RIO Reports Weak Half-Year 2012 - Analyst Blog

By Zacks | August 09, 2012 AAA

Rio Tinto plc. (RIO) reported weak financial results in half-year 2012. Net earnings attributable to ADR holders of Rio Tinto were $5,885 million during the period, down 22% year over year from $7,587 million reported in half-year 2011, hurt by lower prices. Earnings per ADR from continuing operations were approximately $3.16 compared with $3.87 in the comparable period last year. Reported earnings also missed the Zacks Consensus Estimate of $3.30.         

Consolidated sales in half-year 2012 moved down to $25,336 million from $29,056 million recorded a year ago. The decline in sales resulted from lower demand for metals and minerals from China, Europe as well as the US.

Operating profit in the reported period stood at $6,662 million compared with $11,056 million in the year-ago period. Operating margin dropped to 26.3% from 38.1% in the previous year. Underlying EBITDA plunged 29% to $10,079 million from $14,253 million in the comparable period last year.

The company's capital expenditure increased to $7,561 million in the reported period from $5,134 million in the same period last year, due to Rio's investment in property, plant & equipment and intangible assets.

Net cash generated from operating activities was $3,315 million compared with $8,656 million in the year-ago period. Cash and cash equivalents came in at $7,286 million compared with $9,670 million a year ago.

Consistent with its previous guidance, Rio announced a 34% year-over-year hike in its dividend payout to 72.5 cents per share. Rio's $7 billion share buy-back program was completed at the end of the first operational quarter of 2012.

Headquartered in London, UK, Rio Tinto plc is engaged in exploring, mining, and processing the earth's mineral resources, producing a broad range of metals and minerals. Rio Tinto competes against global mining giants like BHP Billiton Ltd (BHP) and Vale S.A (VALE).

Rio Tinto has a Zacks #5 Rank, reflecting a short-term (1-3 months) Strong Sell rating.

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