The Rio Tinto Limited (ASX: RIO) share price is flat this morning after the ASX miner released its full-year results last night. Rio declared a record final dividend as strong iron ore prices supported increased earnings.
Rio Tinto's results
The company reported consolidated sales revenue of US$43.2 billion, up 7% on 2018, attributable to higher iron ore prices. This was partially offset by lower copper and aluminum prices and the absence of revenues from assets divested in 2018.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) came in at US$21.2 billion, up 17% on 2018 primarily due to higher iron ore prices.
Operating cash flow increased 26% to US$14.9 billion, driven by higher underlying EBITDA and ongoing management of working capital.
Underlying earnings increased 18% over 2018 to US$10.4 billion. Net earnings, however, decreased 41% to US$8 billion reflecting US$1.7 billion in impairments in 2019, primarily the Oyu Tolgoi underground project and the Yarwun alumina refinery. This compared with US$4 billion of gains on disposals in 2018.
Underlying earnings per share increased 24% to 636.3 US cents per share, with a 30% effective tax rate applied. This was one percentage point higher than 2018 due to increased profits in Australia.
Record dividend
Rio Tinto's FY19 performance allowed the company to declare a record final ordinary dividend of US$3.7 billion. This translates to a final dividend of US 231 cents per share, up 28% from US 180 cents per share in 2018.
Full-year ordinary dividends per share in 2019 totalled 382 US cents, an increase of 24% on the previous year. Meanwhile, total cash returns during the period amounted to 443 US cents per share, down 19% from 550 US cents in FY18.
The full-year payout ratio was 70%. In total, Rio paid US$10.3 billion in dividends in 2019, comprising the 2018 final and special dividends paid in April 2019 (US$6.8 billion) and the 2019 interim and special dividends paid in September 2019 (US$3.5 billion).
Balance sheet
Rio reports that net debt of US$3.7 billion increased by US$3.9 billion in 2019. This reflected dividend payments of US$10.3 billion and US$1.6 billion of share buybacks, partly offset by strong free cash flow.
Rio reported cash and cash equivalents of US$8 billion at 31 December 2019. Total assets were US$87.8 million at the end of the year, while total liabilities were US$42.6 billion.
Outlook
2020 production guidance was unchanged with 324 to 334 Mt in Pilbara iron ore shipments anticipated.
Rio Tinto is currently evaluating the impact of coronavirus, which could create significant uncertainty for the business in the near term. All operations are looking at opportunities to adjust to the impact of coronavirus on market conditions.
Nonetheless, Rio notes that stimulus measures put in place to drive economic recovery could be relatively commodity intensive, increasing demand for raw materials.
