Rio Tinto delivers underlying EBITDA of $26.3 billion and total dividends of 492 US cents per share
February 22 2023 - 12:35AM
Business Wire
Rio Tinto Chief Executive Jakob Stausholm said: "We are building
a stronger Rio Tinto and delivering against our four objectives.
Our operational performance has improved, as evidenced by a number
of second half records being set at our Pilbara iron ore mine and
rail system. We are also investing for the future, doubling our
stake in the Oyu Tolgoi copper-gold project in Mongolia through the
acquisition of Turquoise Hill Resources, progressing the Rincon
Lithium Project in Argentina and reaching milestone agreements that
underpin the long-term success of our Pilbara iron ore
business.
"We continue to focus on making lasting change to strengthen our
workplace culture and to building better relationships with
Indigenous peoples, communities and other partners. At all times we
will seek to find better ways, in line with our purpose. We clearly
have more to do but I am encouraged by the progress we are
making.
"Despite challenging market conditions, we remain resilient
because of the quality of our assets, our great people and the
strength of our balance sheet. That is why we delivered strong
financial results with underlying EBITDA of $26.3 billion, free
cash flow of $9.0 billion and underlying earnings of $13.3 billion,
after taxes and government royalties of $8.4 billion. This enables
us to continue to invest in strengthening the business while also
paying a total dividend of $8.0 billion, a 60% payout, in line with
our policy.
"The uplift in our operational performance, strengthening of
external relationships and investment in the long-term strength of
the business ensure we will be able to continue to pay attractive
dividends and invest in sustaining and growing our portfolio, while
contributing to society's drive to net zero."
At year end
2022
2021
2020
Change vs 2021
Change vs 2020
Net cash generated from operating
activities (US$ millions)
16,134
25,345
15,875
(36)%
2%
Purchases of property, plant and equipment
and intangible assets (US$ millions)
6,750
7,384
6,189
(9)%
9%
Free cash flow1 (US$ millions)
9,010
17,664
9,407
(49)%
(4)%
Consolidated sales revenue (US$
millions)
55,554
63,495
44,611
(13)%
25%
Underlying EBITDA1 (US$ millions)
26,272
37,720
23,902
(30)%
10%
Profit after tax attributable to owners of
Rio Tinto (net earnings) (US$ millions)
12,420
21,094
9,769
(41)%
27%
Underlying earnings per share (EPS)1 (US
cents)
819.6
1,321.1
769.6
(38)%
6%
Ordinary dividend per share (US cents)
492.0
793.0
464.0
(38)%
6%
Special dividend per share (US cents)
—
247.0
93.0
(100)%
(100)%
Total dividend per share (US cents)
492.0
1,040.0
557.0
(53)%
(12)%
Net (debt)/cash1 (US$ millions)
(4,188)
1,576
(664)
Underlying return on capital employed
(ROCE)1
25%
44%
27%
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. APMs are reconciled to directly comparable IFRS
financial measures on pages 68 to 77. Our financial results are
prepared in accordance with IFRS — see page 35 for further
information. Footnotes are set out in full on page 17.
- We are committed to having a safe work environment, preventing
catastrophic events and reducing injuries. We had a fourth year in
a row of zero fatalities and our all-injury frequency rate has
remained stable at 0.40. We continue to implement our safety
maturity model which, as our blueprint for safety, describes the
systems and behaviours we apply to create a strong safety
culture.
Solid financial results in 2022, set against a context of
record prices in 2021
- $16.1 billion net cash generated from operating activities, 36%
lower than 2021. This included items of a non-recurring nature
which were not representative of the underlying strength of the
performance of the business, which, in aggregate, reduced operating
cash flow by around $2 billion. See page 7 for more detail. Free
cash flow1 of $9.0 billion included capital expenditure of $6.8
billion, which decreased 9% as we commissioned our current
programme of Pilbara replacement projects, notably
Gudai-Darri.
- $12.4 billion of net earnings, 41% lower than 2021, reflected
the movement in commodity prices, the impact of higher energy and
raw materials prices on our operations, and higher rates of
inflation on our operating costs and closure liabilities. Effective
tax rate on net earnings of 30.9% compared with 27.7% in 2021, with
the increase being primarily due to the $0.8 billion write down of
deferred tax assets in the US.
- $26.3 billion underlying EBITDA1 was 30% below 2021, with an
underlying EBITDA margin1 of 45%.
- $13.3 billion underlying earnings1 (underlying EPS1 of 819.6 US
cents) were 38% below 2021.
- $4.2 billion of net debt1 at year end, compared with net cash1
of $1.6 billion at the start of the year, primarily reflected the
free cash flow1 of $9.0 billion, offset by $11.7 billion of cash
returns to shareholders and $3.8 billion for the acquisitions of
Turquoise Hill Resources (TRQ)2 and Rincon Lithium Project.
- $8.0 billion full-year dividend, equivalent to 492 US cents per
share. This represents 60% of underlying earnings, in line with our
shareholder returns policy.
Delivering on our strategy
- We have put climate change and the low-carbon transition at the
heart of our strategy. We are decarbonising our assets; helping our
customers decarbonise by developing new products and technologies;
and growing in materials enabling the energy transition. We will
deliver our strategy through four clear objectives, which guide how
we operate. Progressing our strategy and four objectives will
ensure that we provide the materials the world needs while
maximising shareholder returns and strengthening our position as a
partner of choice for our customers and other key
stakeholders.
- We continue our work on social licence to restore trust and
rebuild relationships, particularly with Indigenous peoples, with
an absolute determination to achieve impeccable ESG
credentials:
- We are implementing all recommendations from the comprehensive
external review of our workplace culture published in February to
ensure that everyone at Rio Tinto has a safe, respectful and
inclusive workplace. Some immediate actions include training 91% of
more than 7,000 leaders in 2022 in the foundations of building
psychological safety, exceeding our target of 80%.
- We increased our gender diversity by 1.4 percentage points to
22.9%, but fell short of our target to raise female representation
by two percentage points. The increases were distributed across all
levels of the organisation with female senior leaders increasing
from 27.4% to 28.3%. We have also increased the number of
Indigenous leaders in our workforce to 46 (November 2020: 6),
through internal promotion and recruitment.
- In October, we published our second Communities & Social
Performance (CSP) progress report on actions addressing the 2020
Board Review of Cultural Heritage Management. It includes direct
feedback from the Pilbara Traditional Owners and details the
actions the company has taken to rebuild relationships with
Indigenous peoples and external stakeholders. We are moving to a
model of co-management of Country in our Pilbara iron ore business,
and we are updating agreements with Indigenous peoples. In May, we
signed a Heads of Agreement with the Puutu Kunti Kurrama and
Pinikura (PKKP) people which will guide the co-management of Puutu
Kunti Kurrama and Pinikura country where mining takes place. In
November, we agreed with the PKKP Aboriginal Corporation to create
the Juukan Gorge Legacy Foundation as part of a remedy agreement
relating to the destruction of the rock shelters at Juukan Gorge in
May 2020. We also signed an updated agreement with Yindjibarndi
Aboriginal Corporation in Western Australia in November and signed
the first agreement with the Pekuakamiulnuatsh First Nation in
Quebec in December.
- To achieve our objective of becoming the best operator, we
continue to roll out the Safe Production System (SPS). We achieved
our SPS deployment target for 2022 with 30 deployments across 16
sites, which resulted in improved performance at those sites.
Roll-outs are ongoing to continuously improve safety, strengthen
employee engagement and sustainably lift operational performance
across our global portfolio.
- We made significant progress with our objective to excel in
development with the following key milestones in the year:
- We delivered first ore from Gudai-Darri, our first greenfield
iron ore mine in the Pilbara in more than a decade. The ramp-up
continues to progress as planned, with the 43 million tonne per
year capacity expected to be reached on a sustained basis during
2023.
- We agreed to enter a joint venture with China Baowu Steel Group
Co. Ltd with respect to the Western Range iron ore project in the
Pilbara, investing $2 billion ($1.3 billion Rio Tinto share3) to
develop the 25 million tonne per year capacity project. We have
received all primary environmental and Australian Government
approvals, while Chinese regulatory approvals continue to progress
as planned. The joint venture is anticipated to commence in March,
once the operational elements of the JV are in place. Rio Tinto
commenced early works site mobilisation and awarded major
contracts.
- We agreed, together with Wright Prospecting Pty Ltd, to
modernise the joint venture covering the Rhodes Ridge project in
the East Pilbara. The participants have commenced an Order of
Magnitude study which will consider development of an operation
before the end of the decade with initial plant capacity of up to
40 million tonnes annually, subject to receipt of relevant
approvals.
- We fired 19 drawbells in 2022 from the Hugo North copper-gold
underground mine at Oyu Tolgoi in Mongolia. Drawbell progression
accelerated as a result of improvement initiatives, bringing
projected first sustainable production from Panel 0 forward to the
first quarter of 2023. This followed the comprehensive agreement
announced on 25 January 2022, which reset the relationship between
partners and resulted in the start of underground operations.
- We completed the purchase of non-controlling interests in TRQ
for $3.1 billion2, simplifying ownership of the Oyu Tolgoi mine,
significantly strengthening our copper portfolio and demonstrating
our long-term commitment to the project and to Mongolia.
- Following completion of the $825 million Rincon acquisition,
the Board approved $194 million to develop a small starter
battery-grade lithium carbonate plant with a capacity of 3,000
tonnes per year. The investment includes early works to support a
full-scale operation. Construction activities progressed on phase
one camp facilities with rooms for 250 persons completed. Airstrip
permits were received and contractors mobilised. First saleable
production is expected in the first half of 2024.
- We increased our exploration and evaluation spend by 24% to
$897 million in 2022, as we ramped up our activities in Guinea,
Argentina and Australia.
The 2022 full year results release is available here.
Footnotes
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. APMs are reconciled
to directly comparable International Financial Reporting Standards
(IFRS) financial measures on pages 68 to 77. Our financial results
are prepared in accordance with IFRS - see page 35 for further
information.
2. Total consideration of $3,139 million for the minority
interest in TRQ excludes transaction costs of $74 million. In 2022,
we paid $2,928 million to shareholders and $33 million of
transaction costs. In 2023, we expect to pay the remaining $41
million of transaction costs and approximately $211 million to
dissenting shareholders, depending on the outcome and timing of
dissent proceedings.
3. Rio Tinto share includes 100% of funding costs for Paraburdoo
plant upgrades.
This announcement is authorised for release to the market by Rio
Tinto’s Group Company Secretary.
LEI: 213800YOEO5OQ72G2R82
Classification: 3.1 Additional regulated information required to
be disclosed under the laws of a Member State
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