Rio Tinto Dividends - RIO

Rio Tinto Dividends - RIO

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Rio Tinto Plc RIO London Ordinary Share GB0007188757 ORD 10P
  Price Change Price Change % Stock Price High Price Low Price Open Price Close Price Last Trade
  21.50 0.46% 4,672.50 4,673.50 4,642.50 4,642.50 4,651.00 09:23:17
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Industry Sector

Rio Tinto RIO Dividends History

Announcement Date Type Currency Dividend Amount Period Start Period End Ex Date Record Date Payment Date Total Dividend Amount

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la forge: HSBC downgraded its stance on Anglo American and Rio Tinto on Thursday, saying sector valuations were no longer cheap following a strong run in the share prices. "The strong share price performance and normalising valuations, along with an average declining near-term earnings profile leads us to re-evaluate our views on the UK diversified miners," it said. "Copper is trading around fundamental support levels following a circa 8% recovery to nearly USD6,200/t (USD2.80/lb) and we believe upside is limited as positioning has already moved and we see the market transitioning to surplus from 2021e. "While we see near-term iron ore price support, we maintain our view of reducing market tightness in the coming years and for prices to revert back towards marginal cost levels in the mid-USD60s." The bank downgraded Anglo American and Rio to 'hold' from 'buy', cutting the price targets to 2,300p from 2,350p and to 4,630p from 4,725p, respectively. It said Anglo and Rio are the two best-performing global diversified miners, up around 30% year-to-date in US dollar terms. HSBC reckoned the shares are fairly valued at current levels, hence the downgrade. "Our over 10% average forecast annual iron ore price decline in 2020/21e leads to a declining earnings profile, particularly at Rio, and resulting in lower free cash flow generation as capex spending also rises. "Anglo's more diversified asset base and favourable platinum group metals exposure provides for a more stable earnings profile. These companies are in top shape with robust balance sheets and we expect shareholder returns to remain a key feature. However, we see limited near-term catalysts and upside from current levels."
sarkasm: forbes Dec 8, 2019, 08:39pm Back To The Chopping Block For Top Miners, BHP And Rio Tinto Tim Treadgold Tim Treadgold Contributor Asia Asset sales and capital returns made the world’s top two mining companies, BHP and Rio Tinto, investment stars until mid-year when trade-war tensions turned them into losers, but a six-month downturn could be ending with a possible re-start of the asset selling process. Until June, both companies had delivered impressive, and almost mirror image share price performances, up 175% over the preceding three-and-a-half years. Credit for the price rises was shared by strong profits in iron ore, the major business units of both BHP and Rio Tinto, along with heavy-duty asset disposals that included BHP selling its onshore U.S. oil and gas interests and Rio Tinto exiting the thermal (electricity generating) coal business. $31 billion In Asset Sales Coal Stockpiles At The Newcastle Coal Terminal As Slump Seen Ending On Deal At Four-Year Low Steam surrounds bucket wheel reclaimers as they operate at the Newcastle Coal Terminal in Newcastle, ... [+]Ian Waldie/Bloomberg Between them, the two big Anglo-Australian miners, disposed of an estimated $31 billion in surplus assets and returned $89 billion in capital to shareholders between 2004 and 2018. Not much has been sold this year but, if a fresh research report by Jefferies Research Services is correct, the sales process could resume in 2020 as the two companies clean up their smaller operations. In theory, according to Jefferies, there could be another $20 to $25 billion to be generated from disposing of assets no longer regarded as core with potential capital returns enhancing total shareholder returns (TSR). Today In: Asia “After five years of consolidation non-core assets remain in BHP’s and Rio Tinto’s portfolios,” Jefferies said in a report headed: “Focus to shift back to divestment tail.” More Sales To Boost TSR PROMOTED Grads of Life BrandVoice | Paid Program How To Build A Culture Of High Expectations Sonos Cyber Monday: Best Deals On Sonos One And Sonos Beam Civic Nation BrandVoice | Paid Program Growing The College Student Vote Jefferies said with balance sheets re-based, operating cashflow elevated, proceeds from divestment will continue to support near-term (financial) multiples and TSR via capital returns. Because there have been few asset sales this year investors have tended to overlook the potential for capital returns from a fresh wave of disposals. “Understandably, the market’s focus on asset sales has diminished,” Jefferies said. “However, with an expected improvement in macro conditions in 2020 and easing of trade tensions (our base case) we anticipate a tail of divestments will come into focus.” High on the next wave of disposals are BHP’s thermal coal business which would bring it into line with Rio Tinto with both companies under pressure from fund managers and climate change activists to quit mining the most polluting of fossil fuels. Stacks of newly moulded aluminum ingots. Stacks of newly moulded aluminum ingots sit in a storage area before distribution.Oliver Bunic/Bloomberg Rio Tinto’s next move in cleaning up its asset base could be the disposal of non-core aluminum assets which are battling high energy costs and a low metal price, as well as the sale of an iron ore business in Canada which is a fraction the size of its giant Australian mines. But there could be a lot more offered, or which might attract an inquisitive buyer. BHP has a number of relatively small oil and gas assets which could easily find a buyer, including a 25% stake in the Scarborough liquefied natural gas project in the north-west of Australia which could fetch $1.27 billion, 45% of an oil and gas project in Trinidad and Tobago which could sell for $1.1 billion, and a half share in the troubled Samarco iron ore mine in Brazil which could be sold for $1.2 billion. Nickel And Potash Could Be Sold Other assets mentioned by Jefferies for possible, but unlikely sales, included the Nickel West business in Australia for $950 million, a stake in the controversial Jansen potash project in Canada for $762 million, and a 25% stake in the Olympic Dam copper mine in Australia for $585 million. Though some potential asset disposals are described as unlikely, Jefferies sees the potential for BHP to generate $12.3 billion in the sale of surplus assets, enabling it to concentrate on its core businesses of iron ore, copper, steel-making coal and oil. Iron ore pellets, a key ingredient of steel, are piled into a mound Iron ore pellets, a key ingredient of steel, are piled into a mound at a plant in Canada.Cole Burston/Bloomberg Rio Tinto has a longer list of sales in three categories, likely possible and unlikely, totaling $11.6 billion. Top of the list is a 59% interest in the Iron Ore Company of Canada which Jefferies values at $3.2 billion with a sale rated as likely. A string of aluminum smelters and alumina refineries are listed, along with the company’s California borates business, two diamond mines and an industrial salt business in Australia. “We expect the divestments could improve the return on capital employed (ROCE) by 1% to 3%,” Jefferies said. The bank rates Rio Tinto a buy and BHP a hold. Tim Treadgold Tim Treadgold I studied geology in the 1960s and worked for a small mining company before getting a start in journalism during the 1969 nickel boom. Since then I've covered repeated booms and busts in the commodities sector for a passing parade of newspapers, magazines and website. I am also a regular contributor to radio and television news services in Australia.
the grumpy old men: What I’d do about the Rio Tinto and Fresnillo share prices today Alan Oscroft | Wednesday, 23rd October, 2019 | More on: ANTO FRES RIO A miner down a mine shaft Image source: Getty Images. Overlooked by the headlines, some share prices in the mining sector have been creeping up. Over the past five years, while the FTSE 100 has gained a modest 10%, Rio Tinto (LSE: RIO) shares are up 37%. And while dividends can be erratic due to the cyclical nature of the sector, Rio’s have been climbing strongly and forecasts suggest a yield of 8.6% for the current year. That’s way better than the predicted overall Footsie yield of 4.8%, but a lot of that will be due to the shares’ low forward P/E rating of just eight after the price has fallen back a little in recent months. The downwards pressure is coming from fears over falling demand as global economic weakness could well hurt the commodities market in 2020 and beyond. China, in particular, has reported a slowing of economic growth to 6% in the three months to 30 September, from 6.2% But a growth rate of 6% is something many a developed economy can only dream of. And the fact Chinese growth has been slowing for a couple of decades is only to be expected as that country matures further. It seems like only yesterday I was reading about Chinese growth dropping below 9% amid fears of a ‘hard landing’ for its economy — which still hasn’t happened. Copper bottomed Any downturn in China might be expected to affect Antofagasta (LSE: ANTO) too. But its focus on copper has helped keep its share valuation buoyant and we’re looking at a forward P/E of 19 (and a modest dividend yield of 2.5%). The company’s Q3 production report Wednesday was opened by CEO Iván Arriagada, who spoke of “another quarter of strong production underpinned by a consistent operating performance, which together with higher grades at some of our operations, contributed to year to date copper volumes of 584,200 tonnes which are 16% higher than the same period in 2018.” Production costs are falling, and the firm expects full-year production growth in line with previous guidance. The fact that the firm also produces gold can’t have hurt, as Brexit-scared investors are helping to push up the price of that otherwise essentially useless shiny stuff. Antofagasta produced 226,600 ounces of gold year-to-date, up 88.7% on the previous year. Silver plated Meanwhile, at silver producer Fresnillo (LSE: FRES), CEO Octavio Alvídrez spoke of the company’s Q3 production, saying: “While grades remain variable, we are now processing higher volumes of ore on a more consistent basis.” Year-to-date total silver production actually declined 11.8%, at 40,839 koz, with gold down 7% at 642,169 oz — but that’s still a lot of ounces of both. The period was affected by “taking actions to address maintenance performance, contractor productivity and equipment availability.” Work currently being undertaken should hopefully help stabilise grades and boost overall volumes. After a huge surge in 2016, the Fresnillo share price has since been steadily declining, and has lost two thirds of its value since an August peak that year. But even after that, forecasts still put the shares on a forward P/E multiple of 31 for the full year. A 29% earnings rise indicated for 2020 would drop that, but only as far as 25, and dividends are set to yield only around 2%. I think mining shares are great for long-term, if variable, income, but I’d buy on the down cycle. High-Yield Hidden Star? Discover the name of a Top Income Share with a juicy 6% forecast dividend yield that has got our Motley Fool UK analyst champing at the bit! Find out why he thinks “the stock’s current weakness may offer us the chance to buy a proven dividend performer at what could be a bargain price”. Click here to claim your copy of this special report now — free of charge! Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo.
the grumpy old men: MOTELY FOOL Are Fortescue, Rio Tinto and BHP shares a buy for their dividends? Lina Lim | October 3, 2019 1:23pm | More on: BHP FMG RIO ASX iron ore miners ASX 200 iron ore miners BHP Group Ltd (ASX: BHP), Fortescue Mining Group Ltd (ASX: FMG) and Rio Tinto Limited (ASX: RIO) have all staged significant share price recoveries after iron ore supply woes throughout August. But are they a buy for their dividends, on current prices? What’s the outlook for iron ore? The iron ore spot price currently sits at around US$90 per tonne, while Chinese iron ore futures soared by more than 2% on Wednesday. I believe the market has largely internalised the news that the world’s largest iron ore miner, Vale SA, is returning to form after its tailings dam disaster earlier this year. The Brazilian miner maintained its 2019 iron ore and pellet sale guidance of 207–322 million tons, with sales expected to be around the mid-point of that range. With that in mind, the Australian government sees iron ore prices in 2019 averaging around $80 per tonne FOB, reflecting the full effect of supply disruptions and firm demand from China. However, it also expects the price to gradually decline to average $57 by 2021, as the seaborne market gradually returns to balance. In terms of global economies, China has maintained a steady level of steel production with its central bank announcing that it will continue to implement a prudent monetary policy and increase the strength of counter-cyclical measures. This should buoy the iron ore spot price and steel production levels. On the flip side, US manufacturing purchasing managers’ index (PMI) signalled that manufacturing business activity was contracting at a stronger pace than expected. This reflects lower consumer demand and a contraction in new export orders. In the short term, the iron ore spot price could maintain the US$80–90 mark as the Australian dollar continues to pivot lower on the back of lower interest rates. This could expose investors to both capital upside and strong dividends. In terms of dividend yield, Fortescue pays a whopping 14% gross yield thanks to its 195% increase in underlying net profit and 266% increase in earnings per share in FY19. This represents a 78% dividend payout ratio – a delicate position where there isn’t too much space to increase dividends, while a lower iron price could potentially lower dividends in the future. BHP and Rio Tinto, on the other hand, pay a 7.8% and 8.7% gross yield, respectively. Foolish takeaway Current market conditions are volatile as lower interest rates drive capital inflows into equity markets, while global economic is showing signs of sluggish growth. A short-term opportunity may exist for investors as iron ore prices remain steady and miners continue to reap the benefits of a higher spot price and increased steel production from China. However, investors should be wary of the medium–long term outlook and the implications that may have on dividends.
the grumpy old men: THE MOTELY FOOL Can the Glencore share price ever return to 400p? Roland Head | Wednesday, 7th August, 2019 | More on: GLEN Diggers and trucks in a coal mine Image source: Getty Images. The Glencore (LSE: GLEN) share price has fallen by nearly 30% over the last year, during a period when big miners such as Rio Tinto and Anglo American have seen gains. GLEN’s record highs of more than 400p at the start of 2018 now seem like a distant memory. Shareholders may be wondering what’s gone wrong at this mining and trading group. I’ve been taking a look at today’s half-year results to find out more. In this article, I’ll explain why I’m beginning to see some value in this FTSE 100 stock. Grim headlines The headline figures from Glencore’s half-year profits weren’t great. The group’s adjusted operating profit fell by 56% to $2,229m during the first half of the year. Funds from operations, a measure of cash generation, fell by 37% to $3,516m. This news wasn’t a complete surprise. The market was already braced for a weaker performance from the firm, which has been hit by the falling price of cobalt and by problems at its African copper mines. Spot the difference With big miners such as Rio Tinto reporting bumper profits, it’s tempting to think that commodity prices must be rising. In fact, Rio’s record half-year profits last week were driven by just one factor — iron ore. The red stuff hit a high of over $120 per tonne during the first half, lifting Rio’s iron ore profits by 39% to $4.5bn. This surge in profit disguised big falls in Rio’s half-year earnings from other commodities. For example, aluminium was down 64%, profits from copper and diamonds were 23% lower. Coal was down 27%. The problem for Glencore is that although its trading business handles iron ore, it doesn’t own any iron ore mines. So the group has not benefited directly from recent high prices. This is one of the main reasons why today’s figures look so poor when compared to iron ore-mining rivals. Troubles? GLEN’s got ’em Admittedly, Glencore has some other problems too. The company is currently facing a number of US legal investigations into alleged corruption. Production at the Mutanda cobalt mine in the Democratic Republic of Congo will now be mothballed for two years. During this time, the firm hopes prices will rise, allowing it to clear a backlog of 10,000 tonnes of unsold production. Today’s results include a $350m write-down on the value this inventory. Finally, the group’s African copper mines have also been underperforming and recorded a loss of $315m during the first half of the year. Chief executive Ivan Glasenberg said today that a programme of changes is under way to address this, but this is unlikely to be a quick fix. Still a cash machine Despite these problems, today’s accounts suggest that Glencore’s cash generation remains strong. My sums show that the group generated free cash flow of about $7.7bn over the last 12 months, compared with $7.2bn in 2018, excluding acquisitions. On this measure, Glencore shares are valued at around five times free cash flow. I see this as extremely cheap. This level of free cash flow also provides strong backing for this year’s dividend of $0.20 per share, which supports a yield of 7.3%. It isn’t without risk. But in my view, the shares are starting to look tempting. A return to 400p could take some time, but I think the stock could be worth buying at current levels.
maywillow: Macquarie tips Rio Tinto share price to hit $114 Motley Fool Staff | July 3, 2019 | More on: RIO Financial news wires are reporting that the expert mining analysts at Macquarie Group Ltd (ASX: MQG) expect the Rio Tinto Limited (ASX: RIO) share price could hit $114 in 2019. Rio Tinto shares are already up around 34% over just the past year to $107.14 today largely on the back of the unexpected rise of the iron ore price from US$67 per tonne at the start of 2019 to US$121 per tonne today according to data provider Market Index. The iron ore price rise is largely due to supply constraints out of Brazil after a tragic mining accident killed more than 300 people in the world’s second largest producer of iron ore behind Australia. Rio Tinto has also benefited from the falling Australian dollar as most of the WA miner’s operating costs are incurred in Australian dollars before it sell its product in US dollars. This provides a big uplift to margins and profits meaning the miner can pay out bigger dividends. On June 19 2019 Rio was forced to revise down 2019 production to between 320 million to 330 million tonnes of iron ore in a result it blamed on “operational challenges” and a higher proportion of low grade product that originally expected.
la forge: A Deeper Look into the Quant Scorecard For: Rio Tinto Group (LSE:RIO), UBS Group AG (SWX:UBSG) Written by John Wilkes × June 9, 2019 There are many different tools to determine whether a company is profitable or not. One of the most popular ratios is the “Return on Assets” (aka ROA). This score indicates how profitable a company is relative to its total assets. The Return on Assets for Rio Tinto Group (LSE:RIO) is 0.142469. This number is calculated by dividing net income after tax by the company’s total assets. A company that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return. Creating a diversified stock portfolio is one way that investors may combat the unknown. Appropriate levels of risk that include different market scenarios might vary from one individual investor to the next. Investors may need to careful that they do not become too reliant on one big position. When that position is producing returns, it can be easy to assume that the holding will continue to produce positive results. If the portfolio is weighted too heavily on one or two big positions, an overall market downturn may send the investor reeling. Finding that proper portfolio balance is typically what dedicated investors strive for. Taking a step further we can take a look at various other valuation metrics. Rio Tinto Group (LSE:RIO) has a Price to Book ratio of 2.146671. This ratio is calculated by dividing the current share price by the book value per share. Investors may use Price to Book to display how the market portrays the value of a stock. Checking in on some other ratios, the company has a Price to Cash Flow ratio of 7.933295, and a current Price to Earnings ratio of 6.876337. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued. The Free Cash Flor Yield 5yr Average is calculated by taking the five year average free cash flow of a company, and dividing it by the current enterprise value. Enterprise Value is calculated by taking the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents. The average FCF of a company is determined by looking at the cash generated by operations of the company. The Free Cash Flow Yield 5 Year Average of Rio Tinto Group (LSE:RIO) is 0.049266. The Return on Invested Capital (aka ROIC) for Rio Tinto Group (LSE:RIO) is 0.163431. The Return on Invested Capital is a ratio that determines whether a company is profitable or not. It tells investors how well a company is turning their capital into profits. The ROIC is calculated by dividing the net operating profit (or EBIT) by the employed capital. The employed capital is calculated by subrating current liabilities from total assets. Similarly, the Return on Invested Capital Quality ratio is a tool in evaluating the quality of a company’s ROIC over the course of five years. The ROIC Quality of Rio Tinto Group (LSE:RIO) is 3.920713. This is calculated by dividing the five year average ROIC by the Standard Deviation of the 5 year ROIC. The ROIC 5 year average is calculated using the five year average EBIT, five year average (net working capital and net fixed assets). The ROIC 5 year average of Rio Tinto Group (LSE:RIO) is 0.117215. Rio Tinto Group (LSE:RIO) presently has a current ratio of 1.92. The current ratio, also known as the working capital ratio, is a liquidity ratio that displays the proportion of current assets of a business relative to the current liabilities. The ratio is simply calculated by dividing current liabilities by current assets. The ratio may be used to provide an idea of the ability of a certain company to pay back its liabilities with assets. Typically, the higher the current ratio the better, as the company may be more capable of paying back its obligations. In terms of value, Rio Tinto Group (LSE:RIO) has a Value Composite score of 24. Developed by James O’Shaughnessy, the VC score uses five valuation ratios. These ratios are price to earnings, price to cash flow, EBITDA to EV, price to book value, and price to sales. The VC is displayed as a number between 1 and 100. In general, a company with a score closer to 0 would be seen as undervalued, and a score closer to 100 would indicate an overvalued company. Adding a sixth ratio, shareholder yield, we can view the Value Composite 2 score which is currently sitting at 16. Quant Ranks (ERP5, Gross Margin, F Score) The ERP5 Rank is an investment tool that analysts use to discover undervalued companies. The ERP5 looks at the Price to Book ratio, Earnings Yield, ROIC and 5 year average ROIC. The ERP5 of Rio Tinto Group (LSE:RIO) is 4487. The lower the ERP5 rank, the more undervalued a company is thought to be. The Piotroski F-Score is a scoring system between 1-9 that determines a firm’s financial strength. The score helps determine if a company’s stock is valuable or not. The Piotroski F-Score of Rio Tinto Group (LSE:RIO) is 7. A score of nine indicates a high value stock, while a score of one indicates a low value stock. The score is calculated by the return on assets (ROA), Cash flow return on assets (CFROA), change in return of assets, and quality of earnings. It is also calculated by a change in gearing or leverage, liquidity, and change in shares in issue. The score is also determined by change in gross margin and change in asset turnover. Investors may be interested in viewing the Gross Margin score on shares of Rio Tinto Group (LSE:RIO). The name currently has a score of 40.00000. This score is derived from the Gross Margin (Marx) stability and growth over the previous eight years. The Gross Margin score lands on a scale from 1 to 100 where a score of 1 would be considered positive, and a score of 100 would be seen as negative. Price Index The Price Index is a ratio that indicates the return of a share price over a past period. The price index of Rio Tinto Group (LSE:RIO) for last month was 1.02182. This is calculated by taking the current share price and dividing by the share price one month ago. If the ratio is greater than 1, then that means there has been an increase in price over the month. If the ratio is less than 1, then we can determine that there has been a decrease in price. Similarly, investors look up the share price over 12 month periods. The Price Index 12m for Rio Tinto Group (LSE:RIO) is 1.11648. Price Range 52 Weeks Some of the best financial predictions are formed by using a variety of financial tools. The Price Range 52 Weeks is one of the tools that investors use to determine the lowest and highest price at which a stock has traded in the previous 52 weeks. The Price Range of Rio Tinto Group (LSE:RIO) over the past 52 weeks is 0.946000. The 52-week range can be found in the stock’s quote summary.
christh: Why Rio Tinto Is 'Top Dividend-Paying Rock Stock' With 4.77% Yield (RIO) August 10, 2017, 09:57:43 AM EDT By, BNK Invest Rio Tinto plc (Symbol: RIO) has been named as the ''Top Dividend-Paying Rock Stock'', according to Dividend Channel , which published its most recent ''DividendRank'' report. The report noted that among shares of companies in the minerals and mining space, RIO displayed both attractive valuation metrics and strong profitability metrics. For example, the recent RIO share price of $46.16 represents a price-to-book ratio of 1.6 and an annual dividend yield of 4.77% - by comparison, the average stock in Dividend Channel's coverage universe yields 3.6% and trades at a price-to-book ratio of 2.3. The report also cited the strong semi-annual dividend history at Rio Tinto plc, and favorable long-term multi-year growth rates in key fundamental data points. The report stated, '' Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation. That's what we aim to find using our proprietary DividendRank formula, which ranks the coverage universe based upon our various criteria for both profitability and valuation, to generate a list of the top most 'interesting' stocks, meant for investors as a source of ideas that merit further research. '' The current annualized dividend paid by Rio Tinto plc is $2.200118/share, currently paid in semi-annual installments, and its most recent dividend ex-date was on 08/09/2017. Below is a long-term dividend history chart for RIO, which the report stressed as being of key importance. Indeed, studying a company's past dividend history can be of good help in judging whether the most recent dividend is likely to continue.
christh: Rio Tinto: A Core Investment In The Mining Sector Despite The Dividend Cut Aug.10.16 | About: Rio Tinto (RIO) Rio Tinto reports acceptable half-year results and cuts the interim dividend by 58% to 45 cents. The dividend for the full year will be at least 110 cents. Higher free cash flow allowed to reduce net debt. If iron remains at $55, Rio Tinto will surely continue to make progress. Rio Tinto (NYSE:RIO), the world's second largest iron ore miner, reported half-year results on August 3. Underlying EBITDA fell 27% to $5,367M compared to $7,303M in the year before. Underlying earnings dropped 47% to $1,563M or $0.95 per diluted share. Strong free cash flow enabled the company to reduce net debt from $13.8B at the end of last year to $12.9B on June 30, and gearing was lowered from 23% to 21%. Underlying earnings are a key metric for Rio Tinto shareholders as they determine the dividend after the introduction of the new policy in February 2016. Total cash returns to shareholders shall be in a range of 40% to 60% of underlying earnings in aggregate through the cycle. The 45 cents interim dividend which was just declared is in the middle of that range and represents 52% of underlying earnings. Nevertheless, it is a 58% reduction compared to the last interim dividend of 107.5 cents. Rio Tinto also stated that for FY16, the board's intention is the final dividend paid next year will be at least 65 cents per share. Business Outlook After the recovery of prices from their 10-year lows at the beginning of the year, the importance of iron ore for Rio Tinto's profitability is as high as it used to be in the past. Iron ore represents 60% of underlying EBITDA in the first half of 2016 and 82% of underlying earnings before other items. Rio Tinto's Product Groups Product Group Revenue [$M] 1HY16 Revenue [$M] 1HY15 Underlying EBITDA [$M] 1HY16 Underlying EBITDA [$M] 1HY15 Underlying Earnings [$M] 1HY16 Underlying Earnings [$M] 1HY15 Iron Ore 6,303 7,004 3,438 4,010 1,743 2,100 Aluminum 4,553 5,455 1,076 1,688 377 793 Copper & Diamonds 2,453 3,263 655 1,335 -67 393 Energy & Minerals 2,960 3,524 531 620 82 74 Other operations/ other items/ exploration/net interest -4 -12 -337 -350 -572 -417 Total 16,293 19,234 5,367 7,303 1,563 2,923 Source: Company website. Iron ore is Rio Tinto's bright spot, and it will likely continue to be the driver for an improved business performance going forward. In 1HY16, Rio Tinto realized an average iron ore price of $44.5/wmt FOB basis, equivalent to $48.4/dmt. Pilbara cash unit costs fell to $14.30/ton, compared to $16.20 in the first half of 2015 . At present it seems that the iron ore price recovery can be sustainable, and assuming an average price of $55/dmt for the rest of the year, Rio Tinto's EBITDA in 2HY16 could grow by around $800M. All other segments had to face stronger headwinds in the first half-year, and combined underlying EBITDA fell 38% or $1,381M from $3,463M to $2,262M. This compares to a $572M EBITDA reduction corresponding to a 14% decline for the Iron Ore product group. Although some improvements can be expected in the second half of the year, the other product groups are unlikely to have a substantial positive impact on Rio Tinto's result. For Aluminum, the second largest segment, I expect a slightly improved performance based on constant volume and better pricing. Not much progress can be anticipated from Copper and Diamonds. Copper is one of the few disappointments in the commodity sector as prices remain at depressed levels, and the red metal did not benefit from the broad mining rally of 2016. Volumes will not contribute to growth either as Rio Tinto's production will essentially remain flat in the second half-year. Energy and Minerals is likely to see a stronger second half-year, driven by various factors. Prices for thermal coal recovered noticeably in recent months due to higher imports to China. Metallurgical coal prices are up as well inline with strong demand for steelmaking raw materials. The contribution of iron ore pellets from IOC (Iron Ore Company of Canada) which are reported under Energy and Minerals, will continue to increase on higher production volumes. All these trends point toward higher cash flows in the second half of 2016. Net cash generated from operating activities of $3.2B in 1HY16 was 24% lower than in 2015, but capital expenditures of $1.3B ($1.1.B less than last year) and raising $0.6B through asset sales increased cash generation, allowing Rio Tinto to reduce net debt by $0.9B. The reduced dividend in the second half-year will liberate additional cash. With the final payment in April 2016, the company distributed $1.9B to shareholders. The lower interim dividend of $0.45 will save Rio Tinto around $1.1B later in the year. On the other side, capital and exploration expenditures will increase based on Rio Tinto's guidance of $4.0B for FY16. New projects and primarily the development of the Oyu Tolgoi underground copper mine in Mongolia with a projected investment volume of $5.3B and the Amrun bauxite project in Queensland with $1.8B remaining will increase capex in the near future. They will bring expenditures up to $5.0B in 2017 and $5.5B in 2018, including around $2.0B of annual sustaining capex. Assuming an at least stable price environment for Rio Tinto's major products and predominantly iron ore, my estimation is that the company's operational performance will continue to improve which should lead to at least constant free cash flow. This should enable the company to reduce net debt further or possibly pay out more than the $1.10 minimum dividend. Share Price and Dividend With the strongest balance sheet and the lowest cost delivered to China, Rio Tinto remains the most solid of the major iron ore miners. This has not spared shares from falling nearly 50% to a low of $22 in January, but the stock has recovered nearly 50% since then. Compared with its peers BHP Billiton (NYSE:BHP) (NYSE:BBL) and particularly Vale SA (NYSE:VALE), Rio Tinto has been less volatile. Despite the dividend cut, Rio Tinto maintains an above average yield, higher than BHP's, not to mention Vale which suspended the dividend entirely. With the outlook of a minimum dividend of $1.10 for FY16, Rio Tinto yields 3.4%. As I said earlier, a healthy cash flow might even allow Rio Tinto to pay more than $0.65 final dividend, but it is too early to count on it yet. Conclusion Rio Tinto has mastered the commodity downturn quite well, and the stock bottomed earlier in the year. The company's balance sheet which already belonged to the strongest in the industry improved further after the debt repayment. I'm optimistic about Rio Tinto's near-term outlook and the stock remains one of the key holdings in my mining's portfolio. Disclaimer: Opinions expressed herein by the author are not an investment recommendation, any material in this article should be considered general information, and not relied on as a formal investment recommendation. Before making any investment decisions, investors should also use other sources of information, draw their own conclusions, and consider seeking advice from a broker or financial advisor. hTtp://
christh: Will Rio Tinto cut its dividend? By Robert Sutherland Smith 29 January 2016 Rio Tinto (RIO) at 1724p, after the annual production figures. Could the market be considerably under-valuing Rio Tinto because it is too bearish about its cash position? I explain here why that may be the case. The Rio Tinto (RIO) share price (1724p last seen) gives a historic annual dividend yield of around 8.7% (at the current pound/dollar exchange rate of $1.44 to the pound). Rio does its accounting in dollars. In accordance with convention, that kind of super normal dividend yield implies a dividend cut which usually, but not always of course, choreographs with an improvement in the share price. The company is clearly preoccupied with costs according to the news of cost cutting and the sale of assets. This week it was confirmed that the company is to sell (subject to conditions) its coking coal asset Mount Pleasant, New South Wales, for a stated $830 million, which, added to disinvestments since January 2013, will take the total value of disposals to over $5 billion. However, the company is at the same time planning to increase its capital expenditure on big efficient mines elsewhere. Most notably, the extension of the Mongolian copper mine Oyu Tolgoi underground with $4.4 billion dollars of syndicated loan finance that will have to be serviced. There is also what is described as the prime Amrun Bauxite development which will take another $1.9 billion of project finance. So the picture of Rio Tinto as the company stripping out billions of dollars of costs and now, non strategic assets, has to be adjusted by thoughts about the costs related to expansion elsewhere. Against the background of weak iron ore, copper and coking coal commodity prices and geo political worries generally, the Rio Tinto share price has massively underperformed the FTSE100 Index in the last six months, falling by near 30% during a period when the market went down by only 11%. That fall crystallises concerns that the dividend may come under financial pressure as its cost competes with the cost of financing the project finance of these new investments. So the question now is will the Rio dividend will be cut – clearly the market thinks it will – with the current historic dividend now at 8.6%? That is clearly too high a dividend at which to sell these shares, if for no other reason than the fact that the cutting of such high dividends is usually taken by the market as a confidence indicator, leading to an improvement in the share price for that reason. Before considering the dividend outlook further, it is worth noting that this month’s production statement for the fourth quarter of 2015 and the year as a whole looks better than circumstances might suggest. I add that the statement gives volume details and not financial data, which will come in due course – with the publication of the annual report and accounting for last year. Because of Pilbara coming more fully on stream, the shipment and production figures for iron ore are notably impressive. For the whole of 2015 iron ore shipment and production rose eleven per cent in volume terms. The price might have fallen dramatically, but that is at least partly compensated for by the company selling more of it in 2015 than in 2014. With the exception of copper and titanium dioxide slag, all categories of production demand performed positively in 2015: bauxite plus four per cent; aluminium plus one per cent; hard coking coal plus 11%. Semi soft thermal coal production was the same as a year before, whilst the relatively small in size titanium dioxide slag saw production fall by a quarter. In short, Rio Tinto demonstrated efficiency across many segments of shipment and production, which justifies a relatively bullish view of the company’s operations, even markets like these. Returning to the question of the dividend, it is worth remembering that according to the last balance sheet dated 30th June 2015, the company had a strong cash position. Operating cash flow was $4.4 billion despite the fact that that the then statutory net income figures was down more than eighty per cent from the net profit figure published a year earlier. So although earnings were down by more than eighty per cent, operating cash flow was down by less than a quarter of that figure. A principle reason being that that the depreciation charge had risen by 2% to $2.3 billion – an amount almost three times the published net profit figure. The depreciation charge alone was more than enough to pay the dividend of $2.1 billion. It constituted a reliable 52% of total operating cash flow in the last June balance sheet. The total operating cash flow figure of $4.4 billion almost covered capital expenditure and the cost of dividends at $4.6 billion. Most significantly, quarter-end cash on 30th June was $11 billion – despite everything, 16.5% higher than a year earlier. I do not take a cut in the Rio dividend for granted. There are two reasons for considering a purchase of RIO shares at this low level: first, that the dividend will not be cut (in which case the shares are cheap); or that there might be such a cut, which is already discounted, prompting the shares to rise on relief, in which case the shares are also cheap. I cannot see the future and do not know what might or might not have been said by the company to analysts. But I am one who thinks there is a strong chance that the dividend will not be cut. The shares are selling at only 2.8 times last balance sheet cash or on my estimate around 600p a share. The market consensus estimates are that the annual dividend will rise a little (by a postulated 2.2%) this year to give a prospective estimated dividend yield of 8.8%. There seems to be a discrepancy between the analysts and the market in general. hxxp://
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