Rio Tinto in a strong position after months of mining issues
Today
With iron ore prices rebounding to a 10-month high after recently falling into a bear market, now is a good time for Rio Tinto to update the market on its second quarter.
It’s not been the easiest of years for the FTSE 100 miner. The company has faced major disruptions at its Escondida and Grasberg mines, slashing its copper production guidance for the year.
Nonetheless, Goldman Sachs believes the company is in rude health and says it has a “good balance sheet, strong cash flow, limited internal need for capital leading to best-in-class capital returns”.
Neither has its problems at Escondida put the mining giant off Chile, with the company announcing last week that it has applied for more exploration permits in the South American country in the search for new deposits.
Tomorrow
Royal Mail will be looking to pick up some positive traction in its trading update as it tries to avoid relegation to the mid-cap FTSE 250.
The postal service company’s share price has plunged by nearly 20pc this year but Laith Khalaf, a senior analyst at Hargreaves Lansdown, argues that some trends in the sector are benefiting the company.
Despite encountering some Brexit-related headwinds, the core domestic parcel side of the business has held up well, he said.
“While letters may be in long term decline, the growth of e-retailing is providing a significant boost to parcels,” added Mr Khalaf.
“That should support UKPIL [its UK parcels division], while the European parcels operation, GLS, continues to deliver robust growth, with the group making a number of small bolt on acquisitions in this area.”
Wednesday
First quarter results from the low-cost airline Wizz Air are due and, while rising fuel costs and the pound’s depreciation are expected to weigh on profitability, the company is upscaling its ambitions to weather Brexit-induced turbulence. Despite a savage price war within the sector, the No 1 Central and Eastern Europe-focused airliner announced year-on-year passenger growth last month of 24pc.
However, the company “will be challenged by continuing capacity growth by Ryanair and its own growth rate”, HSBC told clients.
Nonetheless, its exposure to the UK market isn’t something the company has sought to minimise.
Last month, despite highlighting the growing uncertainty surrounding the European aviation industry created by Brexit, the company opened its first UK base at Luton Airport.
Thursday
The squeeze on household spending could help Moneysupermarket.com report a strong performance to the market as consumers who are feeling the pinch from rising inflation and sluggish wage growth turn to price comparison sites to scout out better value deals.
Rival Gocompare posted a 40pc increase in revenues last week, underpinned by the squeeze.
However, Malcolm Morgan, an analyst with Peel Hunt, is expecting more modest “mid singledigit growth” with its insurance division likely to put in a “very strong” performance.
Friday
The impact of Acacia Mining’s deal last Friday with the Tanzanian government to pay a new royalty rate on gold concentrate will unfortunately fail to show up in its interim results due this week.
However, it will give the FTSE 250 company’s management the opportunity to look ahead to more productive remainder of the year with Tanzania’s export ban of powdered gold concentrate affecting around a third of the company’s output.
Acacia is still battling changes to the laws over its three gold mines in the country but the company ceding some ground to the government could signal the beginning of the end to the dispute that has hurt its production figures.
Despite this, Brad Gordon, the company’s chief executive, said that its guidance for the year “hasn’t changed”.