It was almost like the Harrod’s Boxing Day Sale at 4pm last night. The bell rang for the market close and Rio Tinto [ASX:RIO] released its first half results onto an expecting public.
It really just gave Australian investors 15 minutes to digest the 42-pages of the press release to decide whether this was a stock they wanted to be in or out of when the market re-opened this morning.
It didn’t look too hot in early trade in London [LON:RIO], falling by over 3% as the London market fell, but then recovered ground to end almost even for the day. The share price performance is almost the secondary consideration. The key information that most investors would be looking for is the impact the results will have on the takeover bid made by BHP Billiton [ASX:BHP].
So, what impact has it made?
Let’s take a quick look at the numbers:
- Record underlying EBITDA of USD$11.4 billion, up by 73% over 1H07
- Record underlying earnings of USD$5.4 billion, up by 55% over 1H07
- Record net earnings of USD$6.9 billion, up by 113% over 1H07
- Record production levels for iron ore, bauxite, alumina, aluminium, borates, titanium dioxide and thermal coal
It all looks pretty impressive. However, just like the BHP Billiton results, much of the earnings increase has come as a result of commodity price increases.
While that is fine, and it deserves it having suffered through periods of low commodity prices, there is little in the results that would convince BHP that it needed to pay any more than is already on the table. At this stage, it is probably 1-0 to BHP.
RiverCity Under Water
It isn’t exactly the best of times to be involved with infrastructure investments at the moment. Just ask those that have invested in Brisbane’s RiverCity Motorway Group [ASX:New York Times, the average wage of the average American increased in 2006 for the first time since 2000, based on 2006 tax returns and analysis released by the Internal Revenue Service (IRS).
…. But House Prices Fall
Before too many champagne corks are popped, the bad news is that home values dropped by 15.9% for the twelve months until June 2008, doubtless leaving many home owners with negative equity in their homes. Many of these home sales have been the result of foreclosures where the borrower has just walked away from the home, leaving the bank in possession. The potential for US banks to report further losses as a result of this activity has not abated just yet.
Cheers.
Kris.
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