Mining giant Rio Tinto posted a 56% hike in annual profits and are to give shareholders a record cash return of $4bn special dividend.
The Anglo Australian mining firm reported net profit of $13.64bn for 2018, compared to $8.6bn the previous year, due to $8bn worth of disposals.
Asset sales helped Tinto to report a record cash return of $13.5bn to shareholders, to include $3.1bn final dividend, a $4bn special dividend with a $3.2bn buy back share programme.
Jean-Sebastien Jacques. chief executive said Rio Tinto’s “strong results reflect the efforts of the team to implement our value-over-volume strategy as we continued to strengthen the portfolio and invest in future growth.
“Our world-class portfolio and strong balance sheet will serve us well in all market conditions and underpin our ability to continue to invest in our business and deliver superior returns to shareholders in the short, medium and long term.”
Nicholas Hyett, equity analyst at investment firm Hargreaves Lansdown, said Rio Tinto’s balance sheet is “entirely free from debt despite record cash returns to shareholders, and given that the major energy and minerals business has struggled with some major disruption this year, it looks like there’s more where that came from”.
“A conservative balance sheet suggests to us that management are a little cautious about the outlook for the near term and, given the importance of Chinese demand to global commodity prices, that’s fair enough”.
Hyett said Chinese steel production hit a record of 928m tonnes in 2018 but, “recent noises from the Asian giant suggest its economy might be slowing. Rio’s learnt the hard way that going into a commodity downturn laden with debt is a far from pleasant experience.”