Rio Tinto bucks energy blues in $2bn buyback

 
Adam Hignett
Sam Walsh’s Rio Tinto closed up 2.3 per cent
INVESTORS celebrated yesterday as Rio Tinto disregarded the ongoing commodities rout to announce a $2bn (£1.3bn) share buy-back and increased its dividend by 12 per cent, representing a total cash return to shareholders, in respect of 2014, of almost $6bn.

Shares in the company closed up 2.3 per cent on what analysts described as a very good set of figures.

The company said it expected the operating environment in the coming year to remain tough in the wake of depressed commodity prices and uncertain global economic trends. However, it remains in a position to weather the storm after cutting its net debt by 31 per cent on the year to $12.5bn, beating analyst forecasts.

Consolidated revenues from sales dropped from $51.1bn to $47.7bn for the year, as lower prices offset the gains from higher production volumes.

The company said prices for iron ore nearly halved over the course of 2014 resulting in underlying earnings from the metal declining 18 per cent.

Other areas to see softer commodity prices were copper, coal and titanium dioxide, with aluminium being the only commodity to buck the trend.

Overall, underlying earnings declined by nine per cent on the year to $9.3bn. However, profit before tax increased to $9.5bn, up from $3.7bn recorded the previous year.

Rio Tinto’s Australian chief executive Sam Walsh said: “Last year, we made a clear commitment to materially increase cash returns to our shareholders.

“Our combination of world-class assets, disciplined capital allocation, balance sheet strength, operating and commercial excellence, as well as a culture of safety and integrity gives me confidence in our ability to continue to generate sustainable returns for our shareholders.”

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