RIO - Rio Tinto

[galumay]

Good have been worse, really. Other holders thoughts?

How much worse could it have been, surely that is one of the greatest destructions of value in sheer dollar terms?

 

[Garpal Gumnut]

First ever loss at $ 2.9b due to big write-downs. Underlying earnings at 9.3billion with a 15% increase in dividends Tax credits helped cushion it, lol. Not too bad in my opinion. Good have been worse, really. Other holders thoughts?

Thank gord for the ALP, without Swannie and Ma Gillard's capitulation, this could have been a worse result.

MRRT go !

gg

 

[tinhat]

Wow - just a bad year all round. Every division's results were down substantially. Aluminium underlying earnings down 99%! Underlying earnings from coal down 74%!

Capex exceeded cash flow.

The write-downs don't really matter IMHO - it was given that Rio had dud asset valuations on the balance sheet.

I'm fairly sure that the market is going to look through this report. No substantial new output was added to iron ore other than efficiency gains over the past year. That said Rio is down 1.13% in London as I type.

I think the outlook for Rio Tinto and the materials sector is a story that is going to play out over a longer period this year.

Go through the numbers for each business division and look at the capex versus gross earnings. Wow, just wow, its an income/loss statement perfect storm in terms of slump in earnings (price driven) against massive capex.

To have faith in Rio at the moment is to believe that iron ore prices are going to be somewhere around where they are now in 2015 when the expanded capacity in iron ore fully comes on stream.

 

[Knobby22]

It looks like the plan is to runwhat they have more efficiently and to try to stop doing stupid things.
From the Age following:

Mr Walsh (the new ceo) said in his statement that this year and 2014 will attempt to lift margins at existing businesses "by unlocking substantial productivity improvements, aggressively reducing costs and better managing our sustaining capital".

"We are targeting cumulative cash cost savings of more than $US5 billion to be achieved over the next two years, equivalent to an annual run rate of $US3 billion by 2014, assuming stable market and operating conditions, with significant additional cash savings in sustaining capital expenditure and exploration and evaluation spend."

Read more: http://www.theage.com.au/business/e...-first-loss-20130214-2efer.html#ixzz2KsHBbtff

At least the new CEO understands the business. Looking at the profits though its iron ore, a little copper and then not much else. Aluminium is meant to have made a lousy 3 million. That probably isn't even correct.

 

[Garpal Gumnut]

I have traded RIO long term on monthly charts, and anyone buying now is brave, though may be correct.

I see a retreat to close to $60, and my gumnuts are ready to buy.

$75 has been a difficult point to breach for the long.

I feel it needs a bit more umph in volume and momentum from a lower price to progress to $90.

gg

 

[Garpal Gumnut]

RIO is very gappy at present.

I still hold by my prediction of a retracement.

gg

 

[Knobby22]

Definitely a good chance.
You would have thought the price would have dropped more with all the bad news previously.
I wonder if it just an iron ore price play now?

 

[Julia]

You would have thought the price would have dropped more with all the bad news previously.

Perhaps optimism that Sam Walsh will do a better job and it's upside from here?

 

[tinhat]

Definitely a good chance.
You would have thought the price would have dropped more with all the bad news previously.
I wonder if it just an iron ore price play now?

Perhaps optimism that Sam Walsh will do a better job and it's upside from here?

I read an article on the weekend that puts it into perspective. Iron ore made up > 100% of earnings in the first half. Every other business in the group was a just a drag. So Rio Tinto is pretty much a pure iron ore play in my view.

Here is the article:
http://www.smh.com.au/business/rio-simply-cant-afford-to-sit-on-its-assets-20130215-2eijw.html

The one thing Sam Walsh has to do is divest as smartly as he can of pretty much most other businesses. Also, what is the point of having the whole thing run out of London when all the money is being made in the Pilbara?

If I was running the joint I would try and exit as best I could from everything except Iron Ore, Coal, Copper and the Minerals business. Once I had done that I would close the London office and move the HQ to Perth.

 

[Garpal Gumnut]

Volume is increasing on RIO's falling price.

If it goes through $60 it may continue to $50 before finding support.

My guess is though that support at $60 will show.

gg

 

[Garpal Gumnut]

Good buy, qldfrog.

I'm waiting for a retracement to $60 or a decisive move beyond $70 to add to my holdings in RIO.



gg

RIO closed at $60.70.

It is make up my mind tomorrow.

to buy or not to buy , that is the question, whether.........

gg

 

[Julia]

RIO closed at $60.70.

It is make up my mind tomorrow.

to buy or not to buy , that is the question,

Why would you want to buy it?

 

[Garpal Gumnut]

Why would you want to buy it?

These are my personal views and not backed up by any links or specialist analysis.

1. $60 is a strong support resistance area.

2. China needs their ore.

3. It could still be a takeover play.

4. All brokers are negative or "hold" on RIO.

5. New CEO with an eye to efficiencies.

6. Gut feel.

gg

 

[upandup]

Down 5% in london and newyork over night.

Do you still think support at $60 will come?

 

[notting]

K K K K K Capitulation!! In a bull market!

 

[baby_swallow]

Once again, traders who are well connected to Goldman Sachs made a lot of money shorting the big miners.
They have their shorts before GS announcement - cutting the iron-ore forecast.

 

[notting]

well connected to Goldman Sachs

Hardly needed to be well connected.
The call that 'IO prices were going to come back a fair bit.' is a call been echoing in markets for months!
Time to buy.

 

[Trembling Hand]

Once again, traders who are well connected to Goldman Sachs made a lot of money shorting the big miners.
They have their shorts before GS announcement - cutting the iron-ore forecast.

Actually there has been a steady decline in the amount sold short in RIO over the last 2 weeks.

 

[skc]

Hardly needed to be well connected.
The call that 'IO prices were going to come back a fair bit.' is a call been echoing in markets for months!
Time to buy.

Does feel like capitulation in iron ore today and also agree with your buy sentiment.

AGO and ARI are probably worthy candidates as well. But both must hold the day's low until close.

And the stop has to be at least 3-4% away from current price to manage any gap risk imo.

 

[Garpal Gumnut]

Down 5% in london and newyork over night.

Do you still think support at $60 will come?

No. It is now resistance.

Let's see what happens from here. Am I hurting. Yes. Stop loss approacheth.

gg