Rio Tinto (ASX:RIO) share price on watch after Q4 update: How did it perform compared to expectations?

Rio Tinto had a tough quarter…

| More on:
Construction workers having a chat amongst themselves.

Image source: Getty Images

Key points

  • Rio Tinto had a tough quarter with shipments and production down year on year
  • Iron ore shipments for Q4 fell short of the market’s expectations
  • However, the mining giant’s FY 2022 guidance was largely in line

The Rio Tinto Limited (ASX: RIO) share price will be one to watch on Tuesday.

This follows the release of the mining giant’s fourth quarter update this morning.

How did Rio Tinto perform in the fourth quarter?

For the three months ended 31 December, Rio Tinto reported a 5% decline in Pilbara iron ore shipments to 84.1Mt. This brought its full year shipments to 321.6Mt, which was down 3% year on year.

Unfortunately, this appears to have fallen short of expectations, which could weigh on the Rio Tinto share price. For example, the team at Goldman Sachs was forecasting iron ore shipments of 88.9Mt for the three months.

Management blamed its soft FY 2021 shipments on above average rainfall in the first half of the year, cultural heritage management, and delays in growth and brownfield mine replacement tie-in projects.

Elsewhere, Rio Tinto’s mined copper came in at 132kt for the three months. This was flat on the prior corresponding period and a touch short of Goldman’s forecast of 133kt. This led to full year mined copper of 494kt, which is a 7% reduction on FY 2020’s production. This reflects lower recoveries and throughput at Escondida as a result of the prolonged impact of COVID-19.

It was a similar story for aluminium, which was down 7% in the fourth quarter to 757kt. This ultimately put the miner’s giant full year production into the red for the year, down 1% to 3,151kt. This was driven by reduced capacity at its Kitimat smelter in British Columbia following a strike which commenced in July.

In fact, there was not a single commodity that achieve production growth in FY 2021. Bauxite was down 3% to 54.3Mt, titanium dioxide slag was down 9% to 1,014kt, and iron ore pellets fell 6% to 9.7Mt.

What about FY 2022?

One thing that could support the Rio Tinto share price today is its guidance for potential production growth in FY 2022. Among the highlights, management is guiding to iron ore shipments of 320Mt to 335Mt and mined copper production of 500kt to 575kt.

This is broadly in line with what Goldman Sachs was forecasting. It pencilled in iron ore shipments of 330Mt and mined copper production of 550kt.

Rio Tinto’s Chief Executive, Jakob Stausholm, said: “In 2021 we continued to experience strong demand for our products while operating conditions remained challenging, including due to prolonged COVID-19 disruptions. Despite this, we progressed a number of our projects, including the Pilbara replacement mines, underlining the resilience of the business and the commitment and flexibility of our people, communities and host governments. We are seeing some initial positive results from the implementation of the Rio Tinto Safe Production System, which we will significantly ramp up in 2022, as we continue to work hard to improve our operational performance to become the best operator.”

Should you invest $1,000 in Rio Tinto right now?

Before you consider Rio Tinto, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Rio Tinto wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

Resources Shares

Why did this ASX copper share just pop then stop?

Austral shares were on fire before being halted...

Read more »

Red arrow going down, symbolising a falling share price.
Resources Shares

Lake Resources share price tumbles again: Broker now sees almost 100% upside

It hasn't been a good day for Lake Resources' shares...

Read more »

Two smiling men in high visibility vests and yellow hardhats stand side by side with a large mound of earth and mining equipment behind them smiling as the Hawsons Iron share price recovers today
Resources Shares

Hawsons Iron share price slumps 9% then rebounds following project update

The iron ore explorer is another step closer to bringing its flagship project to life.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Arafura share price surges 18% on Hyundai deal

Arafura has signed a deal with Hyundai and its shares are taking off...

Read more »

Three Argosy miners stand together at a mine site studying documents with equipment in the background
Resources Shares

What’s the outlook for Fortescue shares with Twiggy at the helm?

Andrew Forest stepped down as CEO of the ASX 200 iron ore giant in 2011.

Read more »

A boy in a green shirt holds up his hands in front of a screen full of question marks.
Resources Shares

Do Vulcan Energy shares pay dividends?

Vulcan Energy shares may be popular. But do they pay dividends like other ASX miners?

Read more »

Green arrow with green stock prices symbolising a rising share price.
Resources Shares

Fortescue share price pushes higher following leadership changes

Fortescue shares are having a solid day on Wednesday...

Read more »

A woman's hair is blown back and her face is in shock at this big news.
Resources Shares

Own BHP shares? Here’s what you need to know about the commodity predicted to be bigger than petroleum for the mining giant

The latest move could prove to be a profitable one for the mining giant.

Read more »