viewRio Tinto PLC

Rio Tinto reveals record shareholder payouts for 2018

Shareholder income is evidently being prioritised amid weaker pricing for key metals and as Chinese demand slows

rio miner
A total of US$13.5bn will be paid out to shareholders for 2018

Mining major Rio Tinto plc (LON:RIO) has pledged a ‘record-breaking’ payout to shareholders, announcing a US$3.1bn final dividend and a US$4bn special dividend which takes total returns for 2018 to US$13.5bn.

It represents a substantial portion of the miner’s US$18bn earnings (underlying EBITDA) for the year.

With evidence over past months pointing to slower Chinese growth, meaning lower demand for raw materials globally, evidently, shareholder income is being prioritised at Rio.

“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,” said chief executive Jean-Sébastien Jacques.

READ: Goldman Sachs upgrades Rio Tinto and downgrades BHP

"Our world-class portfolio and strong balance sheet will serve us well in all market conditions, and underpin our ability to continue to invest in our business and deliver superior returns to shareholders in the short, medium and long term."

Net cash generated from operations amounted to US$11.8bn, down 15% from US$13.8bn in 2017, while capital spending increased 21% to US$5.4bn during the year.

Free cash flow reduced 27% to US$6.9bn, from US$9.5bn in the preceding year.

Underlying earnings were down just 2% at US$18.13bn, from US$18.5bn, though the net earnings figure showed some 56% of improvement to US$13.6bn.

Rio had some US$7.2bn of supplementary cash returns as a result of asset divestments, to which the US$4bn special dividend is attached.

Sales revenue totalled some US$40.5bn, up around US$500mln on the previous year, and the company highlighted higher output in core commodities – such as iron ore and copper – plus the benefits of better prices for aluminium and copper.

These positive factors offset the impact of iron ore prices and the divestment of Rio’s coal business.

In a separate statement, the company highlighted the publication of ‘Our approach to climate change’ document which detailed the miner’s position in regards to carbon, following the coal divestments.

Jacques said: "Given our decision to strengthen our business and exit coal, we are now the only major mining company with a fossil-fuel-free portfolio, which means we are well-positioned to contribute to a low-carbon future.

"The materials we produce, from infinitely recyclable aluminium to copper used in electrification to our higher grade iron ore product, all play a part in the transition to a low-carbon economy.

“At Rio Tinto, we have reduced our emissions-intensity footprint by almost 30 per cent since 2008, putting us on track to beat our targets.”

Quick facts: Rio Tinto PLC

Price: 4720 GBX

Market: LSE
Market Cap: £58.84 billion

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