Rio Tinto profit soars

City A.M. Reporter
Global miner Rio Tinto surprised investors by more than doubling its full-year dividend and promising to return $5bn (£3bn) to shareholders by 2012, looking to soak up bumper cashflows after it reported a record second-half profit.

After whittling down a $40bn mountain of debt the company said it was in strong shape to take advantage of any other opportunities that might arise, even after returning all that cash to shareholders.

"I was pleasantly surprised by the share buyback. It was definitely in the top end of what I thought they would do. It was a good result," said Brendan James, portfolio manager at Perennial Growth.

Rio Tinto Chief Executive Tom Albanese said economic growth in emerging markets combined with supply constraints meant the market and pricing outlook for commodities remained positive, but warned that the risks were "elevated".

"In particular, the timing and speed at which post-global financial crisis stimulus packages are removed have the potential to generate both volatility and substantial swings in commodity prices," he said.

Rio Tinto said it would continue to focus on its expansion projects, after approving $12bn worth of work in 2010.

"Rio Tinto is reinvigorated, running strong and benefiting from favourable markets," Albanese said.