From The Australian:
J.P. Morgan says Rio Tinto (RIO) needs to aggressively manage working capital, reduce capital expenditure, or dispose of some assets to boost free cash flow in order to meet its plan for “materially increased returns”.
JPM analyst Lyndon Fagan says RIO’s guidance for gearing at the lower end of the targeted 20%-30% range, reiterated in its London investor seminar on Friday, is “at odds” with its commitment to materially increased returns. On his estimates, gearing at the 20%-30% range would leave minimal excess capital after a forecast 9% increase in the FY14 dividend.
Fair enough, but it kind of pales into insignificance when you realise that the iron ore price is headed below $50 within eigtheen months
