Rio Tinto Annual Profit Climbs, Ups Dividend; To Buy Back $2 Bln Shares

(RTTNews) - Mining giant Rio Tinto Plc. (RTPPF.PK, RIO.L, RIO, RTNTF.PK) Thursday said full year profit increased significantly from the prior year, helped by lower costs and charges, even as revenue slipped on weak pricing.

Further, the company lifted its dividend, and announced a $2 billion buyback, while reducing its capex target for 2015.

Net earnings surged to $6.527 billion from $3.665 billion reported last year. Earnings per share climbed to 351.2 cents from 197.3 cents. The results are from continuing operations.

Underlying earnings dropped to $9.305 billion from $10.217 billion in the prior year, amid weak iron-ore prices but higher volumes.

Rio Tinto said the effect of price movements on all major commodities in 2014 was to decrease underlying earnings by $4.146 billion, compared to 2013.

However, volumes enhanced earnings by $1.431 billion from last year. These were achieved primarily in iron ore, where a new annual sales volume record was achieved following the increase in capacity at the Pilbara ports and mines and productivity improvements.

Profit before taxation increased to $9.552 billion from last year's $3.505 billion.

Consolidated sales revenue declined to $47.664 billion from $51.171 billion in 2013, amid a decline in pricing.

Net operating costs decreased to $33.91 billion from $36.10 billion, and impairment charges net of reversals were $1.062 billion, compared to $7.315 billion last year.

Further, the company increased full year dividend by 12 percent to 215 US cents per share.

The company also proposed a capital return of $2.0 billion, comprising a targeted A$500 million offmarket share buy-back tender of Rio Tinto Limited shares and the balance of approximately $1.6 billion for an on-market buy-back of Rio Tinto Plc shares.

Further, the company reduced net debt by $5.6 billion to $12.5 billion.

Rio Tinto CEO Sam Walsh said: "With lower commodity prices and uncertain global economic trends, the operating environment remains tough...Our combination of world-class assets, disciplined capital allocation, balance sheet strength, operating and commercial excellence, and a culture of safety and integrity gives me confidence in our ability to continue to generate sustainable returns for our shareholders."

The company sees further cash cost improvements of $750 million, expected to be realized in 2015.

Capital expenditure is now expected to decline to less than $7.0 billion in 2015 and remain at around $7.0 billion in 2016 and 2017.

The company had said in August 2014 that its capex in 2015 is expected at around $8 billion, and that beyond 2015, capex was expected to be maintained at around $8 billion annually in the medium term.

The stock rose 1.6 percent in early trade to 3,017.70 pence.