Rio Tinto delivers underlying EBITDA of $15.6 billion and an interim dividend of 267 US cents per share
July 27 2022 - 2:20AM
Business Wire
Rio Tinto Chief Executive Jakob Stausholm said: "We remain
focused on delivering on our long-term strategy, with a steady
improvement in operating performance and some notable advances in
our growth agenda. We continue to strengthen our partnership with
the Mongolian government following commencement of underground
mining at Oyu Tolgoi, delivered first iron ore from the Gudai-Darri
mine and approved early works funding at the Rincon lithium
project.
"Market conditions were good, albeit below last year's record
levels. We delivered largely flat production and solid financial
results, with underlying EBITDA of $15.6 billion, free cash flow of
$7.1 billion and underlying earnings of $8.6 billion, after taxes
and government royalties of $4.8 billion. As a result, we are
paying our second highest ever interim dividend of $4.3 billion, a
50% payout, in line with our policy. The market environment has
become more challenging at the end of the period.
"We are committed to making lasting, long-term change to our
culture, including to our workplace culture, and to building better
relationships with Indigenous peoples, communities and partners.
The progress we are making will ensure we continue to deliver
attractive returns to shareholders, invest in sustaining and
growing our portfolio, and make a broader contribution to society
in the drive to net-zero carbon emissions."
Six months ended 30 June
2022
2021
2020
Change vs 2021
Change vs 2020
Net cash generated from operating
activities (US$ millions)
10,474
13,661
5,628
(23)%
86%
Purchases of property, plant and equipment
and intangible assets (US$ millions)
3,146
3,336
2,693
(6)%
17%
Free cash flow1 (US$ millions)
7,146
10,181
2,809
(30)%
154%
Consolidated sales revenue (US$
millions)
29,775
33,083
19,362
(10)%
54%
Underlying EBITDA1 (US$ millions)
15,597
21,037
9,640
(26)%
62%
Profit after tax attributable to owners of
Rio Tinto (net earnings) (US$ millions)
8,908
12,313
3,316
(28)%
169%
Underlying earnings per share1 (EPS) (US
cents)
532.7
751.9
293.7
(29)%
81%
Ordinary dividend per share (US cents)
267.0
376.0
155.0
(29)%
72%
Special dividend per share (US cents)
—
185.0
—
(100)%
n/a
Total dividend per share (US cents)
267.0
561.0
155.0
(52)%
72%
Underlying return on capital employed
(ROCE)1
34%
50%
21%
At 30 June 2022
At 31 December 2021
Net cash 1 (US$ millions)
291
1,576
1 This financial performance
indicator is a non-IFRS (as defined below) alternative performance
measure ("APM"). It is used internally by management to assess the
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. First half 2022 and first half 2021 APMs are reconciled
to directly comparable International Financial Reporting Standards
(IFRS) financial measures on pages 69 to 76. First half 2020 APMs
are reconciled within the 2020 Half Year Results release on our
website. Our financial results are prepared in accordance with IFRS
- see page 42 for further information. Footnotes are set out in
full on page 7.
- Safety remains our top priority: we have now exceeded 3.5 years
without a fatality on a managed site but we recognise that safety
requires operating discipline every day. Our all-injury frequency
rate of 0.35 improved from 2021: fatigue, labour shortages and
other pressures from COVID-19 have heightened safety risks in
day-to-day operations. We are advancing our enhanced Safety
Maturity Model to address these risks.
- $10.5 billion net cash generated from operating activities,
which was 23% lower than 2021 first half, flowed through to 30%
lower free cash flow1 of $7.1 billion, which included a 6% decrease
in capital expenditure to $3.1 billion, as our current programme of
Pilbara replacement projects near completion.
- $8.9 billion of net earnings, 28% lower than 2021 first half,
reflected the movement in commodity prices, the impact of higher
energy prices on our operations and higher rates of inflation on
our operating costs and closure liabilities. Effective tax rate on
net earnings of 24.5% compared with 28.5% in 2021 first half.
- $15.6 billion underlying EBITDA1 was 26% below 2021 first half,
with an underlying EBITDA margin1 of 50%.
- $8.6 billion underlying earnings1 (underlying EPS1 of 532.7 US
cents) were 29% below 2021 first half with a 25.2% effective tax
rate on underlying earnings1, compared with 28.8% in 2021 first
half.
- $0.3 billion of net cash1 at 30 June 2022, which compared with
net cash1 of $1.6 billion at the start of the year, reflected the
free cash flow1 of $7.1 billion, offset by $7.6 billion of cash
returns to shareholders and the $0.8 billion Rincon
acquisition.
- Interim ordinary dividend of $4.3 billion, our second highest
ever interim, equivalent to 267 US cents per share. This represents
50% of underlying earnings, in line with our shareholder returns
policy, and consistent with our practice of paying out 50% on the
ordinary interim dividend.
- Following publication of a comprehensive external review of our
workplace culture on 1 February, we are now implementing all
recommendations from the report to ensure that everyone at Rio
Tinto has a safe, respectful and inclusive workplace.
- We are on track to achieve our gender diversity target to
increase female representation (including in senior leadership) by
two percentage points this year: this increased by one percentage
point in the half to 22.6%.
- We continue to focus on rebuilding our relationships with
Indigenous Peoples across our global operations. On 14 February, we
announced an agreement with the Yinhawangka Aboriginal Corporation
on a new co-designed management plan to ensure the protection of
significant social and cultural heritage values. This is part of
our proposed development of the Western Range iron ore project in
the Pilbara region of Western Australia. In May, we signed a Heads
of Agreement with the Puutu Kunti Kurrama and Pinikura (PKKP)
people which will guide the co-management of PKKP country where
mining takes place.
- We made significant progress with our objective to excel in
development with the following key milestones in the first half:
- we delivered first ore from Gudai-Darri, our first greenfield
iron ore mine in the Pilbara in more than a decade. We expect it to
reach its 43 million tonne per year capacity in 2023.
- we fired the first and second drawbells from the Hugo North
copper-gold underground mine at Oyu Tolgoi in Mongolia. This
followed the comprehensive agreement announced on 25 January 2022,
which resets the relationship between partners, and resulted in the
start of underground operations. The undercut progression remains
on track to achieve sustainable production in the first half of
2023.
- we made a non-binding all-cash proposal to the Turquoise Hill
(TRQ) Board to acquire the ~49% of the issued and outstanding
shares of TRQ that Rio Tinto does not currently own. The proposed
acquisition price of C$34 per share values the minority
shareholdings at US$2.7 billion. On 18 May, we agreed to amend the
funding plan with TRQ in order to provide liquidity of up to $400
million in short-term early advances, while the Special Committee
of TRQ evaluates our proposal. The deadline in the funding plan for
TRQ to conduct an initial equity offering of at least $650 million
has also been extended from the end of August to the end of
2022.
- following completion of the acquisition of the Rincon lithium
project in Argentina, the Board has approved $190 million to
develop a small starter battery-grade lithium carbonate plant with
a capacity of 3,000 tonnes per year and first saleable production
in 2024. The approval also includes early works to support a
full-scale operation, including power line and associated
substations, construction camp and airstrip.
- To achieve our ambition of becoming the best operator, we
continue to rollout the Rio Tinto Safe Production System (RTSPS).
We now have 15 active deployments across the business with 30 rapid
improvement projects (Kaizens), targeting bottlenecks, either
completed or in progress.
- We set ambitious climate targets in 2021 to reduce our Scope 1
and 2 emissions by 50% by 2030. While, as expected, we are yet to
achieve a reduction in our emissions, we are putting the building
blocks in place, including a call for proposals to develop
large-scale wind and solar power in Central and Southern Queensland
to power our aluminium assets in the Gladstone region. These assets
require 1140MW of reliable power to operate, which equates to at
least 4GW of quality wind or solar power with firming.
- We reached agreement with the Australian Taxation Office (ATO)
on all tax matters in dispute. We also reached agreement with the
Inland Revenue Authority of Singapore in relation to transfer
pricing for the same historical years (2010 to 2021). In the second
half of 2022, we will pay additional tax of A$613 million to the
ATO, relating to this agreement, which has been fully
provided.
Energy Resources of Australia (ERA)
As the majority shareholder of ERA, we were disappointed to
learn of the material cost and schedule overruns on the Ranger
rehabilitation project in Australia’s Northern Territory, announced
earlier this year. We remain committed to ensuring the
rehabilitation project is completed to a standard that will
establish an environment similar to the adjacent Kakadu National
Park. We also acknowledge the Traditional Owners, the Mirarr
People’s opposition to developing the Jabiluka uranium deposit and
restate our full support for ERA’s commitment that the deposit
would never be developed without the Mirarr People’s consent.
Since ERA announced the material cost and schedule overruns, we
have sought to work constructively with ERA’s Independent Board
Committee as they seek to find a funding solution. Rio Tinto’s
position is that the terms should reflect:
- the material cost overruns and interim funding
requirements;
- the Mirarr People’s publicly stated position on the future
development of Jabiluka; and
- Rio Tinto’s expectation that its rehabilitation commitment will
not generate any financial return.
These talks are ongoing as we work to ensure ERA has the means
to complete this critical rehabilitation project.
The full H1 2022 interim results release is available here.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220726006194/en/
Media Relations, UK
Illtud Harri M +44 7920 503 600
Matthew Klar M+ 44 7796 630 637
David Outhwaite M +44 7787 597 493
Media Relations, Australia
Jonathan Rose M +61 447 028 913
Matt Chambers M +61 433 525 739
Jesse Riseborough M +61 436 653 412
Media Relations, Americas
Simon Letendre M +1 514 796 4973
Malika Cherry M +1 418 592 7293
Investor Relations, Australia
Amar Jambaa M +61 472 865 948
Investor Relations, UK
Menno Sanderse M: +44 7825 195 178
David Ovington M +44 7920 010 978
Clare Peever M +44 7788 967 877
Rio Tinto plc
6 St James’s Square London SW1Y 4AD United Kingdom
T +44 20 7781 2000 Registered in England No. 719885
Rio Tinto Limited
Level 7, 360 Collins Street Melbourne 3000 Australia
T +61 3 9283 3333 Registered in Australia ABN 96 004 458 404
Category: General
Rio Tinto (NYSE:RIO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Rio Tinto (NYSE:RIO)
Historical Stock Chart
From Jul 2023 to Jul 2024