RIO Tinto Share Price Down After Half Year Results

Shares of RIO Tinto Limited [ASX:RIO] have been climbing over the last 12 months. They were trading at $65.40 back on 31 July 2017, and by this Monday 30 July 2018 were shares are trading at $80.10 30 — an increase of 22.47% in 12 months.

Since then, shares of Rio are down 4..35% today, to $78.09.

What 2018 half year results means for RIO Tinto Limited Share Price

The relatively steady share price of Rio Tinto may be a reflection of their strong sales in iron ore, copper and aluminium.

As outlined in their 2018 half year result, Rio Tinto will continue to focus on higher long-term returns. Earnings before interest, tax, depreciation and amortization (EBITDA) driven by higher pricing and increased volumes, offsetting cost headwinds. Which impacted EBITDA by $300 million in H1 2018, due to raw material cost.

But despite cost headwinds RIO’s productivity programme is on track. Their underlying EBITDA is up 2% to $9.2 billion, with an operating cash flow of $5.2 billion.

Investors should also consider inflation from the US. That is driving an increase in the federal funds rate, which would have an effect on Rio’s debt costs. But Rio has managed a good turnaround by reducing its gross debt by $1.9 billion.

News for Rio Tinto shareholders

There was good news for Rio shareholders, with interim 2018 returns of $3.2 billion being announced. And the interim dividend of $2.2 billion will be paid in September this year, while additional share Buy-back of $1.0 billion in RIO shares by the end of February 2019.

The growth shown by Rio Tinto provides capacity to allocate more to shareholder cash return and debt reduction.

Strong global growth as well as strong demand for premium products means a good outlook for the company. But continued commodity price volatility could lead to volatility for the shares, too.

Kind regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Our resources analyst, Jason Stevenson, has compiled the top ‘The Top 10 Australian Mining Stocks’ trading on the ASX right now. To find out which ones will benefit from the resurgence in commodity prices? Click here.


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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