26 July 2023
If you are covering Rio Tinto’s latest financial results, please find below a comment from Jamie Maddock, equity research analyst at Quilter Cheviot:
“In light of Rio Tinto's latest results, it's clear that the company has experienced a significant dip in earnings compared to last year. This downturn has primarily resulted from the decreased prices in commodities, which have unfortunately overshadowed the company's modest growth in output. Furthermore, the performance of their non-core segments underwhelmed, leading to a slight miss on earnings versus consensus.
“China's sentiment towards the company appears to be quite brittle at present, and its recovery in the post-Covid environment has lagged behind expectations. Nevertheless, recent statements from the Chinese Politburo suggest that we might see an easing of property terms soon, which, in turn, should work in favour of Rio Tinto.
“While the earnings performance of Rio Tinto has been very modestly weaker than anticipated, it's crucial to highlight the significant potential for an uplift in earnings in the near future. The company's leverage to higher iron ore prices, driven by improvements in China's activity, could serve as a strong boost to their performance. Therefore, despite the current challenges, there is a promising possibility for improved profitability on the horizon.”
