Rio Tinto Limited (RIO)

By Jason Fittler

Rio Tinto Limited (RIO) finds, mines and processes mineral resources.

RIO's products comprise of five main product groups. These include Aluminium, Copper, Diamond & Minerals, Energy and Iron Ore.

Support groups include Technology & Innovation and Exploration.

Rio Tinto reported much stronger than expected first half 2014 underlying earnings of USD 5.1 billion.

This is up more than 20% on the previous corresponding period.

Iron ore dominates the division reporting with a 10% increase in underlying contribution. It makes up more than 90% of earnings.

The next-largest contributors are copper and aluminium. These also exceeded expectations, but they're at the cusp of immateriality.

The strong result reflects Rio exceeding its targeted USD 3 billion in operating cost savings. This is six months ahead of schedule. Record volumes also featured.

Momentum in cost reduction is now expected to realise an additional USD 1 billion by end 2015.

RIO has bucked the trend this week moving higher in a down market. 

Most portfolios would already hold RIO but now is a good time to add to these holdings.

With the Carbon Tax gone and Mining Tax soon to follow we can expect to see better results in the mining sector. This sector has been underweight for some time.

With a fair value of $77 you may have missed the bottom.

But there is still plenty of growth left and a forecast gross yield of 5% makes it a good long-term company.

For more information about Rio Tinto Limited (RIO) please contact us on 07 4771 4577.