Rio Tinto Turns To Profit, Revenue Dips, Plans Share Buyback; Cuts Dividend

(RTTNews) - Shares of Rio Tinto Plc (RTPPF.PK, RIO.L, RIO, RTNTF.PK) were gaining around 2 percent in the London trading after the mining giant reported Wednesday a hefty profit in its fiscal 2016, compared to last year's loss. Revenues, meanwhile, declined on weak commodity prices.

Further, the company trimmed its annual dividend, and announced share buy-back totaling $500 million in Rio Tinto plc shares.

Rio Tinto chief executive J-S Jacques said, "We enter 2017 in good shape. Our team will deliver $5 billion of extra free cash flow over the next five years from our productivity programme. Our value over volume approach, coupled with a robust balance sheet and world-class assets, places us in a strong position to deliver superior shareholder returns through the cycle."

For fiscal 2016, net earnings were $4.62 billion, compared to last year's loss of $866 million. Basic earnings per share were 256.9 US cents, compared to loss of 47.5 US cents a year ago.

The latest results included impairment charges of $183 million, compared to last year's $1.80 billion. The results also included, among other things, exchange and derivative gains of $536 million, while last year's losses were $3.28 billion.

Underlying earnings were $5.10 billion, compared to $4.54 billion last year. Underlying earnings per share were 283.8 cents, compared to 248.8 cents a year ago.

EBITDA margin of 38 percent in 2016 increased from 34 percent in 2015, reflecting the positive impact of the cash cost improvements.

Underlying EBITDA improved 7 percent from last year to $13.51 billion.

Consolidated sales revenues were $33.8 billion, $1.0 billion lower than last year, primarily due to lower average commodity prices, and lower market premia for aluminium.

Further, the company announced total dividends for 2016 of 170 US cents per share, down 21 percent from last year's 215 US cents. This includes the final dividend of 125 US cents per share, which will be paid in April 2017. Total dividend in UK pence terms would be 134.36 pence.

Dividends will be paid on April 6 to holders of ordinary shares and ADRs on the register at the close of business on February 24.

The company said its board expects total cash returns to shareholders over the longer term to be in a range of 40 to 60 per cent of underlying earnings in aggregate through the cycle.

Looking ahead, the company said its production guidance is unchanged from the fourth quarter operations review.

Rio Tinto's Pilbara shipments in 2017 are expected to be between 330 and 340 million tonnes, subject to weather conditions.

In London, Rio Tinto shares were trading at 3,508.50 pence, up 2.14 percent.