Whisper it: Rio Tinto (RIO) is an income stock again. Operational discipline and a little help from commodity prices meant the diversified miner could return the focus on shareholder income in its full-year results, just a year after abandoning the progressive dividend. So, despite downgrading expectations for its full-year payout to a minimum of 115¢ a share, Rio has demonstrated its willingness to ignore its revised policy to pass on 40 to 60 per cent of underlying earnings to investors. In fact, a total return of $3.6bn (£2.9bn), including a newly announced $500m share buyback scheme, equates to more than 70 per cent of the $5.1bn underlying earnings booked last year.
Not even a c-suite bribery scandal and the looming threat of strikes at the part-owned Escondida copper mine could supplant 2016's recovery story. A pick-up in iron ore and coal prices in the second half, along with disposals, lower impairments and exchange losses, fed through to robust operating cash flows of $8.5bn.
Free cash flow of $5.8bn came in below the $6.3bn forecast by HSBC, which is guiding for underlying EPS of $4.12 ($2.80 in 2016) and free cash flow of $8.2bn in 2017.
RIO TINTO (RIO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,527p | MARKET VALUE: | £65.50bn | |
| TOUCH: | 3,526-3,529p | 12-MONTH HIGH: | 3,685p | LOW: 1,605p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 2,184¢ | NET DEBT: | 21% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 51.00 | -2.40 | -163 | 167 |
| 2013 | 51.20 | 3.50 | 198 | 192 |
| 2014 | 47.66 | 9.55 | 353 | 215 |
| 2015 | 34.83 | -0.73 | -47.5 | 215 |
| 2016 | 33.78 | 6.34 | 257 | 170 |
| % change | -3 | - | - | -21 |
Ex-div: 23 Feb Payment: 6 Apr £1 = $1.25 NAV and market value reflect both UK and Australian shares | ||||
