Rio Tinto plc (RIO) reported strong financial results for 2013. The company generated underlying earnings of $10.2 billion, up 10% year over year from underlying earnings of $9.3 billion.
The increase in earnings was primarily a result of cost reduction initiatives undertaken by the company. Underlying earnings per ADR came in at $5.53 against $5.01 reported last year. Earnings were also higher than the Zacks Consensus Estimate of $5.05 per ADR.
Sales: Consolidated sales in 2013 moved up to $51.2 billion from $50.9 billion recorded a year ago. The top-line growth can be attributed to rise in sales for most of the commodities. However, sales missed the Zacks Consensus Estimate of $56.6 billion.
Production Details: Rio Tinto reported strong production results for the fourth quarter of 2013. The company reported rise in production of iron ore, mined copper, bauxite, hard coking coal, while the production of aluminium, semi-soft and thermal coal and titanium dioxide feedstock declined year over year.
The cyclone Christine at the end of Dec 2013 did not significantly affect the production and the company reported record production and shipments of iron ore for 2013. In the year, Rio Tinto produced roughly 266 million tonnes of iron ore, up 5% year over year.
Costs/Margins: Rio Tinto’s exploration and evaluation costs declined 51.9% year over year to $948 million in 2013. Operating profit in the reported period stood at $7.4 billion which compared favorably with a loss of $1.9 billion a year ago.
Balance Sheet/Cash Flow: Exiting 2013, cash and cash equivalents came in at $10.2 billion, up from $7.1 billion at the end of 2012. Long-term borrowings and other financial liabilities were recorded at $24.6 billion, compared with $24.7 billion exiting 2012.
Net cash flow from operating activities in 2013 was $15.1 billion compared with $9.4 billion in the year-ago period. The company’s capital expenditure decreased to $13.0 billion in the reported period from $17.6 billion in the same period last year.
Rio Tinto paid dividend of $1.92 per share in 2013, a 15% increase from $1.67 paid in 2012.
Capital expenditure in 2014 is expected to be less than $11 billion and approximately $8 billion in 2015.
Other Stocks to Consider
With a market capitalization of $107.2 billion, Rio Tinto currently carries a Zacks Rank #2 (Buy). Other stocks worth a watch in the industry include Stillwater Mining Co. (SWC), Augusta Resource Corp. (AZC) and Denison Mines Corp. (DNN). While Stillwater Mining sports a Zacks Rank #1 (Strong Buy), Augusta Resources and Denison Mines hold the same Zacks Rank as Rio Tinto.
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