REPORTING SEASON: Rio Tinto Limited (RIO)
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Figure 1: Rio Tinto Limited 12 month chart
Rio Tinto (RIO) closes out a tough year with a US$2Billion buyback
Australian miner Rio Tinto’s (RIO) full year 2014 profit result was better than the market had expected, even with over US$2.8 billion in write-downs and non-significant items.
Total underlying earnings reached US$9.3 billion above expectations with net earnings totalling US$6.5 billion. Earnings (EBITDA) from RIO’s aluminium (+55%) and energy (-72%) units beat market expectations, iron ore (-18%) in line with expectations to US$14,244 million. Earning from coal came in weaker than expected even with a 33% lift to US$2,336 million.
RIO said “Our continued financial and operational discipline enabled us to offset much of the impact of lower commodity prices.” This was evident by its Net Debt falling by over 31% to US$12,495 and the fact RIO’s (earnings) EBITDA margin remained unchanged at 39%
RIO, like its peers is cutting costs, reduced costs by US$1.5 billion over the year. RIO decreased capital expenditure (CAPEX) by over US$4,836 million due to winding back its business to meet supply. RIO plans to cut spending by another US$2 billion in 2015 with cash cost improvements of US$750 million and management said it has no acquisition plans.
RIO announced a US$2 billion share Buyback, higher than the markets expected, only $500 million of this buyback will be available over Australian shares (off market). Total cash returns to shareholders up 64% total of US$5.9 billion for 2014
RIO will pay US$1.19 final dividend to shareholders on 9 April 2015.