Yahoo Finance Rio Tinto Reports Weak 2015 Results on Market Headwinds
Premium industrial metals & minerals company Rio Tinto plc RIO reported weak results for full-year 2015. Macroeconomic issues such as recession in China, debt negotiations in Greece, weak commodity prices and extensive business rivalry in the global mining industry were primarily responsible for the dismal results.
Underlying earnings came in at $4.5 billion, down 51% from the year-ago tally of $9.3 billion. Underlying earnings per ADR were $2.59 compared with $5.03 accrued in the prior year.
Sales: Consolidated sales for 2015 were $34.8 billion, down $12.8 billion from the value recorded at 2014-end. The year-over-year decline was primarily triggered by lower commodity prices in the market.
Costs/Margins: Rio Tinto’s exploration and evaluation costs declined 22.9% year over year to $576 million as of Dec 31, 2015. Operating profit was $3.6 billion compared with $11.3 billion accrued a year ago.
Balance Sheet/Cash Flow: Exiting 2015, cash and cash equivalents amounted to $9.4 billion, down from $12.4 billion at the end of 2014. Long-term borrowings and other financial liabilities were recorded at $21.1 billion compared with $22.5 billion at 2014-end.
Net cash generated from operating activities in 2015 was $9.4 billion compared with $14.3 billion in the preceding year. Capital expenditure decreased to $4.7 billion from $8.2 billion at 2014-end.
As of 2015-end, Rio Tinto had paid dividends worth $4.1 billion, up from $3.7 billion paid in the preceding year. In 2015, Rio Tinto repurchased shares worth $2 billion.
Outlook: Notwithstanding the negatives, Rio Tinto expects to improve its margins on the back of greater capital discipline and effective operational strategies, going forward.
Stocks to Consider
Rio Tinto presently carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the industry include Anglo American Platinum Limited AGPPY, Rare Element Resources Ltd. REE and Impala Platinum Holdings Ltd. IMPUY. All three stocks hold a Zacks Rank #2 (Buy).
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