Rio Tinto Delivers 2015 First Half Underlying Earnings of $2.9 Billion
Rio Tinto recently announced its financial results for the first half of 2015. Consolidated sales revenues were $18 billion in the first half, $6.4 billion lower than the same period of last year, reflecting a $7.1 billion reduction due to the decline in commodity prices. Rio Tinto reported an earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 38%, compared with 41% in 2014. Underlying earnings were $2.9 billion, $2.2 billion lower than the 2014 first half, with cost improvements, lower energy costs, and positive currency movements offsetting nearly 40% of the $3.6 billion (post-tax) impact of lower prices.
Bauxite underlying earnings increased by 40% to $273 million in 2015 first half, with FOB EBITDA margins of 51%, driven by the sustained increase in third-party sales and stronger pricing. Bauxite production was 5% higher than the first half of 2014 and set a new first half record, primarily driven by a strong performance at Weipa and Gove’s eight million ton annual run-rate by the fourth quarter of 2015. Gross sales revenues for bauxite in the 2015 first half of $1.0 billion included freight revenues of $93 million (2014 first half, $115 million).
The alumina division recorded a loss of $52 million, which represented a 69% improvement compared to the 2014 first half, attributable to an improvement in volumes, productivity gains, higher pricing and favorable currency movements. Alumina production was up by 5% compared with the first half of 2014 (excluding production from the Gove refinery, which was curtailed in May 2014), reflecting improved productivity at Queensland Alumina and Yarwun.
“This is a robust set of results, given the tough operating environment,” said Sam Walsh, CEO. “Tier one assets and sound operating capability have delivered stable margins with underlying earnings of $2.9 billion during the half. Post-tax operating cash flows of $4.4 billion more than covered our sustaining capital expenditure of $1.2 billion and dividend payments of $2.2 billion.
“A continued focus on financial and operating discipline delivered first half cost savings of $641 million, representing 85% of our original full year target, which we have now increased to $1.0 billion. We continue to invest in growth, and have reached key milestones in three of our growth projects with the expansion of our Pilbara iron ore infrastructure, first production from our expanded Kitimat aluminum smelter and an agreement to progress the development of the Oyu Tolgoi underground copper mine.
“The early and decisive actions we started taking in 2013 provide a strong base for the business. Our low level of absolute net debt and gearing allow us to maintain our commitment to capital returns in 2015, with $3.2 billion returned to shareholders in the first half through our progressive dividend and ongoing share buy-back program. I am pleased to announce an increase in our interim dividend of 12%, in line with our established dividend policy. I should like to thank all of my colleagues for their exceptional efforts in achieving these results. Rio Tinto is well-placed to succeed in these volatile times, and we will use our competitive advantages for the benefit of all our stakeholders.”
Additional details are available at www.riotinto.com.