Rio Tinto has handed shareholders a second round of goodies to go with the massive interim payout and capital return.
In its full-year announcement last night the miner revealed a huge special dividend for investors, as it announced a huge $US7.1 billion ($A9.8 billion) dividend payout as part of its full-year results.
Rio said it would pay a fully franked special dividend worth a total of $US4 billion for shareholders, to be funded with the proceeds from the sale of its Grasberg copper mine in Indonesia and the sale of its Dunkerque aluminium smelter in France.
The special dividend bonanza is on top of a final dividend worth a total of $US3.1 billion for shareholders.
Last night’s announcement means Rio has now declared total cash returns to shareholders relating to the 2018 year of $US13.5 billion.
Rio detailed the makeup of those payments in last night’s announcement:
“6.3 billion of cash returns from operations, comprising the $1.0 billion share buy-back announced in August 2018, and record $5.3 billion full-year ordinary dividend (equivalent to 307 US cents per share) – 72% of underlying earnings, including final dividend of $3.1 billion (equivalent to 180 US cents per share), announced today.
“$7.2 billion of supplementary cash returns from divestments, comprising a special dividend of $4.0 billion announced today, equivalent to 243 US cents per share, and $3.2 billion of share buybacks, $1.1 billion of which remains outstanding in Rio Tinto plc shares, to be completed no later than 28 February 2020. This brings total cash returns declared in respect of 2018 to $13.5 billion,” the company said.
Rio’s final dividend will be $US1.80 share, while the special dividend will be $US2.43 per share. Both are fully franked and will be paid on April 18. The interim was $US1.27 a share, making a total for the year of $US3.07.
Shares in Rio closed up 56 cents on Wednesday before the results were released, at $95.12, its second-highest closing price of 2019.
Rio Tinto reported overall underlying annual earnings up 2% to $US8.8 billion, driven by higher contributions from copper (despite the late slide in the copper price in the final quarter of 2018) and aluminium, which offset lower earnings in other divisions.
The company said total revenue rose $500 million to $US40.5 billion in the 2018 year.
“Increased volumes of iron ore and copper, and higher prices for aluminium and copper, offset the impact of lower iron ore prices and our coal divestments,” the company said last night.
Profit from the company’s powerhouse, its WA iron ore division eased 2% to $US8.33 billion despite sale revenue of $US18.48 billion, up 1% on the previous year. That was achieved on shipments of 338.2 million tonnes, up 2% on the previous corresponding period which offset weaker prices for part of 2018.
The mining giant has now joined BHP, Fortescue Metals, Yancoal, Brambles, CSR, potentially Woolworths, Wesfarmers, Caltex and other Australian companies who have unveiled special dividend returns to shareholders in recent months, especially this reporting season.
“We have once again announced record cash returns to shareholders of $US13.5 billion on the back of $US18 billion of underlying EBITDA and a return on capital employed of 19 percent,” CEO JS Jacques said.
“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,” he said.
