Rio Tinto Ltd (ASX: RIO) shares are rising on Wednesday morning.
At the time of writing, the mining giant's shares are up 1% to $115.99.
This follows the release of the miner's half year results this morning.
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Rio Tinto shares rise on half-year profit growth
This morning, Rio Tinto released its results for the six months ended 30 June.
Those results revealed that the company's key iron ore segment had a tough period due partly to weaker prices of the steel making ingredient.
Management notes that Iron Ore underlying EBITDA came in at US$8.8 billion, which was 10% lower than the prior corresponding period. This was primarily due to lower realised prices and lower shipments. That latter was impacted by a train collision in May.
Rio Tinto achieved average iron ore pricing of US$97.30 per wet metric tonne on an FOB basis, which was down from US$98.60 in the first half of 2023.
However, thanks to the strength of the miner's aluminium and copper segments, the company still reported an increase in group earnings.
Rio Tinto's underlying EBITDA was up 3% to US$12.093 billion for the half and its underlying earnings rose 1% to US$5.8 billion.
This ultimately allowed the Rio Tinto board to declare a fully franked interim dividend of US$1.77 per share, which is flat year on year.
Broker reaction
While Rio Tinto's underlying EBITDA was short of the consensus estimate of US$12.4 billion, it appears that the market is willing to overlook this as its underlying earnings were in line.
In response to the results, Goldman Sachs said:
RIO reported an in-line 1H 2024 result with underlying EBITDA/NPAT of US$12.1bn/US$5.8bn, -3%/in-line with GSe at US$12.4bn/US$5.8bn, and in-line with VA consensus. Pilbara EBITDA was slightly better than GSe on lower than expected unit costs, Aluminium beat GSe and VA Cons on lower costs (Alumina and Pacific Aluminium costs), but Copper was below GSe on higher than expected costs at Bingham Canyon.
The interim dividend of US$1.77/sh was slightly below our estimate (US$1.79/sh) and was based on the typical 50% payout for the half year. Net debt of US$5.1bn was slightly above our US$4.5bn estimate on higher working capital, and capex of US$4.0bn is run-rating below FY guidance of US$10bn.
Should you invest?
As things stand, Goldman Sachs has a buy rating and $136.10 price target on Rio Tinto's shares. This implies potential upside of 17% for investors from current levels.
However, it is worth noting that this recommendation could change once the broker has updated its financial model to reflect today's results.
