Thursday preview: Mining giant Rio Tinto unveils annual results

Mining heavyweight Rio Tinto will on Thursday reveal its first set of full-year earnings since Sam Walsh took the helm as Chief Executive Officer.

Mining heavyweight Rio Tinto will on Thursday reveal its first set of full-year earnings since Sam Walsh took the helm as Chief Executive Officer.

Analysts at JP Morgan expect the group to report 2012 underlying earnings of $48.9bn along with further details on its recently announced cost cutting target of circa $3.0bn.

"We expect saving to be exceeded in future years [we model $4.4bn of cuts off the calendar year 2015 cost base with circa 75% from the iron ore and aluminium divisions]," the broker said.

A full year dividend of $1.525 and a final of $0.80 were anticipated by the broker for the year, with no significant rebasing of the dividend until Feb 2014.

JP expects the Iron Ore division to generate 85% ($8.85bn) of the 2012 product group earnings and forecasts cash expenditure of $14.5bn, higher than the company's guidance of $13.6bn due to timing and currency impacts.

"We do not expect any further project approvals and therefore no change to the calendar year 2014 capital expenditure guidance of circa $13bn," it said.

"The company should reiterate its +15% average returns across its major growth projects."

Ahead of the results, Rio said it would continue operating its Gove alumina refinery in Australia's Northern Territory after the government offered 10 years' worth of its domestic gas supply.

The company had warned it would have to mothball the refinery, operated by Rio Tinto subsidiary Pacific Aluminium, if it could not secure a cheap gas supply to run its energy-intensive operations at Gove, east of Darwin.

In other news, Rio was said to have proposed initial terms on a $4.0bn project financing for the Oyu Tolgoi copper-gold mine in Mongolia as it tussles with the government over profits.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

ECB Report (EU) (09:00)

Gross Domestic Product (GER) (07:00)

FINALS

Amec, Coca-Cola HBC S.A., Electric Word, Hrvatske Telekom D.D GDR (Reg S), Morgan Crucible Co, Rio Tinto, Rolls-Royce Holdings, Shire Plc

ANNUAL REPORT

Henderson Diversified Income Ltd.

IMSS

Halma, Helical Bar, Norcros

AGMS

Bajaj Hindusthan Ltd. GDR (Reg S), Noble Investments (UK)

FINAL DIVIDEND PAYMENT DATE

BlackRock New Energy Inv Trust, Euromoney Institutional Investor

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