Rio Tinto (RIO) | SNAPSHOT
Profile: Rio Tinto (RIO) is one of the largest resources companies globally. Its joint headquarters are based in Melbourne and London. Rio’s operations span exploration, development, production and processing of products including iron ore, aluminium, copper, diamonds, gold and industrial minerals.
History: The “Rio Tinto Company” was formed in 1873 when investors re-opened copper mines beside Rio Tinto in Spain. In 1905, Herbert Hoover, partnering with entrepreneurs, formed the Zinc Corporation, mining silver, lead and zinc in Broken Hill, NSW. In 1962, The Rio Tinto-Zinc Corporation Limited (RTZ) was formed through the merger of The Rio Tinto Company and The Consolidated Zinc Corporation Ltd. In the same year, the Australian interest of the Zinc Corporation and The Rio Tinto Company were merged to form Conzic Riotinto of Australia Ltd (CRA). In 1995, RTZ and CRA began operating under a dual listed company structure. In 1997, RTZ became Rio Tinto plc and CRA became Rio Tinto Ltd.
Earnings composition: US$16.1bn (73%) of RIO’s FY19 underlying EBITDA came from its Iron Ore product group. Aluminium constituted 10% of FY19 EBITDA with US$2.3bn, while Copper & Diamonds generated $2.1bn, or 9%. Energy and Minerals accounted for 8% with US$1.8bn.
Most recent result – FY19: RIO reported US$21.2bn in underlying EBITDA, up 17% on the prior corresponding period (pcp). Underlying earnings increased 18% on the pcp to US$10.4bn, driven by strong iron ore prices. This was partially offset by lower copper and aluminium prices. Net earnings declined 41% on the pcp to $8.0bn, impacted by US$1.7bn of impairments primarily relating to the Oyu Tolgoi underground project and the Yarwun alumina refinery. Iron Ore EBITDA increased 41% on the pcp to $16.1bn. A dividend of A$3.50 (US$2.31) was declared, bringing total dividends per share to $6.57 (US$4.43) down from $7.60 (US$5.50) in FY18 which included a $3.39 (US$2.43) special dividend.
Company outlook: 2020 guidance for Pilbara iron ore shipments is 324-334Mt (million tonnes). Mined Copper guidance was reduced to 475-520kt, from 530-570kt in its 1Q20 result, and refined copper guidance was reduced to 165-205kt, from 205-235kt. Capex guidance reduced to $5-6bn in 2020 (from $7bn).
Important dates: 2Q20 results are scheduled for 17 July 2020. Half-year results are scheduled for 29 July 2020. Ex-dividend date is 6 August 2020.
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