The Rio Tinto Ltd (ASX: RIO) share price fell by around 4% in August 2023, noticeably underperforming the S&P/ASX 200 Index (ASX: XJO) last month which only dropped 1.4%.
In the middle of August, the monthly return was looking even worse but then it recovered, as we can see on the chart below. By 16 August 2023, it had fallen more than 11% in the month but then rose 9% over the next two-ish weeks to 31 August to end the month down approximately 4%.
Let's have a look at what has recently happened to the company.
Image source: Getty Images
2023 half-year result recap
The ASX iron ore share reported its HY23 result for the six months to June 2023 on 26 July, and we can see that the Rio Tinto share price started its decline in the last few days of July after reporting, which continued to mid-August. Investors may have been digesting what the miner revealed in the report.
In that result, it said that revenue fell 10% to US$26.7 billion, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 25% to US$11.7 million, operating cash flow declined 33% to US$7 billion and net profit after tax (NPAT) dropped 43% to US$5.1 billion.
The Rio Tinto interim dividend was cut by 34% to US$1.77 per share.
Rio Tinto's CEO, Jakob Stausholm, said that these were robust financials despite softer market conditions. Commodity prices went lower due to slowing global demand. Lower iron ore prices led to a decline in underlying EBITDA to the tune of approximately US$1.6 billion, while lower pricing hurt the aluminium business by US$1.4 billion.
The ASX iron ore share explained that the average iron ore price (the monthly average Platts index for 62% iron fines converted to a free on board (FOB) basis) was 14% lower in the FY23 first half compared to the 2022 first half.
The business also said that lower volumes at some of its assets drove up unit costs. However, it also said that market-linked raw material price declines will help the miner's costs in the second half.
Outlook
The market is usually future-focused, so what the company is expecting and what could happen with commodity prices can be integral for investor thoughts on the Rio Tinto share price.
In its HY23 presentation to investors, the ASX mining share said:
China's economic recovery has fallen short of initial market expectations, as the property market downturn continues to weigh on the economy and consumers remain cautious despite monetary policy easing. Manufacturing data in advanced economies showed a further slowdown and recessionary risks remain.
Reporting by Reuters suggests that the Chinese economy (including the property sector) continues to be challenged and that growth may continue to be low for the time being.
Rio Tinto share price
Since the start of 2023, the Rio Tinto share price is virtually flat, while the ASX 200 has risen around 5%.
