Market Watchers Encouraged by Rio Tinto’s 2016 Results

Rio Tinto plc (ASX:RIO,LSE:RIO,NYSE:RIO) released its full results for 2016, commenting that it generated strong operating cash flow of $8.5 billion. Underlying earnings came in at $5.1 billion, and the company plans to return $3.6 billion to shareholders.

Market watchers are encouraged by the company’s performance, with Shaw & Partners analyst Peter O’Connor telling The Globe and Mail, “[i]t certainly looks and feels like the ‘old school’ Rio swagger is back. It sets the stage for the other big miners reporting this month.”

Other highlights include:

  • Generated strong operating cash flow of $8.5 billion and underlying earnings of $5.1 billion
  • Achieved $1.6 billion of pre-tax sustainable operating cash cost improvements1
  • Investing in three major growth projects in bauxite, copper and iron ore
  • Optimising the portfolio with disposals of $1.3 billion announced or completed in 2016 and up to $2.45 billion announced to date in 2017
  • Strengthened the balance sheet further with net debt reduced to $9.6 billion
  • Returning cash to shareholders with $3.6 billion announced with respect to 2016:
    • full year dividend of 170 US cents per share, equivalent to $3.1 billion
    • share buy-back of $0.5 billion in Rio Tinto plc shares over the course of 2017
    • in total, represents 70 per cent of 2016 underlying earnings

J-S Jacques, chief executive of Rio Tinto, commented:

Today’s results show we have kept our commitment to maximise cash and productivity from our world-class assets, delivering $3.6 billion in shareholder returns while maintaining a robust balance sheet. At the same time, we strengthened the portfolio and advanced our high-value growth projects as we look to the future.

We enter 2017 in good shape. Our team will deliver $5 billion of extra free cash flow over the next five years from our productivity programme. Our value over volume approach, coupled with a robust balance sheet and world-class assets, places us in a strong position to deliver superior shareholder returns through the cycle.

Click here to read the full Rio Tinto plc (ASX:RIO,LSE:RIO,NYSE:RIO) press release.

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