BHP Billiton and Rio Tinto Head-to-Head

VIDEO: Which of the two big Anglo-Australian miners achieved the best quarterly performance?

Nicholas Grove 22 April, 2013 | 9:57AM
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BHP Billiton (BLT) and Rio Tinto (RIO), the two big Anglo-Australian miners, reported quarterly earnings last week. To analyse which put in the best performance, Morningstar Australia's Nicholas Grove talks to senior analyst Mark Taylor. 

Nicholas Grove: The big two miners, BHP Billiton and Rio Tinto, released their quarterly production numbers earlier this week. And here to give investors an idea of which company put in their best performance, I'm joined again by Morningstar's Mark Taylor. 

Mark, thanks very much for your time today. 

Mark Taylor: Thanks, Nick. 

Grove: Mark, firstly to BHP, which commodities were the key drivers of its numbers and did those numbers contain any surprises? 

Taylor: Well, the key drivers of earnings are unchanged. Its iron ore, copper and oil and gas prices, and then weren't any major surprises in prices or production numbers. If anything that was marginally ahead of expectations despite the fact that volumes were off quite sharply due to cyclones and weather events. 

Grove: Mark, how did Rio's numbers stack up and were there any surprises there? 

Taylor: Very similar actually. And for Rio, iron ore is pretty much everything at the moment. Its numbers were marginally below expectations, but not meaningfully so, and in fact both Rio and BHP said that their full year earnings projections were intact. So, while there might have been swings in the quarter itself, they will be making those up over the balance of their fiscal years. 

Grove: Mark, in your opinion which Company delivered the most pleasing set of figures? 

Taylor: Well, I don't think there was any one area or one Company that anything stood out, particularly in the quarter, as being more pleasing than the other, but just as a general statement, BHP's figures, I think, are more pleasing because they’re just not quite so focused on one area. It's not all iron ore. Oil and gas is important for them and that did reasonably well, especially the shale gas in the States is starting to come to the fore, so that's quite pleasing. 

Grove: Finally Mark, was there anything in BHP's third quarter numbers or Rio's first quarter numbers that they are going to alter your full year earnings forecasts, or is it all steady as she goes at this stage? 

Taylor: It's pretty much steady as she goes. The one thing that did happen was the pit fall failure at Bingham Canyon in the States for Rio, but that was announced pre-quarter, so it was already factored in, but that is going to result in lower copper production for them and some added costs and lower revenue. So that has hit their earnings a little, round about 5% or so, but by the time the quarterly came out that wasn’t news. 

Grove: Mark, thanks very much for your time today.

Taylor: Thanks, Nick.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BHP Group PLC2,398.00 GBX2.98Rating
Rio Tinto PLC5,434.00 GBX2.32Rating

About Author

Nicholas Grove  is a financial journalist for Morningstar.com.au, Morningstar's website for Australia-based investors.