RIO TINTO PAYS RECORD DIVIDEND

Mining giant’s 2017 earnings soar 90pc on strengthened commodity prices

RIO Tinto rewarded shareholders yesterday with a record dividend as the mining giant reported a bumper annual net profit of US$8.76 billion for last year, a 90 per cent jump as commodity prices strengthened.

The Anglo-Australian firm had posted US$4.62 billion in annual profit in the previous financial year, turning around a loss in 2015 when key metals prices slumped and the growth in Chinese demand slowed.

“The strength of our cash flow is a result of resilient prices during the year coupled with a robust operational performance and a focus on mine to market productivity,” chief executive Jean-Sebastien Jacques said in a statement.

He added that the firm’s strong position had allowed it to “invest in high-value growth through the cycle, and consistently deliver superior cash returns to shareholders”.

Underlying profit for the year to December 31 — a measure preferred by the world’s secondlargest miner — was US$8.63 billion, a 69 per cent rise from the previous period and broadly matching analysts’ expectations.

The bulk of underlying earnings came from its main commodity, iron ore, at US$6.69 billion.

The company issued a record full-year dividend of US$5.2 billion — US$2.90 per share — and announced a billion-dollar share buyback. The additional share buyback took the total declared cash returns to shareholders to US$9.7 billion.

Shares in Rio closed 3.82 per cent higher at A$78.31 (RM240.37) here ahead of the results, in a rising market.

Rio said improving prices in all its commodities increased underlying earnings by US$4.11 billion compared to 2016.

“Overall, it was a pretty good result,” Fat Prophets resources analyst David Lennox said.

“Pricing did all the heavy lifting for the year, they are still doing very well on (cutting) costs, and volumes — which we thought would be a small negative — have come in at a small positive (and) the balance sheet was squeaky clean.”

The annual net profit was Rio Tinto’s highest since 2010. It posted a loss of US$866 million 2015 on the back of slumping prices.

Rio said it was able to cut costs of US$400 million last year, as part of its drive to free up US$5 billion in additional free cash flow from 2017 to 2021.

The miner also reduced net debt to US$3.8 billion, and made US$2.7 billion in divestments last year, including the sale of most of its Australian coal assets to China-backed Yancoal.