The Rio Tinto Ltd (ASX: RIO) share price will be on watch on Wednesday.
That's because the mining giant has just released its half year results.
Have its earnings fallen short of expectations? Let's find out.
Rio Tinto share price on watch following half year results
- Sales revenue up 1% to US$26,802 million
- Underling EBITDA up 3% to US$12,093 million
- Underlying earnings up 1% to US$5,800 million
- Free cash flow down 25% to US$2,843 million
- Interim dividend flat at US$1.77 per share
What happened during the half?
For the six months ended 30 June, Rio Tinto reported a 3% increase in underlying EBITDA to US$12,093 million.
This growth was driven by the miner's aluminium and copper segments, which offset weakness in the iron ore segment.
For the half, copper EBITDA increased 67% to US$1.8 billion, aluminium EBITDA was up 38% to US$1.6 billion, and minerals EBITDA was flat at US$700 million. Whereas weaker prices meant that iron ore EBITDA was down 10% to US$8.8 billion.
This ultimately led to underlying earnings coming in 1% higher compared to the prior corresponding period at US$5.8 billion.
As a result, the Rio Tinto board elected to keep its fully franked interim dividend at US$1.77 per share. This represents a 50% payout ratio and a total payout of US$2.9 billion.
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, Goldman Sachs was forecasting underlying EBITDA of US$12.4 billion (consensus: US$12.5 billion) and an interim dividend of US$1.79 per share.
Management commentary
Rio Tinto's chief executive, Jakob Staushol, was pleased with the half. He said:
Rio Tinto is both consistently very profitable and growing. This is being driven by the disciplined investments we are making to strengthen our operations and progress major projects for profitable organic growth.
Our overall copper equivalent production is on track to grow by around 2% this year, and our ambition is to deliver around 3% of compound annual growth from 2024 to 2028 from existing operations and projects.
Staushol appears positive on the future. He adds:
We are at an inflection point in our growth, with a step change from our aluminium business and consistent production at our Pilbara iron ore operations. We have considerable growth in cash flow from the ramp-up of the underground copper mine at Oyu Tolgoi, and more value to come as our Simandou investment and Rincon lithium project proceed at pace. We are also solving some of our most complex challenges through technology and partnerships, such as the renewable power solutions announced for Boyne and NZAS.
The miner's production guidance for FY 2024 remains unchanged.
