Net income fell to 69.2 million reais ($38 million) from 72.7 million reais a year ago, the Rio de Janeiro-based company said in a regulatory filing late yesterday. MMX was expected to post a net loss of 30 million reais, according to an estimate by analysts at Banco Itau BBA SA.
The company plans to spend at least 7.9 billion reais to quintuple its output capacity to 53 million metric tons by 2016 as it taps rising demand from China and other emerging nations. MMX is rivaling Anglo American Plc (AAL) and Ferrous Resources Ltd. in boosting iron-ore output from projects in the Brazilian eastern state of Minas Gerais.
MMX’s iron-ore output declined 32 percent to 1.44 million metric tons in the quarter while sales volumes dropped 6.3 percent to 1.95 million tons, the company said. Gross revenue increased 31 percent to 291.5 million reais, it said.
The output reduction “was mainly due to the exceptionally heavy rainfall” in December in the state of Minas Gerais, where MMX’s Serra Azul mine is located, it said. “There has never been as great a volume of rainfall recorded in the last 100 years” like the state’s volumes in December and January, MMX said, citing the Brazilian government.
MMX is purchasing iron-ore from third-party vendors to make up its sales volume after the decline in production, BMO Capital Markets analyst Tony Robson said in a note to clients.
Production at MMX’s Corumba unit, in the center-west state of Mato Grosso do Sul, also slumped 90 percent in the quarter after reduced navigability of the Paraguay River used to export the iron ore, the company said.
MMX added 0.1 percent to 9.17 reais in Sao Paulo at 11:02 a.m. Before today, the stock has gained 37 percent this year, more than twice the 16 percent increase in the Brazilian benchmark Bovespa index.
Iron-ore prices slumped to $116.90 per ton on Oct. 28, their lowest level since December 2009, after reaching $191.90 in early 2011 on concern demand from China, the biggest user of the steelmaking ingredient, is slowing.
The price of ore with 62 percent iron for immediate delivery to the Chinese port of Tianjin gained 0.4 percent to $147.70 a ton today, its highest level since October, according to a price index compiled by The Steel Index Ltd.
(MMX will host a conference call with investors today at 11 a.m. New York time.)
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