Rio Tinto sees profits slump

Dividends are back on the menu for mining giant Rio Tinto after it posted better than expected full year profits.

The FTSE 100 group, and the world’s third largest miner, said it would reinstated dividends yesterday after a year-long break – a move it hailed as a reflection of its “positive outlook”.

The news came as the miner posted underlying earnings of $6.3bn (£4bn) for the year to 31 December 2009, a 39 per cent decline on 2008 figures but above analysts’ forecasts of $6bn.

Chairman Jan du Plessis said: “Achieving underlying earnings of $6.3bn is a commendable result for
the group, especially during rapidly changing macro economic conditions.”

Prices declined for nearly all of Rio Tinto’s major commodities in 2009; average copper and aluminium prices were 28 per cent and 35 per cent lower respectively while molybdenum prices plunged 65 per cent below 2008 levels.

The firm, led by chief executive Tom Albanese, channelled much of its efforts last year on rebalancing its balance sheet beating its savings target one year in advance and slashing its net debt in half through an aggressive divestment programme and reduced operating costs.

Charles Kernot of Evo Securities said: “The market will breathe a positive sigh of relief that the worst is behind the company and that net debt has been reduced from $38.7bn to $18.9bn.” The group said the latter part of 2009 had seen an upturn and remained confident this trend would continue through 2010, with China set for strong growth after forecasts predicted nine per cent growth this year. The emergence of the OECD nations from recession will provide further support, the miner added.