Reporting season: Rio Tinto
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Where Rio Tintoï¿½s earnings above, in line with, or below expectations?
Mark Taylor: Well, the result was in line with most recent expectations, but it's got to be said that we brought those expectations down quite dramatically in recent times due to the persistence in high cost in the Aluminum division. But subsequent to that, I don't think there would have been any surprises.
Was the dividend above, in line with, or below expectations?
Taylor: The dividend was precisely in line with expectations and in line with Rio's progressive dividend policy, which is to pay at least half the previous year's full-year dividend for the first half of the subsequent year.
What were the key drivers of the result?
Taylor: The key drivers - a 34% decline in profit, were chiefly lower commodity prices across the commodity spectrum. Volumes and exchange rates had very minor impact around the fringes but it was chiefly a reflection of lower commodity prices.
Was there anything about the result that surprised you?
Taylor: A couple of things about the result that was surprising. The first was the strength in the aluminum results. We were expecting a considerable loss. In fact, they reported breakeven, and that had a lot to do with the Canadian currency, which was favorable versus the U.S. dollar. So costs were a bit lower than expected. Although it must be said that Rio has hived off a lot of its Rio assets into a separate vehicle ready for sale, so there could be some costs lurking in there that were hidden.
The other thing that was quite surprising was the CEO, Tom Albanese's very bullish outlook in the near-term for the Chinese economy. We've been used to seeing some quite subdued outlook commentary about the near-term. This time it was quite bullish, and he is forecasting 8% growth in China this year and an uptick in demand.
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