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Rio Tinto cuts 2019 production estimates after posting 14% drop in quarterly iron ore shipments

The Anglo-Australian miner reduced its annual iron ore shipments estimate to a range of 333mln to 343mln, down from a previously reduced range of 338mln to 350mln tonnes
Iron ore mining
The FTSE 100-listed firm shipped 69.1mln tonnes of iron ore in the quarter ended 31 March 2019, down from 80.3mln tonnes last year

Rio Tinto PLC (LON:RIO) has further cut its 2019 production estimates after reporting a 14% drop in quarterly iron ore shipments amid disruption caused by a tropical cyclone that last month hit its export terminal in Western Australia.

The Anglo-Australian miner reduced its annual iron ore shipments estimate to a range of 333mln to 343mln, down from a previously reduced range of 338mln to 350mln tonnes.

READ: Rio Tinto cuts 2019 iron ore shipments outlook from Pilbara due to disruption and damage caused by cyclone

The FTSE 100-listed firm shipped 69.1mln tonnes of iron ore in the quarter ended 31 March 2019, down from 80.3mln tonnes last year and well below market estimates of around 74.7mln tonnes.

Earlier this month, Rio Tinto had said it expected to lose about 14mln tonnes of production in 2019 from the Pilbara region of Western Australia due to disruption caused by the tropical cyclone and an earlier fire at a port facility in January.

Rio Tinto’s chief executive, Jean-Sébastien Jacques commented: “Our iron ore business faced several challenges at the start of this year, particularly from tropical cyclones. As a result, and following the continuing assessment of damage at the port resulting from the cyclones and other minor disruptions, 2019 guidance for Pilbara shipments is reduced.”

He added: “The quarterly operational performance in our other products was solid, generally higher than last year.”

In a note to clients, analysts at Citigroup said: “Based on updated guidance around iron ore shipments, we revised our CY19 sales estimates to 338mt (mid-point of new guidance range) vs previous estimate of 340mt. Consequently we downgrade our CY19 earnings estimates by ~4%.”

The US bank maintained a ‘buy’ rating and 4,900p target price on Rio Tinto shares, which in afternoon trading were 0.1% higher at 4,708p.

 -- Adds analyst comment, share price --

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