Shareholders in Rio Tinto will get record interim and special dividends totalling $US5.61 a share (about $A7.60) after the iron ore giant revealed a record profit and revenues for the six months to June 30 almost wholly due to the surge in global iron ore prices.
Higher prices for copper (an all-time high in May) and a solid rise in the price of aluminium also added to the turbo-charged boost from iron ore – even though Rio’s six-month production and sales fell short of guidance.
That surge in iron ore prices, plus copper and aluminium saw Rio boost revenue 71% to a record $US33.083 billion for the June half, up from what was a solid $US19.362 billion in the first half of 2020 (part of which was hit by the impact of lockdowns and Covid which cut prices for most metals).
Net after tax earnings surged 271% to $US12.313 billion from a solid $US3.316 billion. That topped market forecasts around $US12.1 billion.
Underlying Earnings Before Interest Tax Depreciation and Amortisation surged 118% to $US21.036 billion.
An interim dividend of $US3.76 a share will be paid, as well as a special dividend of $US1.85 a share. That $US5.61 a share was more than three times the $US1.55 interim paid in 2020.
The total value of the two payments is a record $US9.1 billion or nearly $A12.38 billion.
Rio said its average realised iron ore price nearly doubled to $US168.4 a dry metric tonne free on board from the June half of 2020 (which saw prices sag because of Covid).
Capex rose 24% to $US3.33 billion from just on $US2.7 billion.
The return on capital leapt to 50% from 21% in the first half of last year.
RIO CEO Jakob Stausholm said in a statement with the earnings release that “Government stimulus in response to ongoing COVID-19 pressures has driven strong demand for our products at a time of constrained supply resulting in a significant spike in most prices.”
“We focused on safely running our world-class assets and supplying products to our customers. This enabled us, despite operational challenges, to deliver record financial results with free cash flow of $10.2 billion and underlying earnings of $12.2 billion, after taxes and government royalties of $7.3 billion.
“We are further strengthening the portfolio with our commitment to fund the high-quality Jadar lithium project, which signals our large-scale entry into the fast-growing battery materials market. We will pay an interim dividend of 561 US cents per share, representing 75% of underlying earnings,” he said.
Rio shares eased ahead of the results release after trading ended at 4pm (they were issued at 4.15pm) The shares lost 0.19% to end at $132.22. The shares rose 5% in the past week in the lea up to the release.
