10 important things to know about Rio Tinto Limited's half-year production results

Rio could be moving into the buy zone.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Today Rio Tinto Limited (ASX: RIO) released its half-year production results. CEO Sam Walsh said: "We achieved another half of very strong operating performance, powered by productivity gains across our business," and I agree.

Here are 10 key points you need to know about today's announcement.

  1. Global iron ore shipments were 23% higher than the previous corresponding period (pcp).
  2. Mined copper was 23% higher.
  3. Aluminium production was flat but bauxite production was 2% lower than the pcp.
  4. During the half, Rio's Pilbara iron ore operations achieved a 290 million tonne per annum (mtpa) run rate.
  5. Copper production from the Kennecott Utah Copper and Oyu Tolgoi projects was impressive.
  6. Development of the infrastructure for its Pilbara 360 expansion remains on track for completion within 12 months.
  7. Gold production was up strongly.
  8. Mozambique coal operations were affected by stoppages and operational changes.
  9. Coal production will be down but boast higher margins in 2014.
  10. Exploration and evaluation spend was $202 million lower than the pcp.

What it all means

Rio Tinto, along with BHP Billiton Limited (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) has been hammered by a wave of negative sentiment over the past six months as the iron ore price slumped from over $US135 per tonne to just $US91.80 per tonne last month.

However, with a strong operational performance from the copper division there is significant potential for Rio to post an upside surprise when it reports half-yearly results next month. In early afternoon trade, Rio shares were trading 1.24% higher as a result of the announcement.

To buy or not?

I'm impressed by today's results and production forecasts. However, lower iron ore prices will take a toll on Rio's revenues (counteracting the increased iron ore sales) and I think it would be wise for risk-averse investors to hold off buying shares until next month (when we can gauge its effect on profits when it announces half-yearly results). If Rio does not report any significant writeoffs, but continues to cut debt and possibly increase its dividend payout then it could appear cheap at today's prices.

3 high-risk/high-reward resources stocks 

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »