Rio Tinto Group's (ASX:RIO) second-quarter update was broadly in line with expectations, although a roughly $1.2 billion increase in working capital that weighed on cash flow was a highlight, RBC Capital Markets said in a Wednesday note.
The focus now turns to first-half results due July 29, with the investment firm forecasting a 28% increase in earnings before interest, taxes, depreciation, and amortization (EBITDA), and flat net debt at $14.3 billion.
The company's second-quarter Pilbara shipments of 85.3 million tonnes rose 7% from a year earlier and 18% from the linked quarter as roughly half of the 8 million tonnes of first-quarter cyclone losses were recovered, RBC said.
The miner also cut its copper C1 net unit cost forecast to between $0.30 and $0.50 per pound, reflecting stronger-than-expected gold by-product credits and productivity gains. RBC expects copper to contribute 30% to group EBITDA in the first half, up from 27% in the same period a year earlier.
Additionally, the equity research firm expects the company to report first-half underlying EBITDA of $14.87 billion and a net profit after tax of $6.4 billion. It does not foresee any changes to Rio Tinto's full-year outlook.
RBC kept an underperform rating on Rio Tinto with a price target of AU$143.