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159310
Tue, 02/08/2011 - 11:35
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http://m.oananews.org//node/159310
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Huge jump in Rio Tinto FY profit expected
(AAP) - Rio Tinto Ltd is expected to report a jump in annual net profit of almost $US10 billion ($A9.89 billion) on Thursday, driven by strong prices for its key products of iron ore and copper.
A strong operating cashflow, thanks to the China-induced global commodities boom, is expected to lead to the announcement of a share buyback of at least $US5 billion ($A4.94 billion).
Morningstar Equities analyst Mark Taylor said he expected the mining giant would post a $A14.7 billion ($US14.87 billion) net profit for the 2010 calendar year, compared to $US4.872 billion ($A4.82 billion) in 2009.
"Iron ore and copper in particular are the key drivers in that," Mr Taylor said.
Deutsche Bank predicts Rio Tinto will report underlying earnings of $US14 billion ($A13.84 billion), up 123 per cent from $US6.3 billion ($A6.23 billion) in 2009.
This compares with a consensus among analysts of $US14.1 billion ($A13.94 billion).
"The result will largely be driven by iron ore, which should contribute 73 per cent to underlying earnings from operations," Deutsche Bank said.
It also said Rio Tinto was expected to announce a final dividend of 63 US cents together with a minimum $US5 billion ($A4.94 billion) on-market share buyback due to strong operating cashflow in the second half.
Deutsche Bank said it did not expect a turnaround from Rio Tinto's aluminium division and forecast a sharp fall in earnings from $US358 million ($A354.02 million) in the first half to $US136 million ($A134.49 million) in the second half, due to higher input costs and currency movements.
Mr Taylor said Rio Tinto's aluminium division was the "sleeper" that could very quickly contribute substantially to its bottom line should current positive trends continue.
Aluminium prices were improving and the de-coupling of alumina prices from aluminium was a strong tail wind, he said.
Mr Taylor said there was potential for Rio Tinto to benefit from even further rises in the copperprice from current levels above $US10,000 per tonne.
The copper price hit a record $US10,160/t in trade in London on Monday on supply concerns.
"The world is going to be short on copper in the next couple of years because grades have been falling," he said.
"Particularly over the next year and a half to two years or so, there could be some supply side constraint.
"There has been no shortage of demand and it has made sense for the major miners to not really try too hard to produce much copper because what they lose on volume they make up for in price."
Deutsche Bank said Rio Tinto could increase its 2011 capital expenditure budget of $US11 billion.
A strong operating cashflow, thanks to the China-induced global commodities boom, is expected to lead to the announcement of a share buyback of at least $US5 billion ($A4.94 billion).
Morningstar Equities analyst Mark Taylor said he expected the mining giant would post a $A14.7 billion ($US14.87 billion) net profit for the 2010 calendar year, compared to $US4.872 billion ($A4.82 billion) in 2009.
"Iron ore and copper in particular are the key drivers in that," Mr Taylor said.
Deutsche Bank predicts Rio Tinto will report underlying earnings of $US14 billion ($A13.84 billion), up 123 per cent from $US6.3 billion ($A6.23 billion) in 2009.
This compares with a consensus among analysts of $US14.1 billion ($A13.94 billion).
"The result will largely be driven by iron ore, which should contribute 73 per cent to underlying earnings from operations," Deutsche Bank said.
It also said Rio Tinto was expected to announce a final dividend of 63 US cents together with a minimum $US5 billion ($A4.94 billion) on-market share buyback due to strong operating cashflow in the second half.
Deutsche Bank said it did not expect a turnaround from Rio Tinto's aluminium division and forecast a sharp fall in earnings from $US358 million ($A354.02 million) in the first half to $US136 million ($A134.49 million) in the second half, due to higher input costs and currency movements.
Mr Taylor said Rio Tinto's aluminium division was the "sleeper" that could very quickly contribute substantially to its bottom line should current positive trends continue.
Aluminium prices were improving and the de-coupling of alumina prices from aluminium was a strong tail wind, he said.
Mr Taylor said there was potential for Rio Tinto to benefit from even further rises in the copperprice from current levels above $US10,000 per tonne.
The copper price hit a record $US10,160/t in trade in London on Monday on supply concerns.
"The world is going to be short on copper in the next couple of years because grades have been falling," he said.
"Particularly over the next year and a half to two years or so, there could be some supply side constraint.
"There has been no shortage of demand and it has made sense for the major miners to not really try too hard to produce much copper because what they lose on volume they make up for in price."
Deutsche Bank said Rio Tinto could increase its 2011 capital expenditure budget of $US11 billion.
