Equities Update: Rio Tinto, ANTO, B&M, Barratt’s, Dunelm, Ocado…

Rio delivers strongest iron ore output in 7 years

Adam Vettese, market analyst for eToro says: “Rio Tinto delivered a solid Q2 production performance, with standout results in copper and bauxite, and the strongest iron ore production for a second quarter since 2018. However, despite the headline strength in output, iron ore shipments fell short of expectations and the increasing share of lower-grade SP10 ore raises concerns about price realisations and margin pressure. The reaffirmation of guidance at the low end of the shipment range suggests lingering operational constraints, particularly around logistics and equipment availability, following Q1’s weather disruptions.

“On the positive side, copper production is ramping up well, with costs trending lower, and the company is accelerating its pivot to clean energy commodities with progress on Simandou and integration of its lithium assets.

“Overall, the results highlight Rio’s quality asset base and improving diversification but challenges in optimising system capacity and delivering higher-quality product remain areas to watch. Investors will be looking for continued improvement in execution heading into H2, particularly in iron ore shipments, to unlock full value from the stronger underlying production performance and hope to see this trigger a reversal in the prevailing trend direction of the shares.”

ANTO ups copper production as looming Trump tariffs makes copper a coiled spring 

Mark Crouch, market analyst for eToro, says: “Copper is rapidly becoming the backbone of the energy transition and the digital infrastructure boom, and with President Trump hinting at steep tariffs on copper imports, markets are bracing for a supply shock just as global demand accelerates. If rhetoric turns into policy, copper prices could react like a coiled spring.

“Antofagasta’s lean balance sheet, premium Chilean assets, and disciplined execution make it one of the cleanest plays on copper’s potential next leg higher. Risks remain however, Chilean political uncertainty and rising input costs aren’t going away, but they’re well understood and likely priced in.

“ANTO’s share price is volatile, but recent troughs have been bought with conviction, signaling strong underlying demand. A global slowdown could dent momentum, but if copper breaks out, Antofagasta will likely follow with velocity.”

B&M shares slip despite sales growth

Adam Vettese, market analyst for eToro says: “B&M’s first-quarter statement demonstrates that its value-led retail model continues to resonate, with solid group revenue growth and positive like-for-like sales in the UK and France despite a challenging consumer environment. The consistent expansion of its store estate and a focus on key categories have supported performance, particularly as shoppers remain price conscious.

“However, the business does face some headwinds. Margin pressures remain evident due to general price deflation, coupled with ongoing cost inflation, while like-for-like performance in FMCG was negative and Heron Foods sales stagnated. The company’s high valuation multiple increases the pressure to deliver on ambitious targets. B&M will also have to convince investors that performance is not just driven by new store openings, which tends to be a transient boost and not sustainable.

“For investors, B&M offers exposure to defensive value retailing with strong free cash flow and a robust expansion pipeline. That said, execution risks around margins and the cost base mean the business needs some more consistent performance and show some adaptability for the shares to track meaningfully higher. Shares have now declined 35% in a matter of weeks and are half the value they were just a year ago.”

Barratt’s buy back masks a deeper issue for UK housebuilders 

Mark Crouch, market analyst for eToro, says: “Barratt’s £100m buyback will please shareholders, but it does little to mask the challenges facing Britain’s biggest housebuilder. As completions for the year missed guidance, management pointed to softer investor and international demand in London, another sign that the capital’s housing market is faltering. The merger with Redrow was pitched as a sector-defining move, yet the market response has been largely indifferent. Strategic logic around scale and land pipeline depth is sound, but synergy alone isn’t enough to lift sentiment.

“Despite government assurances, planning reform remains sticky, while build costs are still elevated, and demand is softening as high interest rates and fiscal drag weigh on affordability. Most telling is the record-high average age of first-time buyers, a data point that cuts to the heart of the sector’s problems. The Barratt Redrow tie-up may have reinforced operational resilience, but the falling share price reflects a more fundamental truth, even well-built businesses can struggle when the ground beneath the sector begins to crack.”

Dunelm update provides cushion against tough retail environment

Adam Vettese, market analyst for eToro says: “Dunelm’s latest trading update really helps soften the blow of a difficult consumer environment. Delivering 4% sales growth in Q4 and 3.8% for the full year, is an impressive result when you consider the bumpy macroeconomic backdrop. Digital sales now account for 42% of Q4 turnover a clear sign that its online investments are paying off and that Dunelm is sitting pretty among the UK homewares sector. Gross margin improvement of 60 basis points year-on-year points to disciplined execution and a keen focus on cost control, allowing profits to stay comfortably plumped despite inflation’s squeeze.

“However, even with this solid performance, management highlights that a true bounce-back in consumer confidence has yet to materialise. Operational agility and new store openings give the group good springboard potential for future growth, but headwinds from higher costs and subdued discretionary spending could keep a lid on short-term outperformance. All told, Dunelm remains a well-cushioned choice for investors seeking stability and income, though, it may not see a dramatic lift-off to reclaim record levels until household sentiment firms up.”

A better half-year for Ocado, but have investors seen this all before?

Mark Crouch, market analyst for eToro, says: “Ocado continues to test the limits of investor patience. Once viewed as a pioneer in grocery logistics, the company’s downward spiral has become a case study in hype over substance. But is that now about to change?

“Ocado reported a marked improvement in half-year earnings, a rare moment of relief for investors following a particularly bruising 2024. Management claims the business will be cash flow positive by next year, a target that, while encouraging, comes after several years of missed milestones. The market has learned to treat such guidance with caution.

“Much of Ocado’s appeal has rested on its technology licensing model, but the pace of adoption has been slow, and the returns even slower. The tie-up with M&S continues to offer some operational ballast, yet it doesn’t resolve the broader question of whether Ocado’s core proposition can generate sustained, profitable growth. And until Ocado demonstrates that it can convert technical sophistication into reliable financial performance, investors may be right to remain sceptical.”