Rio Tinto PLC (LON:RIO) saw its shares fall on Wednesday as plans to reward shareholders with a mammoth US$7.2bn (£5.49bn) return from asset sales and share buy-backs failed to offset slightly disappointing first-half results from the Anglo-Australian mining giant.
The FTSE 100-listed firm saw its underlying earnings (EBITDA) for the six months to 30 June 2018 increase by just 2% to US$9.2bn, below the consensus estimates for US$9.5bn.
READ: Rio Tinto’s strong iron ore production offset by more cost warnings
The firm’s consolidated sales revenue was US$19.9bn in the first half, up $0.6bn year-on-year, driven by increased volumes of iron ore, bauxite and copper and higher prices for aluminium and copper, which offset the impact of lower iron ore prices and the divestment of Coal & Allied.
Rio said it shipped 88.5mln tonnes of iron ore in the second quarter of 2018, up year on year, due to improved productivity and better weather.
The group generated operating cash flow of US$5.2bn in the half-year, net of a US$1.2bn payment to the Australian Tax Office pertaining to 2017 profits.
The miner raised its interim dividend by 15% to US$1.27 a share and said returns to shareholders will include US$3.2bn from operations, and US$4bn from asset sales.
Rio Tinto chief executive J-S Jacques said: "We will continue to invest in Tier 1 growth, further strengthen our portfolio and maintain a strong balance sheet in order to deliver superior returns to shareholders in the short, medium and long-term."
Shares fall, Liberum repeats ‘sell’
In early morning trading, Rio Tinto shares were 3.7% lower at 4,043p.
In a note to clients, analysts at Liberum Capital repeated a ‘sell’ rating on Rio shares, with a target price of 2,750p.
They said; “Headline numbers in line with consensus, if not slightly below: i.e. EBITDA of $9.2bn vs. $9.1bn Liberum but $9.5bn consensus.
“Operating cash flow was weak – came in at $5.2bn vs. our $7bn, in part due to $1.2bn payment due to the Australian tax office, but still a reasonable miss.”
The analysts added: “Nothing major on incremental returns, adding an additional $1bn to the buyback programme where there is $1.4bn remaining.
“Steady as she goes but certainly no major beats to expectations and if anything a few small misses.”