Rio Tinto (ASX: RIO) on Wednesday reported robust results buoyed by the boom in commodity prices and surge in iron ore demand due to China’s rapid economic recovery. The company also announced a total dividend of 557 US cents per share for 2020, translating to 72% of underlying earnings.
Robust results for 2020
The company reported that the surge in iron ore prices and stability in operating performance resulted in $15.9 billion net cash generated from operating activities, which is a 6% increase from 2019. These flowed through to a 3% higher free cash flow of $9.4 billion, which was net of a $0.7 billion increase in capital expenditure to $6.2 billion.
The company’s net earnings of $9.8 billion were 22% higher than in 2019. Rio Tinto delivered an underlying EBITDA of $23.9 billion (13% higher than 2019) and Return on Capital Employed of 27%.
Below are the financial results reported for 2020.
- Net cash generated from operating activities (US$ millions): 15,875 (6% increase from 2019)
- Capital expenditure (US$ millions): 6,189 (13% increase from 2019)
- Free cash flow (US$ millions): 9,407 (3% increase from 2019)
- Consolidated sales revenue (US$ millions): 44,611 (3% increase from 2019)
- Underlying EBITDA2 (US$ millions): 23,902 (13% increase from 2019)
- Net earnings (US$ millions): 9,769 (22% increase from 2019)
- Underlying earnings2 per share (US cents): 769.6 (21% increase from 2019)
- Ordinary dividend per share (US cents): 464 (21% increase from 2019)
- Total dividend per share (US cents): 557 (26% increase from 2019)
- Net debt (US$ millions): -664
- Return on capital employed (ROCE): 27%
$9.0 billion dividend
The company announced a $9.0 billion full-year dividend which includes a $5.0 billion record final ordinary dividend (309 US cents per share) and a $1.5 billion special dividend (93 US cents per share) declared on Wednesday. The final dividend is equivalent to 557 US cents per share and 72% of underlying earnings.
Rio Tinto Chief Executive Jakob Stausholm said: “It has been an extraordinary year – our successful response to the Covid-19 pandemic and strong safety performance were overshadowed by the tragic events at the Juukan Gorge, which should never have happened.
My new executive team and wider leadership of the company are all committed to unleashing Rio Tinto’s full potential. We will increase our focus on operational excellence and project development and strengthen our [environmental and social] credentials.
We must earn the right to become a trusted partner for traditional owners, host communities, governments and other stakeholders, but we all recognise that this will require sustained and consistent effort.”