In exceptional market conditions, Rio Tinto achieves record financial results and declares total interim dividend of 561 US cents per share, 75% of underlying earnings
July 28 2021 - 2:19AM
Business Wire
Rio Tinto Chief Executive Jakob Stausholm said “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 $7.3 billion. We are further strengthening
the portfolio with our commitment to fund the high-quality Jadar
lithium project, which signals our large-scale entry into the
fast-growing battery materials market. We will pay an interim
dividend of 561 US cents per share, representing 75% of underlying
earnings.
“We are making progress on our four priorities, identifying
opportunities for operational improvement, advancing our ESG
agenda, taking important investment decisions and stepping up our
external engagement. We are making real and lasting changes to the
way we engage, interact and operate and are committed to ensuring
that we have strong and positive relationships wherever we do
business. We have identified what we need to do to make Rio Tinto a
better company for the long term, with the right teams in place to
unleash our full potential.”
Six months ended 30 June
2021
2020
Change
Net cash generated from operating
activities (US$ millions)
13,661
5,628
143%
Capital expenditure1 (US$ millions)
3,336
2,693
24%
Free cash flow2 (US$ millions)
10,181
2,809
262%
Consolidated sales revenue (US$
millions)
33,083
19,362
71%
Underlying EBITDA2 (US$ millions)
21,037
9,640
118%
Underlying earnings2 (US$ millions)
12,166
4,750
156%
Net earnings (US$ millions)
12,313
3,316
271%
Underlying earnings2 per share (US
cents)
751.9
293.7
156%
Ordinary dividend per share (US cents)
376.0
155.0
143%
Special dividend per share (US cents)
185.0
0.0
n/a
Total dividend per share (US cents)
561.0
155.0
262%
Underlying return on capital employed
(ROCE)2
50%
21%
At 30 June 2021
At 31 December 2020
Net cash/(debt)2 (US$ millions)
3,140
(664)
Our financial results are prepared in
accordance with International Financial Reporting Standards (IFRS)
and are unaudited.
- Our colleague Nico Swart was tragically killed in a shooting
incident whilst driving to work at Richards Bay Minerals (RBM) in
South Africa on 24 May. Our sympathies are with Nico's family and
we are offering ongoing support to his family, friends and
colleagues.
- We continue to prioritise the safety of our people and
communities and have now exceeded 30 months without a fatality on
site. However, our all injury frequency rate (AIFR) of 0.39 has
seen a slight increase versus 2020 first half (0.37).
- Our new leadership team is now fully in place and focused on
driving forward our four priorities. We are developing a large
volume of work taking a company-wide, bottom-up and people-centric
approach as we look to embed real and sustainable changes to the
way we operate and engage.
- In the first half, we sustained our efforts to earn back trust
and strengthen our social licence. We continue rebuilding our
relationships with Traditional Owners in the Pilbara and engaged
extensively with government representatives, business leaders,
current and former Rio Tinto employees and our shareholders. The
insights from these meetings are helping us improve how we operate
and effectively and respectfully engage in a collaborative manner
wherever we operate.
- $13.7 billion net cash generated from operating activities was
143% higher than 2020 first half, mainly due to higher pricing for
iron ore, aluminium and copper.
- $10.2 billion free cash flow2 reflected the stronger operating
cash flows partially offset by a 24% rise in capital expenditure1
to $3.3 billion, driven by an increase in replacement and
development capital as we ramp up our projects.
- Funding committed for the Jadar lithium-borates project in
Serbia, subject to receiving all relevant approvals, permits and
licences and ongoing engagement with local communities, the
Government of Serbia and civil society: $2.4 billion investment,
targeting first saleable production in 2026 and ramp-up to annual
production of ~58,000 tonnes of battery-grade lithium carbonate in
2029.3
- $21.0 billion underlying EBITDA2 was 118% higher than 2020
first half, with an underlying EBITDA margin2 of 61%.
- $12.2 billion underlying earnings2 (underlying EPS of 751.9 US
cents) were 156% higher than 2020 first half with an underlying
effective tax rate of 29%. Taking exclusions into account, net
earnings of $12.3 billion (basic EPS of 761.0 US cents) mainly
reflected $0.3 billion of exchange rate gains net of $0.1 billion
of net additional closure costs for non-operating and fully
impaired assets. See table on page 12.
- $3.1 billion of net cash2 at 30 June 2021, compared with net
debt2 of $0.7 billion at the start of the year, which reflected the
free cash flow of $10.2 billion partly offset by $6.4 billion of
cash returns paid to shareholders.
- Cash returns of $9.1 billion announced today, comprising
interim ordinary dividend of $6.1 billion, equivalent to 376 US
cents per share, and special dividend of $3.0 billion, equivalent
to 185 US cents per share. Interim pay-out ratio represents 75% of
first half underlying earnings.
The H1 2021 interim results release is available here
- Capital expenditure is presented gross, before taking into
account any cash received from disposals of property, plant and
equipment (PP&E).
- This financial performance indicator is a non-GAAP alternative
performance measure ("APM"). It is used internally by management to
assess the liquidity and performance of the business and is
therefore considered relevant to readers of this document. It is
presented here to give more clarity around the underlying business
performance of the Group’s operations. APMs are reconciled to
directly comparable IFRS financial measures on pages 74 to 79.
- These production targets were previously reported in a release
to the Australian Securities Exchange (ASX) dated 10 December 2020,
“Rio Tinto declares maiden Ore Reserve at Jadar”. All material
assumptions underpinning the production targets continue to apply
and have not materially changed.
This announcement is authorised for release to the market by
Steve Allen, Rio Tinto’s Group Company Secretary.
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Media Relations, Australia Jonathan Rose M +61 447 028
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Amar Jambaa M +61 472 865 948
Rio Tinto Limited Level 7, 360 Collins Street Melbourne
3000 Australia T +61 3 9283 3333 Registered in Australia ABN 96 004
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