Higher commodity prices helped mining giant Rio Tinto (RIO) more than double its annual profit as it announced a record $16.8 billion payout (including special dividends) in total for 2021.
However, after rising 15% year-to-date the shares were flat on today's results at £56.78.
Net profit for the year through December jumped to $21.09 billion, up from $9.77 billion year-on-year, as revenue rose 42% to $63.50 billion.
Underlying earnings before interest, tax, depreciation and amortisation climbed 58% to $37.72 billion.
Rio Tinto declared a full-year dividend, including special dividends, of $10.40 per share, up 87% year-on-year.
‘The recovery of the global economy, driven by industrial production, resulted in significant price strength of our major commodities,’ chief executive Jakob Stausholm said.
THE GROWTH CHALLENGE
Rio Tinto kept its production guidance for 2022 unchanged and forecast capital expenditure of around $8 billion.
Today’s results represent a positive for Rio which recently published a shocking report on its workplace culture.
Jefferies analyst Christopher LaFemina said: ‘Rio is riding the wave of a commodity super-cycle that is as much a function of a lack of investment in growth industry-wide as it is a result of increasing demand, in part due to structural growth in decarbonisation initiatives.
‘One challenge for Rio, however, is a relative lack of organic growth. Cash flow and capital returns matter most for now, but the company will need to pivot to growth at some point, and this likely means M&A. Not an issue for now, but something for investors to keep in mind.’
