Rio Tinto (RIO) misses at the first half

Stock

Rio Tinto (RIO) $96.00 as at 1/08/2019

Event

Rio is the first miner out with their results this reporting season and it looks to have fallen slightly short of expectations. Shares in Rio are trading lower early in the session, however commodity names in general are off today following Trump’s tariff talk overnight.

There was plenty of hype around the iron ore producers heading into this reporting season given the move in the underlying price over the past 6 months. Rio’s profit line grew 11% compared to the first half of 2018, but was marginally below consensus numbers.

To soften the blow the company announced a juicy 61USc/sh special dividend to take the total dividend for the half to $US 2.12. This is a change in tune for the company which has often maintained a mid-year payout ratio of around 50%, preferring to top up any returns to shareholders at the full year result. The company is conservatively levered, running near the lower end of targeted debt levels despite the $15bn returned to shareholders already over the past 12 months and so it makes perfect sense to send any extra cash flow back into shareholders pockets.

Rio Tinto (RIO) Chart

Rio Tinto Ltd Chart

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