Rio Tinto share price on watch after half-year earnings miss

Rio Tinto has released its half-year results. Here's how it performed…

| More on:
Two miners standing together with a smile on their faces.

Image source: Getty Images

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

Key points

  • Rio Tinto has released its half year results
  • The mining giant appears to have fallen short of expectations
  • The company also failed to declare a special dividend as expected

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

This follows the release of the mining giant's half-year results after the market close today.

Rio Tinto share price on watch following earnings miss

  • Revenue down 10% to US$29,775 million
  • Underlying EBITDA down 26% to US$15,597 million
  • Free cash flow down 30% to US$7,146 million
  • Dividend of 276 US cents per share
  • No special dividend

What happened during the half?

For the six months ended 30 June, Rio Tinto reported a 10% decline in revenue to US$29,775 million and a 26% reduction in underlying EBITDA to US$15,597 million.

This was driven by a softer iron ore price, which led to the company's iron ore EBITDA falling 35% to US$10,395 million for the half. This was partially offset by a 49% lift in aluminium EBITDA to US$2,866 million.

How does this compare to expectations?

Unfortunately for the Rio Tinto share price, this result appears to have fallen a touch short of expectations.

For example, a recent note out of Goldman Sachs reveals that its analysts were expecting revenue of US$29,655 million and underlying EBITDA of US$15,671 million.

Furthermore, the market consensus estimate was for revenue of US$30,785 million and underlying EBITDA of US$16,813 million.

Also falling short of expectations was its dividend of 276 US cents per share. Not only did this come in short of estimates, but there was no special dividend this time around.

Goldman was pencilling in total dividends of US$3.68 per share, whereas the consensus estimate was for US$3.97 per share. Both estimates included special dividends of 50 US cents and 67 US cents, respectively.

Though, it is worth highlighting that this was the second largest interim dividend in the company's history.

Management commentary

Rio Tinto's chief executive, Jakob Stausholm, commented:

We remain focused on delivering on our long-term strategy, with a steady improvement in operating performance and some notable advances in our growth agenda. We continue to strengthen our partnership with the Mongolian government following commencement of underground mining at Oyu Tolgoi, delivered first iron ore from the Gudai-Darri mine and approved early works funding at the Rincon lithium project.

Stausholm spoke cautiously about the second half. He notes that the "market environment has become more challenging at the end of the period."

Nevertheless, the chief executive remains optimistic on the longer term.

We are committed to making lasting, long-term change to our culture, including to our workplace culture, and to building better relationships with Indigenous peoples, communities and partners. The progress we are making will ensure we continue to deliver attractive returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society in the drive to netzero carbon emissions.

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 Scott Phillips.

More on Resources Shares

Miner looking at a tablet.
Resources Shares

The Fortescue share price is down almost 10% in February, time to buy?

Is this an opportunistic time to buy the miner?

Read more »

Two miners standing together.
Resources Shares

2 battered ASX mining shares to buy for cheap right now

The global economy is set to improve in the coming year. That's why one expert is seeing a huge 58%…

Read more »

A happy miner pointing.
Resources Shares

Will Fortescue stock be worth more than CBA by 2026?

The resources giant has done a wonderful job of growing. Can it keep going?

Read more »

a woman wearing a sparkly strapless dress leans on a neat stack of six gold bars as she smiles and looks to the side as though she is very happy and protective of her stash. She also has gold fingernails and gold glitter pieces affixed to her cheeks.
Resources Shares

This ASX gold stock just fell 31%. It's time to buy

The global market for the precious metal remains strong, so Blackwattle analysts advise looking past the recent sell-off of these…

Read more »

A girl holding a globe shouts into a green megaphone about climate change.
Resources Shares

ASX mining shares up amid Labor plan to spend multibillions on renewables revolution

Prime Minister Anthony Albanese will deliver a speech in Newcastle tonight.

Read more »

Miner looking at a tablet.
Earnings Results

South32 share price lifts off as ASX 200 miner greenlights US$2.2 billion project

ASX 200 investors appear optimistic about South32’s major US project approval.

Read more »

Miner and company person analysing results of a mining company.
Resources Shares

BHP share price resilient ahead of Friday's strike action

BHP shares are marching higher today despite a looming workers’ strike on Friday.

Read more »

Female miner smiling at a mine site.
Share Gainers

If I'd invested $5,000 in this ASX mining stock a week ago I'd have $11,923 today!

The little ASX mining stock has drawn rising interest from investors this past week.

Read more »