2020 was as good as it gets for Rio Tinto, judging by the full year results issued late Wednesday.
BHP surprised with a record interim dividend this week, yesterday Rio Tinto went further with a record full year dividend – and iron ore was the sole driver of the enormous result.
Late Wednesday Rio reported a better-than-expected 20% rise in underlying profit for the year to December 31 and said it would pay record total dividends of $US5.57 a share.
Most analysts had expected Rio to announce total dividends of $US4.80 a share.
The miner’s underlying profit of $US12.4 billion ($16 billion) above market expectations of $US11.74 billion.
That was the best profit performance since 2011.
The huge annual dividend more than doubles the high (then) $2.31 a share paid for all of 2019. It is also considerably higher than the huge interim of $US1.55 a share paid for the first half of 2020.
Rio said the $US9.0 billion full-year dividend, was equivalent to 557 US cents a share and represented 72% of underlying earnings.
There was a record $US5.0 billion final ordinary dividend (309 US cents a share) and $US1.5 billion special dividend (93 US cents a share) declared on Wednesday.
Fortescue Metals, the third ranked global iron ore miner, is expected to reveal a record interim profit of $4.5 billion today (Thursday) but the shine will be taken off that result by what is expected to be a huge $US1 billion plus cost overrun on the Iron Bridge magnetite export mine in the Pilbara.
The financial results were the first to be unveiled by new chief executive Jakob Stausholm after replacing former CEO Jean-Sebastien Jacques, who resigned amid outrage over the miner’s decision to blast through culturally significant Aboriginal rock shelters in Western Australia’s Pilbara.
It has been an extraordinary year,” Mr Stausholm said. But he added: “Our successful response to the COVID-19 pandemic and strong safety performance were overshadowed by the tragic events at the Juukan Gorge, which should never have happened.”
Rio said sales revenue rose 3% to more than $US44.6 billion, sending underling EBITDA up 13% to nearly $US24 billion. Net earnings were 22% higher at $US9.769 billion.
The result includes $US1.3 billion of exchange losses and $US1.1 billion in impairment charges, mostly against three of its Pacific Aluminium smelters, its ISAL smelter in Iceland and its stake in the Diavik diamond mine in Canada’s Northwest Territories.
Iron ore jumped as high as $US176.90 a metric tonne late in 2020 (for 62% Fe fines delivered to northern China) on strong Chinese demand, which was underpinned by China’s quicker-than-anticipated economic recovery from the Covid-19 pandemic lockdowns.
Rio Tinto in January said it produced 2% more iron ore in Australia last year (330.6 million tonnes) versus 2019. It is targeting iron ore exports of up to 340 million tonnes this year.
Iron ore revenue rose 13.4% higher to $US29,202 billion for 2020.
But aluminium, alumina, and bauxite revenue fell 10% to $US9.146 billion and copper revenue dropped 11.8% to US$1.785 billion, and Industrial minerals revenue fell 8.4% to US$2.051 billion. The weak copper result is in contrast to BHP where its revenues rose, as did earnings.
