals

* Analysts see weak prices, volumes for 2012

By Jeb Blount and Sabrina Lorenzi

RIO DE JANEIRO, Feb 15 (Reuters) - Vale SA, the world’s second-largest mining company, posted a 21 percent drop in fourth-quarter net income after costs rose and lower prices undermined returns from higher output of iron ore and other metals.

The Rio de Janeiro-based company, the world’s largest exporter of iron ore, earned $4.67 billion in net income in the three months ended Dec. 31, in line with the average estimate of a $4.68 billion profit from 11 analysts surveyed by Reuters. Compared with the third quarter, profit fell 5.3 percent.

The average price of iron ore , Vale’s main export, fell 11 percent to $141.80 a tonne in the fourth quarter from a year earlier, eating into the gains from higher output. Analysts warned ore prices would remain weak.

Iron ore production rose 3.5 percent to 80.26 million tonnes in the quarter.

Weak prices and volumes will likely continue in 2012, according to Edmo Chagas and Antonio Heluany, analysts with BTG Pactual.

Vale, which accounts for more than one-quarter of the world’s sea-borne iron ore trade, said that net revenue, or total sales minus taxes, was little changed, falling 1.17 percent to $14.8 billion, above the $14.1 billion average expected by analysts.

Compared with the third quarter, revenue fell 11.9 percent, less than the 15.9 percent slide expected by analysts.

Earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of operating profit closely watched by analysts, were also in line with estimates, falling 16.6 percent to $7.40 billion from $8.87 billion a year earlier. EBITDA fell 23.2 percent from the third-quarter result of $9.63 billion.

The average estimate was for a 15.7 percent decline in EBITDA from a year ago and a 22 percent decline from the third quarter.

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