Key Takeaways From Rio Tinto’s H1’18 Results

+16.65%
Upside
63.74
Market
74.35
Trefis
RIO: Rio Tinto logo
RIO
Rio Tinto

Rio Tinto (NYSE: RIO) released its H1 2018 results and conducted a conference call with analysts on 1st August 2018. The company’s earnings for the quarter fell short of analysts expectations because of which the market penalized the company’s stock price. This was despite the fact that the company announced an additional $1 billion of share buybacks for the year. Altogether, the company did report a notable improvement in its earnings and revenue. Underlying earnings for the first half was reported at $4.42 billion, 12% higher on a year-on-year (y-o-y) basis whereas revenue was reported at $19.9 billion, 3% higher y-o-y.

Rio’s top line growth for the first half of the year was primarily driven by higher iron ore shipment volume. The company’s iron ore shipments in H1 grew by 9% year-on-year (y-o-y), largely reflecting improved productivity across its system of mines, rail, and port facilities. Favorable weather conditions in comparison to the same period last year also aided the company’s volume growth. However, the company’s realized iron ore prices remained weak during the period largely due to weaker demand and global trade war concerns, especially those impacting China. Rio reported that the price for its FOB Platts index for 62% iron Pilbara fines was 9% lower on a year-on-year basis. Thus, this decline in price offset the company’s positive impact of higher shipment volume.

Looking forward, the company’s management reiterated its confidence in the global demand outlook for commodities and did not consider a significant negative impact on demand due to tariffs. However, the company did notify its concerns with respect to rising input costs, especially those for alumina, oil, coke, pitch and caustic soda, and rising rates for contractors.

Relevant Articles
  1. Is Rio Tinto Stock Attractive At $62
  2. Down 9% This Year, What’s Next For Rio Tinto Stock?
  3. After Tough 2022 Results, What’s Next For Rio Stock?
  4. Is Rio Tinto Stock Still Good Value Following The Recent Iron Ore Rally?
  5. With Iron Ore Prices Under Pressure, What’s Next For Rio Stock?
  6. With Iron Ore Prices Volatile, Is Rio Tinto Stock Worth A Look?

We continue to remain positive with respect to Rio’s future performance and its return potential. Consequently, we have maintained the company’s pre-earnings outlook in our interactive dashboard: What To Expect From Rio Tinto In 2018? You can modify our assumptions to arrive at your own fair price estimate for the company by using our interactive platform.

 

What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Research

Like our charts? Explore example interactive dashboards and create your own.