industrial production slid a steeper-than-expected 1.1% in May from the prior month with output down sharply at factories, utilities and mines. Again, US auto market is showing budding signs of stabilization, but further demand deterioration for the lightweight metal during the seasonally slower summer months cannot be ruled out. Similarly, housing data in recent times have painted a largely conflicting picture.
Increased demand from China and significant production cuts have led to a recovery in the aluminum market, but industry experts warn that it is still too early to claim a sustained recovery. China's imports of primary aluminum rose to a record 362,400 tonnes in April, about four times the volume in March, as higher local prices attracted buyers. In May, China imported 331,740 mt of unwrought aluminum and aluminum product, down 24.6% from April. Imports in January-May totaled 1.04 million mt, up 156.8% year on year.
Turning to the financials, the balance sheet of the company currently has $1.13 billion in cash and cash equivalents and $10.21 billion in debt. The stock currently trades at a forward P/E (fye 31-Dec-10) of 32.93.
Of the thirteen analysts who cover the stock, one rates it a Strong Buy, three rate it a Moderate Buy while five tag it a Hold. Two analysts each rate it a Moderate Sell and Strong Sell.
Rio Tinto (NYSE: RTP)
Rio Tinto engages in mining and processing mineral resources. The company produces aluminum products, including bauxite, alumina, and aluminum; copper and diamonds, such as copper in concentrate, refined copper, gold, silver, molybdenum, magnetite, vermiculite, and diamonds; energy and mineral products that consist of coking and thermal coal, uranium, titanium dioxide, feedstock, borates, and talc; and iron ore products, including iron ore, pig iron, salt, and gypsum.
Rio has been under extreme pressure to cut its debt and raise cash since it acquired Canadian group Alcan for $38 billion in 2007. Among its looming debt maturities are an $8.9 billion payment due next month. On Monday,
Rio Tinto Group announced that it has agreed to sell its U.S. food packaging business to Bemis Co. for $1.2 billion in cash and stock. The sale is part of Rio's efforts to raise $3.9 billion from asset sales in 2009.So far this year; Rio has sold $3.7 billion in assets. To raise money, the miner recently successfully completed a $15.2 billion rights issue.
Early in June, Rio Tinto Plc. and BHP Billiton Ltd. agreed to establish a production joint venture that will cover both of the companies' Western Australian iron-ore assets. The joint venture is "expected to unlock significant value from the companies' overlapping, world-class resources," the miners. Rio and BHP said the value of the production and development synergies will be over $10 billion
Looking at the balance sheet, the company currently has $1.96 billion in cash and cash equivalents and $39.44 billion in debt. The stock currently trades at a forward P/E (fye 31-Dec-10) of 12.07.
Of the nine Wall Street analysts who cover the stock, two rate it a Strong Buy, one tags it a Moderate Buy while four analysts recommend Hold. Two analysts rate it a Strong Sell.
Disclosure: Author does not own any of the stocks discussed here
