Vale SA (VALE5), the world’s largest iron- ore producer, declined to the lowest in seven weeks after reducing the minimum dividend payment it plans for this year by a third to $4 billion amid lower profits.
Vale fell 0.7 percent to 37.41 reais at 1:13 p.m. in Sao Paulo after sliding to 37.27 reais, the lowest intraday level since Dec. 10. The stock was the most traded by value on the benchmark Bovespa index, which fell 0.2 percent.
Vale shareholders of common and preferred stock will get about 77.6 cents per share in two installments on April 30 and on Oct. 31, the Rio de Janeiro-based company said late yesterday in a statement. The proposed minimum matches a $4 billion estimate from Banco Itau BBA SA in a Jan. 21 note and compares with a $6 billion target set a year ago by the company.
The announcement “confirms that the company is adjusting its dividend distribution to an expected decrease in cash flow generation,” Itau analysts Marcos Assumpcao and Andre Pinheiro said in a note to clients dated yesterday. “Vale’s cash flow will be tight in 2013,” they wrote.
Vale paid $6 billion in 2012 dividends, half the record $12 billion returned to shareholders including share buybacks the prior year, as the company is set to post its lowest annual profit since 2009. Chief Executive Officer Murilo Ferreira sold coal, shipping and energy assets and cut investments to the lowest in three years amid weakening minerals and metals demand.
“The proposed minimum dividend is consistent with Vale’s financial policy, which aims to provide strong support to the exploitation of profitable growth opportunities alongside the preservation of a sound balance sheet,” the company said in yesterday’s statement.
The dividend proposal requires board approval, Vale said.
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