Rio Tinto earnings preview: what to expect from its full-year results

The mining company is expected to impress investors with the strength of its balance sheet, with analysts forecasting a strong dividend payout when the business announces its full-year results on Wednesday next week.

Rio Tinto is expected to report a strong set of full-year results on Wednesday next week, with analysts forecasting that the mining company will return a significant amount of cash to its shareholders after what has a been a great year for the business.

There is consensus from forecasters that Rio Tinto we will impress shareholders with the strength of its balance sheet next week, with UBS analyst Glyn Lawcock estimating a net cash position of $732 million for its end of year accounts.

Meanwhile, Citi analyst Paul McTaggart recently upgraded his earnings estimate for Rio Tinto, upping his EBITA forecast by as much as 44% after a surge in ore prices, which have climbed as much as $20 dollars since the start of the new year, coming in a touch under $90 a tonne on Friday.

Vale dam incident bolsters iron ore prices

The surge in ore prices in recent weeks is due, in large part, to the halting of operations at the ValeVale-owned Brucutu mine following the collapse of the company’s tailing dam in Minas Gerais in late-January, resulting in the deaths of more than 130 people.

Not only did the incident cost the lives of hundreds of people, but analysts have estimated that it will result in the loss of around 30 million tonnes of ire ore a year, leading to a gradual supply shock in the commodities market.

‘This would be an incremental supply shock to the iron ore market and would support prices at higher than expected levels,’ Jefferies analysts including Christopher LaFemina said in a note.

European miners rally as metal prices soar

Rio Tinto and its rivals are all set to benefit from the recent swell in ore prices, with the Stoxx 600 Basic Resources index climbing as much as 1.8% on Friday.

BHP stock climbed more than 2% on Friday, as investors weigh in ahead of its half-year results on Tuesday. Analysts expecting BHP to beat its net debt target of between $10 billion - $15 billion, with consensus suggesting that the company will sees its net debt fall to $9.7 billion next week.

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