21st Feb 2024 12:53
(Alliance News) - Rio Tinto PLC on Wednesday reported weaker yearly earnings, though they landed largely in line or ahead of expectations.
A chunkier than expected dividend was not enough to give the stock a boost, however, as it warned of rising costs at the Pilbara operation.
The stock was down 0.7% at 5,193.70 pence each in London on Wednesday afternoon.
Consolidated sales revenue in 2023 was 2.7% lower at USD54.04 billion from USD55.55 billion in 2022. Pretax profit declined 26% to USD13.79 billion from USD18.66 billion.
Berenberg said revenue beat consensus of USD53.4 billion. Underlying earnings before interest, tax, depreciation and amortisation amounted to USD23.89 billion, down 9.1% on-year, but largely in line with consensus of USD24.0 billion.
"We are making clear progress as we shape Rio Tinto into a stronger and even more reliable company. By focusing on our four objectives, we are building a portfolio that is fit for the future - including our Oyu Tolgoi underground copper mine in Mongolia and the Simandou iron ore project in Guinea," Chief Executive Jakob Stausholm said.
"In 2023, we lifted our overall copper equivalent production by over 3% and delivered resilient financial results."
Rio Tinto declared a 258.00 US cents per share final dividend, a rise of 15% from 225.00 cents. Its total dividend for the year, however, was 12% lower at 435.00 cents per share from 492.00 cents.
The annual dividend landed ahead of consensus of 423 cents, Berenberg noted.
"We will continue paying attractive dividends and investing in the long-term strength of our business as we grow in the materials needed for a decarbonising world," the Rio Tinto CEO added.
Looking to 2024, Rio Tinto is guiding for Pilbara cash costs per wet metric tonne between USD21.75-23.50, up from USD21.5 in 2023.
"2024 guidance for Pilbara unit cash costs reflects the increased work effort in the mines and persistent labour and parts inflation in Western Australia," Rio said.
However, copper costs will ebb.
"Our Copper C1 unit costs are expected to decrease in 2024, primarily driven by higher volumes at Oyu Tolgoi as the underground continues to ramp up and at Kennecott, where refined copper volumes are expected to increase following the planned smelter rebuild in 2023," it added.
"We remain focused on cost control, in particular maintaining discipline on fixed costs, which are expected to be broadly flat in 2024. While inflation has eased, we continued to see lag effects in its impact on our third party costs, such as contractor rates, consumables and some raw materials; we expect this to stabilise in 2024."
By Eric Cunha, Alliance News news editor
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