Sharecast - Berenberg stated Rio Tinto (LON:RIO) had reported iron ore production of 79.0m tonnes, in line with its 78.7m tonne estimate, while shipments of 82.5m tonnes were better than its 78.7m tonne estimate. However, when drilling slightly into the detail, the analysts noted that while shipment volumes were good, a lot of the additional material came from lower-quality and lower-value SP10 material.
The German bank also noted that due to geotechnical issues at its Escondida site and conveyor issues at Kennecott, Rio has cut copper guidance to 590,000-640,000 tonnes from 650,000-710,000 tonnes. For the aluminium business, bauxite production was 12.1m tonnes, below its 12.7m tonne estimate due to poor weather in Australia.
Berenberg, which also stood by its 6,600.0p target price on the stock, said: "We update our model for the quarterly report, which results in limited changes. We reiterate our 'buy' rating on Rio, which offers a 9.2% FCF yield, a 7% dividend yield, and is trading on 4.4x EBITDA and 1.09x NAV."
Reporting by Iain Gilbert at Sharecast.com