Mining giant Rio Tinto Limited (ASX: RIO) has reported its half-year result to 30 June 2019, is the share price a buy?
Rio Tinto’s origins date back more than 145 years, but today it is one of world’s largest aluminium and iron ore producers, with much of its sales revenue coming from its operates in Western Australia. It also owns, fully or partly, mining projects for copper, diamonds, uranium and other minerals.
Rio Tinto’s ‘Special’ HY19 Result
Rio Tinto reported that its underlying profit grew by 12% to US$4.93 billion and underlying EBITDA (click here to learn what EBITDA means) increased by 11% to US$10.25 billion. However, net earnings actually declined by 6% to US$4.13 billion. The consensus expectation was for US5.07 billion, meaning that it didn’t hit the expectations, but still produced a good result.
Looking at the cashflow side of things, which some say is a better measure of performance, operating cashflow grew by 22% to US$6.39 billion and free cashflow increased by 35% to US$3.88 billion because capital expenditure only grew by 1% to US$2.39 billion.
Sales revenue increased by 9% to US20.7 billion where higher iron ore prices offset the impact of lower volumes and lower aluminium prices.
Rio Tinto’s Big Dividends
The Rio Tinto Board has declared an ordinary dividend per share of US$1.51 per share, which represents a 19% increase on the half year dividend a year ago.
With the resources market performing so strongly the Rio Tinto Board has also decided to declare a special dividend of US$0.61 per share.
Rio Tinto Management Comments
Rio Tinto CEO J-S Jacques said: “Our world class portfolio and strong balance sheet serve us well in all market conditions. This, together with our disciplined capital allocation, underpins our ability to continue to invest in our business and deliver superior returns to shareholders in the short, medium and long term.”
Is Rio Tinto A Buy?
Despite seemingly not meeting expectations, this was a solid result by Rio Tinto – it is capitalising on the high commodity prices. Current shareholders are doing very well.
However, I think we are probably seeing the best part of the mining cycle, so it would be better to wait until commodity prices fall in value again before thinking about buying shares.
Until then, the reliable shares in the free report below could be better ideas at the current share prices.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.