{"id":6835,"date":"2013-02-21T20:22:09","date_gmt":"2013-02-22T00:22:09","guid":{"rendered":"http:\/\/www.pgm-blog.com\/?p=6835"},"modified":"2013-02-21T20:22:09","modified_gmt":"2013-02-22T00:22:09","slug":"review-of-rio-tintos-2012-report-the-aluminum-sector","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/review-of-rio-tintos-2012-report-the-aluminum-sector\/","title":{"rendered":"Review of Rio Tinto&#8217;s 2012 Report &#038; the Aluminum Sector"},"content":{"rendered":"<p><a href=\"http:\/\/www.pgm-blog.com\/review-of-rio-tintos-2012-report-the-aluminum-sector\/comprometida-mine\/\" rel=\"attachment wp-att-6836\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-6836\" alt=\"Comprometida mine\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/02\/Comprometida-mine.jpeg\" width=\"267\" height=\"189\" \/><\/a><a href=\"http:\/\/www.pgm-blog.com\/review-of-rio-tintos-2012-report-the-aluminum-sector\/rio-tinto-logo-2\/\" rel=\"attachment wp-att-6837\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-6837 alignright\" alt=\"Rio Tinto logo\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/02\/Rio-Tinto-logo.jpeg\" width=\"240\" height=\"144\" \/><\/a><\/p>\n<p>Dear\u00a0<strong>PGM-Capital<\/strong>, blog readers,<br \/>\nOn Thursday February 14th 2013, British-Australian mining giant RIO Tinto (NYSE: RIO, ASX: RIO.AX, LSE: RIO.L world 3rd biggest miner by market cap, behind BHP Billiton and Vale), reported its H2-2012 and full year results.<\/p>\n<p><strong>Highlights 2012 financial results:<\/strong><\/p>\n<ul>\n<li>Underlying earnings\u00a0of US$9.3 billion.<\/li>\n<li>Net loss of US$3.0 billion after impairments of <strong><span style=\"color: #ff0000;\">US$14.4 billion<\/span><\/strong>, \u00a0primarily relating to aluminum businesses as well as coal assets in Mozambique.<\/li>\n<li>15 per cent increase in full year dividend to 167 cents per share.<\/li>\n<\/ul>\n<table width=\"542\" border=\"0\" cellspacing=\"0\" cellpadding=\"0\">\n<colgroup>\n<col width=\"374\" \/>\n<col span=\"2\" width=\"69\" \/>\n<col width=\"66\" \/> <\/colgroup>\n<tbody>\n<tr>\n<td width=\"374\" height=\"15\">Twelve months to 31 December<\/td>\n<td width=\"69\"><\/td>\n<td width=\"69\"><\/td>\n<td width=\"66\"><\/td>\n<\/tr>\n<tr>\n<td height=\"15\">(All amounts are US$ millions unless otherwise stated)<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td height=\"15\"><\/td>\n<td style=\"text-align: center;\" align=\"right\"><strong>2012<\/strong><\/td>\n<td style=\"text-align: center;\" align=\"right\"><strong>2011<\/strong><\/td>\n<td style=\"text-align: right;\"><strong>Change<\/strong><\/td>\n<\/tr>\n<tr>\n<td height=\"15\">Underlying earnings<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a09,303.00<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a015,549.00<\/td>\n<td style=\"text-align: right;\" align=\"right\"><span style=\"color: #ff0000;\">-40%<\/span><\/td>\n<\/tr>\n<tr>\n<td height=\"15\">Net (Loss) \/ Earnings<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a0<span style=\"color: #ff0000;\">-2,990.00<br \/>\n<\/span><\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a05,826.00<\/td>\n<td style=\"text-align: right;\" align=\"right\"><span style=\"color: #ff0000;\">-151%<\/span><\/td>\n<\/tr>\n<tr>\n<td height=\"15\">Cash flows from operations<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a016,450.00<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a027,388.00<\/td>\n<td style=\"text-align: right;\" align=\"right\"><span style=\"color: #ff0000;\">-40%<\/span><\/td>\n<\/tr>\n<tr>\n<td height=\"15\">Capital expenditure<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a017,418.00<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a012,298.00<\/td>\n<td style=\"text-align: right;\" align=\"right\">42%<\/td>\n<\/tr>\n<tr>\n<td height=\"15\">Basic (loss)\/earnings per share from continuing operations (US Cents)<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a0503.10<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a0808.50<\/td>\n<td style=\"text-align: right;\" align=\"right\"><span style=\"color: #ff0000;\">-38%<\/span><\/td>\n<\/tr>\n<tr>\n<td height=\"15\">Underlying earnings per share (US Cents)<\/td>\n<td style=\"text-align: center;\" align=\"right\"><span style=\"color: #ff0000;\">\u00a0-161.30<\/span><\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a0303.50<\/td>\n<td style=\"text-align: right;\" align=\"right\"><span style=\"color: #ff0000;\">-153%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left;\" align=\"right\" height=\"15\">\u00a0Ordinary Dividends per share (US Cents)<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a0167.00<\/td>\n<td style=\"text-align: center;\" align=\"right\">\u00a0145.00<\/td>\n<td style=\"text-align: right;\" align=\"right\">15%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><a title=\"Rio Tinto results for the year ended 31 December 2012\" href=\"http:\/\/www.riotinto.com\/documents\/PR801g_Rio_Tinto_results_for_the_year_ended_31_December_2012.pdf\" target=\"_blank\">Source:<\/a><\/p>\n<p>The write-down of USD 11 billion of its aluminum sector, which was announed in January 20th of this year, lead to the immidiate resignation of its CEO Mr. Tom Albanese.<\/p>\n<p><a title=\"Rio Tinto chief resigns following surprise writedown on aluminium\" href=\"http:\/\/www.telegraph.co.uk\/finance\/commodities\/9814219\/Rio-Tinto-chief-resigns-following-surprise-writedown-on-aluminium.html\" target=\"_blank\">source:<\/a><\/p>\n<p><a title=\"Rio Tinto\u2019s Problems a Microcosm of Aluminum Market\u2019s Malaise  Steel, Aluminum, Copper, Stainless, Rare Earth, Metal Prices, Forecasting | MetalMiner Read More at http:\/\/agmetalminer.com\/2013\/01\/22\/rio-tintos-problems-a-microcosm-of-aluminum-markets-malaise\/ Copyright \u00a9 2013 MetalMiner  If your company sources any product that contains steel, stainless steel, non-ferrous metals, ferro alloys, precious metals, rare earth metals, or minor metals \u2014 or if you engage in global scrap trading and consume scrap as a significant cost input \u2014 you need MetalMiner IndX\u2120. http:\/\/www.metalminerindx.com\" href=\"http:\/\/agmetalminer.com\/2013\/01\/22\/rio-tintos-problems-a-microcosm-of-aluminum-markets-malaise\/\" target=\"_blank\">Read also this article<\/a><\/p>\n<p>The fact that the company has increased its dividend with 15% despite having booked a loss in 2012, clearly shows that without the write-downs in the aluminum business, the company would have made a profit in 2012.<\/p>\n<p>In the past big diversified mining companies reduced their exposure to aluminum or sold their aluminum section to a third parties, in order to boost their profit.<\/p>\n<p>Most investors may ask themselves what the problem is with aluminum, that it affects the balance sheets, cashflow and income statements of miners\/aluminum producers negatively.<\/p>\n<ul>\n<li>Aluminum is\u00a0the third most abundant element\u00a0(after\u00a0oxygen\u00a0and\u00a0silicon), and the\u00a0most abundant metal, in the\u00a0Earth&#8217;s\u00a0crust.<\/li>\n<li>Aluminum is theoretically 100% recyclable without any loss of its natural qualities.<\/li>\n<li>Production of Aluminum out of Bauxite ore is very energy intensive.<\/li>\n<li>Aluminum can be replaced by cheaper magnesium or a stronger synthetic product in applications like:\n<ul>\n<li>Transportation (automobiles, aircraft,\u00a0trucks,\u00a0railway cars, marine vessels,\u00a0bicycles, etc.)<\/li>\n<li>Tubings etc<\/li>\n<li>Packing materials,\u00a0(cans, foil, etc.)<\/li>\n<li>Construction (windows,\u00a0doors,\u00a0siding, building wire, etc.)<\/li>\n<li>Street lighting poles, sailing ship\u00a0masts,\u00a0walking poles, etc<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Mainly due to the above the price of Aluminum hasn&#8217;t recovered from its peak of July 2008 as can be seen from below 5-year chart.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/review-of-rio-tintos-2012-report-the-aluminum-sector\/spot-aluminum-5y-large\/\" rel=\"attachment wp-att-6842\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-6842 aligncenter\" alt=\"spot-aluminum-5y-Large\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/02\/spot-aluminum-5y-Large.gif\" width=\"510\" height=\"324\" \/><\/a><\/p>\n<p><a title=\"5 Year Aluminum Spot\" href=\"http:\/\/www.kitcometals.com\/charts\/aluminum_historical_large.html#5years\" target=\"_blank\">Source:<\/a><\/p>\n<p>Lower aluminum prices combined with higher production costs due to higher energy cost have resulted in lower profits or even loss for most mono aluminum companies, with the consequence of lower stock prices and dividend per share since July 2008 as can be seen here below for the two biggest aluminum producers; Alcoa (NYSE: AA) and Aluminum corporation of China (NYSE: ACH)<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/review-of-rio-tintos-2012-report-the-aluminum-sector\/5-year-chart-alcoa\/\" rel=\"attachment wp-att-6843\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-6843 aligncenter\" alt=\"5 year chart Alcoa\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/02\/5-year-chart-Alcoa.png\" width=\"552\" height=\"243\" \/><\/a><\/p>\n<p>\u00a0<a title=\"5 year chart of Alcoa Inc. (AA) -NYSE\" href=\"http:\/\/finance.yahoo.com\/q\/bc?s=AA&amp;t=5y&amp;l=off&amp;z=l&amp;q=l&amp;c=\" target=\"_blank\">Source:<\/a><\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/review-of-rio-tintos-2012-report-the-aluminum-sector\/5-year-chart-ach\/\" rel=\"attachment wp-att-6844\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-6844 aligncenter\" alt=\"5 year chart ACH\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/02\/5-year-chart-ACH.png\" width=\"554\" height=\"244\" \/><\/a><\/p>\n<p style=\"text-align: left;\"><a title=\"5 Year Chart Aluminum Corporation Of China Limited (ACH) -NYSE\" href=\"http:\/\/finance.yahoo.com\/q\/bc?s=ACH&amp;t=5y&amp;l=off&amp;z=l&amp;q=l&amp;c=\" target=\"_blank\">Source:<\/a><\/p>\n<p style=\"text-align: left;\">On top of this, Alcoa has reduced its dividend per share from <strong>USD 0.17<\/strong> a share in 2008 to <strong>USD 0.03<\/strong> since May 2009, <a title=\"Alcoa Dividend History\" href=\"http:\/\/www.alcoa.com\/global\/en\/investment\/info_page\/dividends_history.asp\" target=\"_blank\">see link to dividend history Alcoa<\/a>, while \u00a0Aluminum of China has reduced its dividend per share from <strong>USD 0.188<\/strong> in April 2008 to <strong>USD 0.044<\/strong> in April 2011, which was its last dividend payment <a title=\"Aluminum Corporation of China Ltd Dividend History\" href=\"http:\/\/www.nasdaq.com\/symbol\/ach\/dividend-history#.USYkIlojot0\" target=\"_blank\">see dividend history of Aluminum Corporatio of China<\/a>.<\/p>\n<p style=\"text-align: left;\">RIO TINTO has increased its dividend during the last 10 years from <strong>USD 0.305<\/strong> a share in April 2002 to<strong> USD 0.725<\/strong> a share in September 2012 an increase of approx <span style=\"color: #339966;\"><strong>137%.<\/strong><\/span><\/p>\n<p style=\"text-align: left;\"><a title=\"Rio Tinto Limited Dividend History\" href=\"http:\/\/www.riotinto.com\/shareholders\/12447_plc_12450.asp\" target=\"_blank\">Source:<\/a><\/p>\n<p style=\"text-align: left;\">For\u00a0H1-2013 RIO TINTO Plc has increased its bi-yearly dividend with 15% to: \u00a30.60 \u00a0per share &#8211; Prelim. with an\u00a0<em>Ex Dividend date: 06\u00a0March\u00a02013 and\u00a0Payment date: 11\u00a0April\u00a02013.<\/em><\/p>\n<p style=\"text-align: left;\"><a title=\"Rio Tinto Dividend Payment April 11, 2013\" href=\"http:\/\/www.riotinto.com\/shareholders\/12447_rio_tinto_plc_12489.asp\" target=\"_blank\">Source:<\/a><\/p>\n<p style=\"text-align: left;\">Based on the above we have maintained a <span style=\"color: #008000;\"><strong>Buy Rating<\/strong><\/span> on the stock of RIO-TINTO since March 2009, and a <span style=\"color: #ff0000;\"><strong>Sell Rating<\/strong><\/span> on all mono miners\/aluminum producers.<\/p>\n<p style=\"text-align: left;\"><strong>Disclosure:<\/strong><\/p>\n<ul>\n<li><span style=\"font-size: 13px; line-height: 19px;\">PGM Capital is an active investor in the stock of RIO-Tinto, we own it \u00a0in our personal portolio as well as in those of several clients . <\/span><\/li>\n<li><span style=\"font-size: 13px; line-height: 19px;\">We don&#8217;t hold any (mono) aluminum miners\/producers\u00a0in our own account nor in those of our clients.<\/span><\/li>\n<\/ul>\n<p>Before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities, Precious metals as well as the stocks of their producers can be very\u00a0volatile and that sharp corrections may happen in the short term.<\/p>\n<p>Yours Sincerely,<\/p>\n<p>Eric Panneflek<\/p>\n<p style=\"text-align: left;\">\n","protected":false},"excerpt":{"rendered":"<p>Dear\u00a0PGM-Capital, blog readers, On Thursday February 14th 2013, British-Australian mining giant RIO Tinto (NYSE: RIO, ASX: RIO.AX, LSE: RIO.L world 3rd biggest miner by market cap, behind BHP Billiton and Vale), reported its H2-2012 and full year results. Highlights 2012 financial results: Underlying earnings\u00a0of US$9.3 billion. Net loss of US$3.0 billion after impairments of US$14.4<a href=\"https:\/\/www.pgmcapital.com\/nl\/review-of-rio-tintos-2012-report-the-aluminum-sector\/\">[&#8230;]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,25,23,9,10,19,15,16,1,18],"tags":[],"class_list":["post-6835","post","type-post","status-publish","format-standard","hentry","category-commodities","category-dividend-declaration","category-earnings-report","category-emerging-markets","category-eric-panneflek","category-financial-news","category-pgm-capital","category-precious-metal","category-uncategorized","category-world-economic-outlook"],"_links":{"self":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/6835","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/comments?post=6835"}],"version-history":[{"count":0,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/6835\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media?parent=6835"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/categories?post=6835"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/tags?post=6835"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}