Rio Tinto Unveils $3.5 Billion Dividend

Rio Tinto (RIO, RIO.L), one of the world’s largest metals and mining groups, unveiled a cash return to shareholders of $3.5 billion early on Thursday as underlying earnings and sales jumped in the first half due to higher iron ore prices.

Revenue grew by 9% to $20.72 billion during the six months that ended June 30, from $19.91 billion a year ago, the Anglo-Australian firm said in its earnings statement. Group turnover, which excludes the contribution of $800 million from coking-coal assets divested in 2018, jumped as higher iron ore prices offset the negative impact of lower volumes as well as lower aluminium prices.

Underlying earnings per share surged by 19% to 301.5 cents, from 253.6 cents a year earlier, as higher iron ore prices more than compensated for increased costs. Iron ore unit costs were driven by reduced shipments in the first half.

Rio said iron ore shipments from Rio’s Pilbara operations, whose 72% earnings before interest, tax, deprecation, and amortization margin contributed strongly to group earnings, fell by 8% because of weather disruptions and mine operation challenges. Additionally, it noted average prices for copper and aluminium were down 11% and 17%, respectively, compared to a year ago.

But, the London-based firm was able to overcome those headwinds as commodity price movements in 2019 first-half increased underlying earnings before interest, tax, depreciation, amortization by $1.88 billion.

Rio said the $3.5 billion cash-return comprised a “record” interim dividend of $2.5 billion, equivalent to $1.51 per share, and a special dividend of $1.0 billion, which translates into $0.61 per share.

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