Eyes Down For Rio Tinto plc’s Results

Rio TintoWe have first-half results from Rio Tinto (LSE: RIO) (NYSE: RIO.US) due on Thursday 7 August, and thanks to a first-half production report released in July, we know they’re going to be good.

Telling us of “very strong first half production“, the update revealed new records for first-half iron ore shipments, production and rail volumes.

Record production

Rio’s iron ore production in the second quarter came in at 73.1 million tonnes, up 10% on the same quarter a year previously and up 11% on the first quarter this year. The half saw a 10% rise over the same period last year, to 139.5 million tonnes.

There have been fears raised of overproduction of iron, but it seems that Rio can shift everything it can dig up, with actual iron ore shipments racing ahead of production and drawing down stocks.

For the six-months, we heard of iron ore shipments reaching 142.4 million tonnes for a rise of 20%, with Q2 bringing in a 23% rise over Q1 to 75.7 million tonnes.

Much of this success was due to the firm’s Pilbara iron ore development, which was ramped up to a production rate of 290 million tonnes a year two months ahead of schedule — and Rio says it is on track for a capacity of 360 million tonnes a year by the end of the first half of 2015.

Copper doing well

Copper production also rose impressively, up 28% in the second quarter and up an overall 23% in the half. And the company has lifted its production guidance for the valuable metal after the half saw higher grades and better recovery at Kennecott Utah Copper and a ramp-up in production at Oyu Tolgoi.

Chief executive Sam Walsh said that “we continue to transform Rio Tinto into a stronger, more disciplined business that will consistently deliver strong cash flows and shareholder value“.

Laying the foundations

The Rio Tinto share price has spiked up a little, but forecasts still put it on a relatively modest forward P/E of 11.5 with a dividend yield of 3.6% predicted. But the Rio Tinto story isn’t really about this year, or even next — it’s about the longer term, for which the firm’s current efforts are building a firm foundation.

I’m looking forward to decent figures and a strong forward outlook on 7 August.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned.