Investment: Metal prices dent Rio Tinto
Friday 11 September 1998
Metal traders suggest that sustained speculative selling by hedge fund operators is the mystery factor driving metal prices down. If this theory is correct, it makes no sense for speculators to force producers out of business, and every sense for them to switch sides and drive prices sharply higher once the turning point has been reached.
In the meantime Rio Tinto is a natural hedge because large chunks of its cost base are in weak currencies like the Australian dollar, the Canadian dollar and the rand, which gives Rio Tinto a natural hedge and added back $124m (pounds 74m) to profits. Take in another $107m (pounds 64m) worth of cost savings, a modest rise in volume, and margins on sales were actually little changed at 23 per cent. Turnover fell 5 per cent and pre-tax profits were only 8 per cent lower at $942m (pounds 560m). Earnings increased in four of the six divisions, industrial minerals, iron ore, aluminium and energy, while copper and gold were the only two which failed to shine.
The shares shed another 22p to 600p yesterday. But analysts are still expecting profits of pounds 900m in the full year, rising to pounds 1.03bn and earnings of 60p a share in 1999. Size and diversity give Rio Tinto an extra resilience, and at just 10 times prospective earnings in 1999 only a meltdown would stop them looking cheap.
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 Christians: The world's most persecuted people
- 3 The secret report that helps Israelis to hide facts
- 4 Danish TV reporter is all business up top, all party down below
- 5 Denmark bans kosher and halal slaughter as minister says ‘animal rights come before religion’
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Israel-Gaza conflict: The children were playing in the street with toy guns. The air strikes were tragically real
Danish TV reporter is all business up top, all party down below
Syria conflict: Syrian and Turkish Kurds unite to battle Isis threat - ‘We shoot them like sheep, but next day double the number return’
Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...