Berenberg says 'hold' Rio Tinto after weak start to 2021

Berenberg kept its 'hold' rating on Rio Tinto shares after the FTSE 100 miner reported a weaker start to 2021 than the broker expected.

Rio Tinto reported a 2% drop in iron ore production on Tuesday to 76.4 metric tonnes for the first three months of 2021 and kept its annual guidance unchanged. Berenberg had forecast first-quarter production at 78.4 metric tonnes.

Mined copper also came in lower than Berenberg expected and there were other misses. Berenberg analyst Richard Hatch made small adjustments to his estimates and kept his 'hold' rating with a £64 per share target price.

Hatch said the share price target was derived from "our expectation that as iron ore prices eventually temper Rio shares will weaken. However, given weaker-than-expected supply and resilient Chinese steel production, there is clear scope for iron ore prices to remain resilient in the near term".

He said this scenario should support a dividend yield of about 9% in 2021 and 5% in 2022. Rio Tinto shares rose 0.4% to £59.81 at 15:00 GMT.