29th Jul 2020 10:49
(Alliance News) - Anglo-Australian miner Rio Tinto PLC on Wednesday said it put in a "resilient" performance in the first half of 2020 with revenue down marginally, and it increased its interim dividend.
The FTSE 100 mining group with operations in 36 countries recorded a small drop in its revenue for the first six months to June 30 which was at USD19.36 billion, 6.6% from USD20.72 billion a year before. This was mainly due to lower prices and volumes for copper and lower aluminium prices, the company said.
Pretax profit was up 1.7% at USD5.28 billion compared to last year's first half of USD5.19 billion.
Rio Tinto's underlying earnings before interest, tax, depreciation and amortisation was down 5.6% at USD9.64 billion, from USD10.25 billion the year prior.
Despite the marginal drop in revenue, Rio Tinto announced an interim dividend of 155 US cents per share, costing USD2.5 billion, and up 2.6% from last year's interim dividend of 151 US cents per share. Rio said its dividend decisions take into account both its financial results and its outlook for its major commodities.
Rio Tinto Chief Executive Jean-Sebastien Jacques said: "We have been agile and adapted our way of working, to deliver another resilient performance while navigating the new and ongoing challenges of dealing with COVID-19."
All assets remained up and running during the first half which helped mitigate heavy drops in profit.
Rio Tinto reported a USD5.6 billion in operating cash flow, down 12% from the prior year's USD6.4 billion, and USD2.8 billion in free cash flow, which was 28% lower than last year's USD3.88 billion.
Share Centre Investment Research analyst Joe Healey commented: "Investors will welcome these results, as the group posts strong half-year figures taking into account Covid-19 disruption.
"Rio has become a much more streamlined business than it has been in the past, reforming itself to be one of the lowest cost producers which has been reflected in today's results."
Healey also mentioned the company's reliance on iron, from which it gets approximately 90% of earnings.
Iron ore pellets and concentrates production in the six months to June 30 were up 6% on a year prior at 5.3 million tonnes versus 5.0 million tonnes.
Earlier this month, the company reported that Pilbara iron ore production rose 4% year-on-year in the second quarter to 83.2 million tonnes, with shipments edging 1% higher to 86.7 million tonnes.
IOC iron ore pellets & concentrate output climbed 9% to 2.8 million tonnes during the quarter.
Rio Tinto on Wednesday reconfirmed its 2020 production guidance across all commodities.
Share Centre's Healey said: "Taking a longer-term view, we remain positive on the outlook for steel despite the shorter term uncertainty. It's estimated that global steel demand will continue to grow by 2.5% per year up until 2030 and with the business continuing to actively cut costs, investing efficiently and operating well we believe Rio is well capitalised to navigate the difficult environment we find ourselves in."
The company's forecast for annual capital expenditure for 2021 and 2022 was nudged up earlier this month to between USD7 billion from USD6.5 billion from between USD5 billion and USD6 billion.
Rio Tinto shares were up 1.4% at 4,829.50 pence each in London on Tuesday morning.
By Greg Roxburgh; [email protected]
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