Rio Tinto's half-year results: Earnings and dividend miss, strong copper outlook
Rio Tinto shares fall 2% after mixed H1 results with revenue beating estimates but net profit missing by 4% amid higher costs.
Source: Rio Tinto's Oyu Tolgoi (Source: Getty Images)
Mentioned
KEY POINTS
- Rio Tinto delivered mixed H1 2025 results with revenue beating estimates by 6% at $26.87 billion but underlying net profit falling 16% to $4.80 billion, missing analyst expectations by 4%.
- The company maintained 2025 guidance across key commodities despite operational challenges including four cyclones in Q1, with iron ore shipments expected toward the lower end of guidance and copper toward the higher end.
- The company maintained 2025 guidance across key commodities despite operational challenges including four cyclones in Q1, with iron ore shipments expected toward the lower end of guidance and copper toward the higher end.
Rio Tinto (ASX: RIO) shares are down around 2% ($113.40) after reporting a softer-than-expected set of numbers for the first half of 2025. Here's everything you need to know.
First-half 2025 by the numbers
Revenue flat at $26.87 billion vs. $25.64 ests (6% beat)
Underlying EBITDA down 5% to $11.54 billion vs. $11.30 billion ests (2% beat)
Underlying NPAT down 16% to $4.80 billion vs. $5.0 billion ests (4% miss)
Free cash flow down 31% to $1.96 billion vs. $1.77bn ests (11% beat)
Net debt up 188% to $14.59 billion vs. $14.76 billion ests (1% miss)
Dividend per share down 16% to 148 US cents vs. $155 US cents ests (4% miss)
"We are delivering very resilient financial results with an improving operational performance ... despite a 13% lower iron ore price, demonstrate the growing contribution from our Aluminium and Copper businesses and our Pilbara operations' strong recovery from the four cyclones in the first quarter," said CEO Jakob Stausholm.
RBC Capital: Operational beat, earnings miss
RBC Capital Markets analysts Kaan Peker and Ben Davis said Rio Tinto produced a "good set of operational results across key divisions that was a 6% beat at the product group level, but this was dragged down by other items including restructuring costs at Arcadium."
Revenue and EBITDA came out ahead, with the outperformance coming from beats across iron ore, aluminium and copper divisions. The EBITDA beat would have been bigger at approximately 5%, but was dragged down by $300 million in restructuring costs associated with the Arcadium lithium acquisition.
Net profit was weaker-than-expected due to higher depreciation, finance items and tax, with the company lifting its 2025 effective tax rate guidance from 30% to 33%. This led to a below consensus dividend outcome.
2025 guidance
Rio Tinto reiterated its 2025 guidance, including:
Iron ore shipments (100% basis) towards the lower end of 323-338Mt
Mined copper towards the higher end of 780-850kt
Bauxite at the higher end of 57-59Mt
Pilbara iron ore unit cash costs (FOB) of US$23-24.50 per wet metric tonne
The only revision was its copper cost, which was improved to US$1.10-1.30/lb compared to prior guidance of $1.30-1.50/lb due to "disciplined cost control, production volumes at the higher end of the full year guidance range and higher than expected gold prices driving net costs down."
Morgan Stanley: Off the earnings call
Morgan Stanley analysts shared their key takeaways following the results conference call:
Lithium market outlook: Rio Tinto noted that while lithium prices are recovering from recent lows, they remain below long-term averages, with ~25% of the lithium carbonate cost curve currently unprofitable, with the current price environment not supporting the growth in production required to satisfy future demand.
Oyo Tolgoi lease transfer delay: Rio reiterated their strong relationship with the Mongolian government and that they are comfortable with the current state of play. They note that delays in the tax dispute settlement would delay access to higher grade areas but are not consequential to the mine plan.
US copper tariffs impacts and opportunities: Management see the Kennecott smelter becoming immediately more profitable as a result of the tariffs as it is the largest smelter in the US.
Aluminium tariffs: Rio sees aluminium tariffs mainly impacting the final consumer, management said they have been able to pass on some of the impact, with unit revenue still up around 6% year-on-year after deducting the tariff impacts.
Cost discipline in focus: Rio stated that in response to the low commodity price environment, operational employee numbers across the group have decreased by 2% over the last twelve months.
Gearing levels and capital management: Rio remains comfortable with net debt levels (~US$14.6bn) sitting higher than historical levels due to stronger cash flows with debt being used to fund growth (such as Arcadium).
The analysts are Equal-weighted on Rio Tinto, with a $118.00 target price.
