Rio Tinto CEO Jean-Sebastian Jacques
PERTH (miningweekly.com) – Diversified miner Rio Tinto has reported a 12% increase in underlying earnings for the six months to June, as sales revenues increased on the back of higher iron-ore, bauxite and copper volumes, and higher aluminium and copper prices.
“We have reported another strong set of results with underlying earnings before interest, tax, depreciation and amortisation (Ebitda) of $9.2-billion and operating cash flows of $5.2-billion,” CEO Jean-Sebastian Jacques said on Wednesday.
“In a favourable market environment, our Tier 1 assets and strong operational capability have achieved a 43% Ebitda margin. Inflationary pressures are being experienced across the industry, but we have been able to offset these through our mine to market productivity programme,” Jacques said.
Underlying earnings for the six months ended June was reported at $4.4-billion, compared with the $3.9-billion in the previous corresponding period, with underlying earnings per share up 16% to $2.53 a share. The performance, however, was below analyst forecasts of $4.53-billion, according to Reuters.
Consolidated sales revenue for the interim period was up by $0.6-billion on the previous corresponding period, to $19.9-billion.
Rio said that the movements in sales volumes increased underlying Ebitda by $887-million compared with the first half of 2017, with higher sales volumes reported for the iron-ore, bauxite and copper divisions.
Increases in commodity prices during the first half of the year also increased the underlying Ebitda by $604-million, compared with the previous corresponding period. The miner noted that the average London Metal Exchange prices for copper and aluminium were up by 20% and 18% respectively, compared with the first half of 2017.
The company also benefitted from higher market premiums for aluminium.
Meanwhile, Rio increased its capital expenditure in the first half of 2018 to $2.36-billion, up from the $1.75-billion in the same period last year, with $1.4-billion invested in growth projects, including AutoHaul, Amrun and the Oyu Tolgoi projects.
“We will continue to invest in Tier 1 growth, further strengthening our portfolio and maintain a strong balance sheet in order to deliver superior returns to shareholders in the short, medium and long-term,” Jacques said.
Capital expenditure is expected to remain about $5.5-billion in 2018, and about $6-billion in 2019. For 2020, capital expenditure has been revised to around $6.5-billion, up from the previous guidance of $6-billion.