By Rhiannon Hoyle
SYDNEY--Rio Tinto PLC (RIO) said it would buy back more stock and pay a record annual dividend as the mining company reported a 90% rise in profit for 2017.
The Anglo-Australian miner said on Wednesday it will hand shareholders a further US$1 billion via a share buyback, in addition to the US$1 billion dedicated to repurchasing shares at its fiscal half year. Rio Tinto also promised a full-year dividend of US$2.90 a share, versus US$1.70 in 2016.
The company reported a net profit of US$8.76 billion for 2017, up from US$4.62 billion the year prior. Underlying earnings, stripping out one-off items, were up 69% at US$8.63 billion, roughly in line with a US$8.71 billion median of seven analyst forecasts.
Rio Tinto is enjoying a turnaround thanks to aggressive efforts to reduce costs over the past few years and a more recent recovery in prices for commodities such as iron ore and copper. As recently as 2015, the miner recorded an annual loss and was forced to junk a prized progressive dividend policy, which promised stable or rising returns, to conserve cash.
"The strength of our cash flow is a result of resilient prices during the year coupled with a robust operational performance and a focus on mine to market productivity," Chief Executive Jean-Sebastien Jacques said.
Rio Tinto said it had boosted cash flow by US$400 million from improved productivity, despite grappling with higher raw material costs like other resources companies. Management hit a target to strip out US$2 billion in cash costs midyear, six months earlier than planned.
Rio Tinto said net debt reduced by 60% to US$3.85 billion. That took its gearing--a measure of a company's debt relative to equity--to 7% from 17% at the end of 2016.
Write to Rhiannon Hoyle at [email protected]