Anglo Australian mining giant Rio Tinto (RIO) trumped consensus forecasts and laid down a marker for the industry by exceeding targeted cuts in operational and capital expenditure - paving the way for a 15 per cent hike in the full-year dividend.
Under new chief executive Sam Walsh, Rio has reduced capital spending by 26 per cent to $12.9bn (£7.8bn), cut cash operating costs by $2.3bn and pared back net debt to $18.1bn - an 18 per cent fall from the June half year. Management confirmed that Rio would be in a position to consider share buy-backs or other capital returns when its net debt falls to around $15bn - conceivably by the 2014 half-year. Rio's largesse towards shareholders was facilitated by the completion of the phase one Pilbara expansion in Western Australia, together with a buoyant iron ore pricing environment. These factors combined to drive operating cash flows by over a fifth to $20.1bn.
Rio was forced to book impairments on its Oyu Tolgoi mine in Mongolia and the closure of its Gove alumina refinery. But the aggregate charge was half that of last year's disastrous $14.7bn write-down on its Alcan aluminium business and Mozambique coal assets. Excluding one-off charges, Rio was still able to drive up its underlying earnings 10 per cent to $10.2bn.
RIO TINTO (RIO) | ||||
---|---|---|---|---|
ORD PRICE: | 3,462p | MARKET VALUE: | £65bn | |
TOUCH: | 3,460-3,463p | 12-MONTH HIGH: | 3,838p | LOW: 2,580p |
DIVIDEND YIELD: | 3.3% | PE RATIO: | 29 | |
NET ASSET VALUE: | 2,482¢* | NET DEBT: | 34% |
Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
---|---|---|---|---|
2009 | 44.0 | 7.9 | 302 | 45.0 |
2010 | 55.2 | 20.5 | 731 | 108 |
2011 | 60.5 | 13.2 | 304 | 145 |
2012 (restated) | 51.0 | -2.4 | -163 | 167 |
2013 | 51.2 | 3.5 | 198 | 192 |
% change | +0 | - | - | +15 |
Ex-div: 5 Mar Payment: 10 Apr *Includes intangible assets of $6.8bn, or 366¢ a share £1=$1.66 NAV and market value reflect both UK and Australian listed shares |