Boston, MA 02/12/2014 (wallstreetpr) – Towards the end of 2013, Vale SA (ADR) (NYSE:VALE) announced that it would embark on an investment-cutting spree to help drive its profits up. The company hopes to pay close attention on matters to do with cutting down on spending, in the hope that by doing this, it will be able to see a rise in profits. The company has gone through a two-year period when its profits have been on a downward trend. However, Vale SA hopes that even prices remain lower like they have been and outputs continue disappointing, just as they have done since 2010, its cost cutting measures will help compensate for everything else and assure shareholders of profits.
The company is expected to develop a business plan for 2014 that will cost upwards of $14.5 billion. If this happens, then Vale SA (ADR) (NYSE:VALE) will have reduced its budget quite substantially, bearing in mind that it spent more than $16.3 on its business plan for the 2013 fiscal year. In essence, if Vale goes ahead with this plan, it will have effectively reduced its spending by around 11 percent. This decision will have long-term implications since it will give Vale SA the platform and precedence to carry similar steps in future. If the current cost-cutting measures prove successful, it is likely that Vale will continue along a similar path in future.
Nobody can blame Vale SA (ADR) (NYSE:VALE) in any way, for doing what it thinks is best for its business, shareholders and Wall Street. This is the latest step that the company is carrying out. In 2013, it sold close to 3 percent of all its assets. Furthermore, in 2013 Vale SA successfully reduced spending by more than $2 billion. The quest to turn Vale SA into a company that constantly and regularly posts profits is one that the top executives at the world’s largest miner of iron ore have to follow to logical conclusion. If the company’s board and top executives can turn this global producer or iron ore into a profit making entity, more investors will pour their money here.
Among all the stocks of mining companies, none has performed worse than Vale SA (ADR) (NYSE:VALE). The company needs to shed this reputation if it intends to retain investor confidence, and bring more investors on board. By showing that it is a profit-making venture, Vale SA will have the funds it needs to carry out more mining prospects that will lead to an increase in revenue and profits. The company also hopes that in 2014 it will finally be able to settle one of the longest running tax disputes that it has been involved in for close to ten years. The main challenge for Vale SA is to focus its energies on its core business, which is the profitable iron ore operation.
Finally, Vale SA (ADR) (NYSE:VALE) is doing well by taking such actions. It is high time that the company returns to its core business, that of iron-ore operations. It has neglected its core business operations for some time and suffered greatly for it.
