This Mining Company Surprised The Street With Big Numbers
The world’s second biggest miner, Rio Tinto plc (ADR) (NYSE: RIO), came out with better than expected full-year earnings earlier on Thursday.
The full-year net profit of the company rose from $3.67 billion last year to $6.5 billion this year.
The company also slashed its net debt by $12.5 billion and hiked annual dividend by 12 percent.
Sam Walsh, Rio Tinto's CEO, was on CNBC Thursday to discuss the results and the outlook for this year.
The Numbers Surprised The Street
“I think we have surprised the markets,” Walsh said. “Earnings of $9.3 billion, 12 percent increase in dividend [...] $2 billion buyback. And we have achieved that in tough market conditions – through cost reductions, trimming our capital, trimming our working capital and very focused on taking advantage of our tier-one, low-costs assets. It’s a good story; it’s a great business.”
Is Another Buyback Ahead?
When asked if he would expand on the possibility of another buyback amid the current, tough environment, Walsh said, “We focus very much on strengthening our balance sheet.
“We have taken $9.5 billion of debt out of the business since its peak in June 2013. That, with low debt and low gearing ratio of debt to equity of 19 percent, has enabled us dividend. The buyback has increased our pro-forma debt to equity ratio to 21 percent, which is still very low and in the range we have indicated is our preferred operating range of 20 to 30 percent.
“It does bode well in terms of the options that are provides our board to make decisions around this time next year about our shareholder returns. We are strongly committed to shareholder returns.”
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