The Rio Tinto Ltd (ASX: RIO) share price has dipped following its FY24 result last year.
This mining giant works with a number of resources including iron ore, copper, bauxite and aluminium.
HY25 result
Let’s look at what the company reported before deciding if it’s a buy.
- Revenue declined 1% to US$53.7 billion
- Underlying EBITDA fell 2% to US$23.3 billion
- Operating cashflow rose 3% to US$15.6 billion
- Free cash flow declined 27% to US$5.5 billion
- Underlying earnings per share (EPS) declined 8% to US$6.69
- Dividend per share reduced by 8% to US$4.02
- Statutory net profit rose 15% to US$11.5 billion
The free cash flow reduced so much because its spending on purchases of property, plant and equipment and intangible assets increased 36% to US$9.6 billion.
Rio Tinto revealed that its iron ore underlying EBITDA declined 19% to US$16.2 billion. But, this was largely offset by aluminium underlying EBITDA growing 61% to US$3.7 billion and copper underlying EBITDA jumped 75% to US$3.4 billion.
Resource prices played their part, though higher copper volumes led to greater cost efficiencies where it saw a 27% reduction in copper net unit costs.
Is the Rio Tinto share price a buy?
The Rio Tinto share price has dipped 6% since 21 February 2025, though the miner is capable of falling much further if resource prices continued to decline.
One of the main reasons to like the business at the moment is the numerous initiatives it’s working on, including the large Oyu Tolgoi copper mine in Mongolia, the major Simandou iron ore project in Guinea, as well as various other replacement iron ore projects in Australia.
It’s also advancing its lithium ambitions with the Arcadium Lithium CDI (ASX: LTM) acquisition and working on the Rincon lithium project in South America.
The business continues to work on its pipeline, which could help it maintain and possibly grow profit.
Despite the ongoing difficulties for iron ore, I think it’s better to invest when the iron ore price is low rather than high.
There could be an even lower valuation in the future if commodity prices went down, but I’d be leaning towards a buy rather than a sell right now, particularly with the strength of the copper price helping earnings. There are other ASX dividend shares that could provide a higher level of dividend stability.
