Rio shareholders in for record payday on back of $4b half-year profit

RIO Tinto has declared a record half-year dividend and announced a new $1.25 billion share buyback as it reaps the rewards of stronger commodity prices and deep cost cutting.

The record payday for shareholders came as the Anglo-Australian mining giant doubled its profit to $US3.3 billion ($4.1 billion) for the six months ending June 30 compared to the same period a year earlier.

Underlying profit, which strips out one-off costs, surged 152 per cent to $US3.9 billion, slightly missing analysts’ expectations.

A lift in the prices of iron ore, aluminium, coal and copper boosted underlying profit by $US2.7 billion, Rio reported yesterday.

Rio sold its iron ore, which makes up the bulk of its earnings, for $US62.40 a tonne during the first half of 2017, up from the $US44.50 a tonne it received for the same period a year earlier.

The miner has also been slashing its cost base since the peak of the mining boom and yesterday announced it had hit its latest target, to take out $US2 billion over 2016 and 2017, six months early.

Rio declared a fully-franked interim dividend of $US1.10 ($1.37.7) a share. The latest payment beats its previous halfyear record of $US1.07.5 delivered in June 2015.

It also announced a $US1 billion share buyback, on top of the $US500 million buyback it announced in February when it released its 2016 results. Its latest dividend and buyback means it will pay out 75 per cent of its first half underlying earnings for 2017.

It sets Rio up to deliver a record full-year dividend with its coffers to be boosted by the $US2.7 billion sales of its NSW thermal coal business to China’s Yancoal in June.