Tip Update Rio Tinto PLC (RIO)
Our previous tip
- We said Buy
- When 5 Nov 2010
- Price 4,164p
- Tip performance to date -19%
Tom Albanese has stepped down as chief executive of
Mr Albanese, a Rio Tinto veteran, had been at the helm since 2007, and has been replaced by Sam Walsh, who has been heading up the group’s core iron division.
Despite the hefty write-down, shares in Rio Tinto fell by a relatively modest 2.2 per cent on the news; an indication, perhaps, that the market was probably anticipating another hit on the group’s aluminium assets, following on from last year’s $8.9bn charge. The board obviously felt, however, that this latest write-down would have made it very difficult for Tom Albanese to continue as chief executive, given his association with the damaging $38bn acquisition of Alcan, which was acquired at the height of the commodities boom.
SHARE TIP UPDATE
At 3,389p, we still maintain that Rio offers long-term value. Near-term prospects are improving on the back of a rise in Chinese industrial demand, and a slight easing in Australian labour costs. Long-term buy.
Last IC view: Buy, 3,162p, 8 Aug 2012