[VIDEO] Australian earnings preview Rio Tinto
Tony Sycamore July 27, 2020 10:10 AM
The Australian equities reporting season kicks off in earnest next week and it is promising to be the most interesting since the Global Financial Crisis, over a decade ago.
The Covid-19 pandemic struck shortly after the February reporting season concluded. Since then lockdowns, implementation of travel restrictions, and a sharp rise in unemployment have dominated the economic landscape.
Many of Australia’s largest companies have been forced to the market to raise capital to shore up balance sheets. While others have been forced to defer, slash, or even cancel altogether the attractive dividend payouts that investors and retirees have come to rely upon.
Some companies have been able to weather the storm better than others, including iron ore producers Rio Tinto Ltd, Fortescue Metals Group Ltd. and BHP Group Ltd. who have benefitted from resilient demand from China as iron ore from rival suppliers in Brazil has been disrupted by Covid-19.
Investors will be able to get a better gauge on the outlook from this sector from Rio Tinto's half-year earnings report to be delivered on the 29th of July at 4.15pm Sydney time or 7.15am London time.
Rio Tinto half year earnings preview:
Rio Tinto Group is the world's second-largest metals and mining corporation, behind BHP, producing iron ore, copper, diamonds, gold, and uranium.
Iron ore typically accounts for 80% of Rio Tinto’s earnings and robust demand for iron ore from China has helped offset a sharp fall in industrial and economic activity in other regions as a result of the coronavirus pandemic.
The pandemic is expected to result in a sharp fall in Rio Tinto’s half-yearly earnings reported next week. However, with the market now more interested in the post coronavirus recovery punctuated by strong shipments and a rally in the price of iron to near U.S $110/ton, it is expected investors will mostly look through soft half yearly numbers and focus on full-year earnings.
Rio Tinto’s full-year earnings are expected to remain broadly flat in FY 2020 at around US$43bn, a remarkable result under the circumstances. Earnings per share (EPS) is expected to fall from US$636.3 cents per share in 2019 to around US$620.00 cents per share in 2020.
Technically, Rio Tinto has found the layer of resistance near AU $108.00 formidable over the past 12 months and this remains the key resistance level to keep in mind. While on the downside, dips are likely to find support initially at near term support at AU$98.00, before medium-term support at AU$95.00.
Source Tradingview. The figures stated areas of the 23rd of July 2020. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.