A weak iron ore price and extreme weather have weighed on Rio Tinto’s profits, but the mining giant is confident in the road ahead.
Rio posted a $US4.5 billion ($A6.9 billion) net profit in the half to June 30, a 22 per cent slip on the same period last year, after its Pilbara operations were impacted by four cyclones.
At the same time, iron ore prices grinded from US$107 per tonne to as low as US$93 per tonne.
Chief executive Jakob Stausholm, who will make way for incoming boss Simon Trott on August 25, called it a “resilient” result.
He focused on positive earnings and cash flow results, buoyed by aluminium and copper.
“We remain on track to deliver strong mid-term production growth, with solid foundations in place and a diverse pipeline of options for the future,” Mr Stausholm said.
The company will pay an interim ordinary dividend of $US1.48 ($A2.27) per share, worth $US2.4 billion, delivering its promised 50 per cent payout ratio.
Rio Tinto’s production guidance remained largely unchanged, but Pilbara shipments were tipped to fall to the lower end of the expected range because of cyclones in the first quarter.
Bauxite and copper production was forecast to come in at the higher end of expectations thanks to better-than-expected mine performances and a successful ramp up at an underground mine in Mongolia.
Rio’s takeover of Arcadium Lithium came to $US7.6 billion ($A11.7 billion) which, along with property and equipment purchases, $US3.8b billion in dividends and other outgoings took its net debt to $US14.6 billion, swelling from US$5.5 billion at the end of 2024.
“We are well positioned to generate value from our best-in-class project execution, together with growing demand for our products, now and over the coming decades,” Mr Stausholm said.
RBC Capital Markets analysts Kaan Peker and Ben Davis said sentiment on the result would be positive.
“Rio Tinto produced a good set of operational results across key divisions that was a six per cent beat at the product group level,” the analysts wrote.
“But this was dragged down by other items including restructuring costs at Arcadium.”
Looking further afield, the miner said the global economy appeared resilient with continued commodity demand growth supported by the energy transition.
It was likewise optimistic about China’s growth prospects, supported by ongoing domestic stimulus and a government committed to infrastructure investment in the face of its beleaguered property sector, the report said.
The US economy was holding up despite tariff impacts still feeding through to inflation and consumer sentiment, but the housing sector remained weak with building hampered by high mortgage rates, construction costs and poor labour supply.
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