Rio Tinto FY Profit best in 4 years; Offloads cash

by Ike Obudulu Posted on February 27th, 2019

Shares of Rio Tinto Plc (RTNTF,RIO,RIO.L, RTPPF) were gaining around 2 percent in the morning trading in London after the Anglo- Australian mining giant announced significant final dividend and a special dividend after reporting higher profit in its fiscal 2018. The company also said its 2019 production guidance is unchanged.

Rio Tinto Chief Executive J-S Jacques said, “We have once again announced record cash returns to shareholders of $13.5 billion on the back of $18 billion of underlying EBITDA and a Return on Capital Employed of 19 percent. These strong results reflect the efforts of the team to implement our value-over-volume strategy as we continued to strengthen the portfolio and invest in future growth.”

Rio Tinto announced final dividend of $3.1 billion or 180 US cents per share, resulting in total dividend for the year of $5.3 billion or 307.0 US cents. The company also announced a special dividend of $4.0 billion or 243 US cents per share. The company will pay the 2018 final dividend and the special dividend on April 18.

The board expects total cash returns to shareholders over the longer term to be in a range of 40-60 percent of underlying earnings in aggregate through the cycle.

For 2019, Rio Tinto expects Pilbara shipments to be 338 to 350 million tonnes (100 percent basis), subject to weather and market conditions.

The company expects its share of production in 2019 to be between 56 and 59 million tonnes of bauxite, 8.1 to 8.4 million tonnes of alumina and 3.2 to 3.4 million tonnes of aluminium.

For the fiscal year 2018, net profit attributable to the owners of the company was $13.64 billion, 56 percent higher than last year’s $8.76 billion. The latest results included $4.6 billion of gains on disposals of businesses and land. Earnings per share were 787.6 cents, up from 486.9 cents a year ago.

Underlying earnings were $8.81 billion, compared to $8.63 billion last year. Underlying earnings per share were 512.3 US cents, compared to 482.8 US cents last year. The results reflected a strong contribution from Copper & Diamonds, offsetting lower underlying earnings in other product groups.

Underlying EBITDA was $18.1 billion, down 2 percent from last year with higher revenues outweighed by a rise in energy and raw material costs.

Consolidated sales revenue grew to $40.52 billion from $40.03 billion in 2017. Increased volumes of iron ore and copper, and higher prices for aluminium and copper, offset the impact of lower iron ore prices and its coal divestments.

Separately, Rio Tinto published its approach to climate change, which shows how the company plans to contribute to and leverage the transition to a low carbon future.

Rio Tinto said it has consistently beaten its climate change goals since the business first set short-term and mediumterm targets in 2008. The company has already reduced emissions intensity by almost 30 per cent from 2008 levels, putting it on track to beat its latest target of reducing emissions intensity by 24 per cent from 2008 levels by 2020.

The company noted that it is working on targets for 2020 and beyond before current targets expire in 2020.

In London, Rio Tinto shares were trading at 4,477 pence, up 2.07 percent.

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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