Rio Tinto share price on watch after half-year earnings miss

Rio Tinto has released its half-year results. Here's how it performed…

| More on:
Two miners standing together with a smile on their faces.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Rio Tinto has released its half year results
  • The mining giant appears to have fallen short of expectations
  • The company also failed to declare a special dividend as expected

The Rio Tinto Limited (ASX: RIO) share price will be one to watch on Thursday.

This follows the release of the mining giant's half-year results after the market close today.

Rio Tinto share price on watch following earnings miss

  • Revenue down 10% to US$29,775 million
  • Underlying EBITDA down 26% to US$15,597 million
  • Free cash flow down 30% to US$7,146 million
  • Dividend of 276 US cents per share
  • No special dividend

What happened during the half?

For the six months ended 30 June, Rio Tinto reported a 10% decline in revenue to US$29,775 million and a 26% reduction in underlying EBITDA to US$15,597 million.

This was driven by a softer iron ore price, which led to the company's iron ore EBITDA falling 35% to US$10,395 million for the half. This was partially offset by a 49% lift in aluminium EBITDA to US$2,866 million.

How does this compare to expectations?

Unfortunately for the Rio Tinto share price, this result appears to have fallen a touch short of expectations.

For example, a recent note out of Goldman Sachs reveals that its analysts were expecting revenue of US$29,655 million and underlying EBITDA of US$15,671 million.

Furthermore, the market consensus estimate was for revenue of US$30,785 million and underlying EBITDA of US$16,813 million.

Also falling short of expectations was its dividend of 276 US cents per share. Not only did this come in short of estimates, but there was no special dividend this time around.

Goldman was pencilling in total dividends of US$3.68 per share, whereas the consensus estimate was for US$3.97 per share. Both estimates included special dividends of 50 US cents and 67 US cents, respectively.

Though, it is worth highlighting that this was the second largest interim dividend in the company's history.

Management commentary

Rio Tinto's chief executive, Jakob Stausholm, commented:

We remain focused on delivering on our long-term strategy, with a steady improvement in operating performance and some notable advances in our growth agenda. We continue to strengthen our partnership with the Mongolian government following commencement of underground mining at Oyu Tolgoi, delivered first iron ore from the Gudai-Darri mine and approved early works funding at the Rincon lithium project.

Stausholm spoke cautiously about the second half. He notes that the "market environment has become more challenging at the end of the period."

Nevertheless, the chief executive remains optimistic on the longer term.

We are committed to making lasting, long-term change to our culture, including to our workplace culture, and to building better relationships with Indigenous peoples, communities and partners. The progress we are making will ensure we continue to deliver attractive returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society in the drive to netzero carbon emissions.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

A group of three men in hard hats and high visibility vests stand together at a mine site while one points and the others look on with piles of dirt and mining equipment in the background.
Resources Shares

How Rio Tinto and BHP shares can beat a plunging iron ore price

BHP and Rio Tinto continue to deliver multi-billion-dollar profits.

Read more »

Miner looking at a tablet.
Resources Shares

3 reasons why this fund manager thinks Mineral Resources shares are 'incredibly undervalued'

An expert believes this is an opportunity worth digging into.

Read more »

A woman standing on the street looks through binoculars.
Resources Shares

Here's the latest earnings forecast out to 2029 for Fortescue shares

How much could profit drop in the coming years?

Read more »

Miner looking at a tablet.
Mergers & Acquisitions

Rio Tinto share price marching higher amid two multi-billion-dollar announcements

Rio Tinto is investing billions to expand its operations.

Read more »

Group of successful real estate agents standing in building and looking at tablet.
Financial Shares

3 ASX shares that just reported 30%+ profit jumps

It was a strong half for these three players.

Read more »

Two men in hard hats and high visibility jackets look together at a laptop screen at a mine site.
Resources Shares

Pilbara Minerals stock: Why are short sellers piling in?

Short interest remains high.

Read more »

Three miners looking at a tablet.
Resources Shares

Is this the BIG announcement ASX 200 mining shares have been waiting for?

Will this new development turn the tide for struggling ASX 200 miners?

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Resources Shares

Core Lithium stock: All that glitters is not always gold

Lithium isn't shining too brightly right now either.

Read more »