Rio Tinto Posts Record Annual Profit, Nearly Doubles Dividend
23 February 2022 - 05:35PM
Dow Jones News
By Rhiannon Hoyle
Rio Tinto PLC, one of the world's biggest mining companies, said
it made a record profit in 2021 and would nearly double its
full-year payout to shareholders, becoming the latest resources
company to report a surge in earnings from increased commodity
prices.
Rio Tinto said it made a net profit of $21.09 billion last year,
up from $9.77 billion in 2020.
Underlying earnings totaled $21.38 billion, up from $12.45
billion the year earlier, reflecting a jump in prices not just for
iron ore-which accounts for most of Rio Tinto's profits-but other
commodities including copper and aluminum.
Analysts had expected underlying earnings of roughly $21.63
billion, according to 13 estimates compiled by Visible Alpha.
Directors of Rio Tinto declared a final dividend of $4.17 a
share plus a special dividend of $0.62, taking the total payout for
the year to $10.40 a share.
"The recovery of the global economy, driven by industrial
production, resulted in significant price strength for our major
commodities, which we were able to capture," said Jakob Stausholm,
Rio Tinto's chief executive.
Some of its rivals, including Glencore PLC and BHP Group Ltd.,
have also reported record earnings in their latest respective
fiscal reports.
Commodity prices jumped last year as fiscal and monetary
policies were geared to support economic growth.
The price of iron ore, the key ingredient in steel, was
especially strong, surging to an all-time high in May. China's
steel output last year exceeded 1 billion metric tons for a second
time while, globally, crude steel production rose by one of its
largest absolute annual increments in history to record levels, Rio
Tinto said.
Iron ore accounted for roughly 80% of its underlying earnings
last year, as the average price Rio Tinto was paid for its
Australian iron ore climbed to $143.80 a ton, from $98.90 a ton in
2020.
Miners are using fatter earnings from higher prices to reward
their shareholders.
The industry in recent years pivoted to spending more on capital
returns, and less on growth, after investors berated companies for
burning through cash during a China-led commodity bull run a decade
ago.
Rio Tinto has been slowly returning to growing its business, at
a time when analysts increasingly worry hesitancy toward new
projects could create supply crunches for some critical
commodities. Rio Tinto is expanding a copper mine in Mongolia. It
is also seeking to develop a lithium project in Serbia, although it
was recently told permits there would be revoked. The company said
it is exploring all options for that project.
Rio Tinto, like its peers, has faced rising cost pressures more
recently, however, as inflationary headwinds mount globally. Rio
Tinto on Wednesday said it expects mining costs in its Australian
iron-ore business to rise due to higher input prices, labor costs,
and maintenance of processing plants.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
February 23, 2022 01:20 ET (06:20 GMT)
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