Rio Tinto plc (RIO - Analyst Report) reported weak financial results for the first half of 2013. The company generated underlying earnings of $4.2 billion declining 18% year over year from the underlying earnings of $5.2 billion reported in the first half of 2012.
The results were hurt by lower market prices and higher effective tax rate. Underlying earnings per ADR came in at $2.29 compared with underlying earnings of $2.78 in the comparable period last year.
Sales: Consolidated sales in the first half of 2013 moved down to $24.5 billion from $25.3 million recorded a year ago. The decline in sales resulted from lower prices across almost all its products lines.
At the half-year production levels, the company achieved a record iron ore production with the production increasing 6% and shipments rising 4% against the year-ago comparable period. Rio’s Pilbara capacity expansion plans are on track and are expected to reach a capacity of 290 million tonnes annually by third-quarter 2013.
Costs/Margins: Rio’s exploration and evaluation costs declined 49% year over year to $527 million in the six months ended Jun 30, 2013. Operating profit in the reported period stood at $5.8 billion compared with $6.6 billion in the year-ago period.
Financial Status: Cash and cash equivalents came in at $7.3 billion up from $7.1 billion at the end of 2012. Consolidated net debt was recorded at $22.1 billion, compared with $19.2 billion exiting 2012.
Net cash generated from operating activities in the first half of 2013 was $5.5 billion compared with $3.4 billion in the year-ago period. The company’s capital expenditure decreased to $7.0 billion in the reported period from $7.6 billion in the same period last year.
Capital expenditure in 2013 is expected to be roughly 20% lower in 2013 compared with 2012.
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Rio currently carries a Zacks Rank #3 (Hold).