Rio Tinto shares sink after H1 profit miss
melbourne — Global miner Rio Tinto said on Wednesday its first half profit grew 12 per cent, missing estimates and sending shares lower even though it earmarked an additional $1 billion to buy back London-listed stock.
Underlying earnings for the six months to June 30 grew to $4.42 billion as higher iron ore output overcame lower prices. That was below forecasts of $4.53 billion, according to estimates in an independent survey of 15 analysts, though above $3.94 billion in the same period a year ago.
“Versus consensus, it’s a slight miss. It looks like aluminium was the problem at the divisional level,” said Jason Teh, chief investment officer at Sydney based Vertium Asset Management, which owns Rio shares. At 0829GMT, shares in London were down 4.1 per cent while the broader market slipped 0.8 per cent.
Outgoing chief financial officer Chris Lynch attributed the miss partly to the market not taking into account pricing in old alumina contracts the company has, which cost Rio “a couple of hundred million” dollars as it missed out on exposure to recent price gains in alumina — a raw material used to make aluminium — after the US imposed sanctions on Rusal.
While US-China trade tensions have overshadowed many businesses, chief executive Jean-Sebastien Jacques said the miner’s operations had not been impacted the spar and rising tariffs so far.
“At this point in time, do we see any material impact on our business in relations to the rumours of trade wars and so forth? The answer is no. However, we will not become complacent,” Jacques told reporters in a conference call. —