Commodity prices take a bite out of Rio profit

22nd February 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – Diversified major Rio Tinto has seen its profit after tax fall by 41%, while underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) decrease by 30% for the full year ended December, as commodity prices fell.

Profit after tax reached $12.4-billion in the full year under review, down from the $21-billion reported in the last financial year, while Ebitda fell from $37.7-billion to $26.2-billion.

The miner said that the lower net earnings reflected the movement in commodity prices, the impact of higher energy and raw materials prices on operations, and higher rates of inflation on operating costs and closure liabilities. Rio’s working capital increased by some $0.5-billion in the year under review.

Effective tax rate on net earnings of 30.9% compared with 27.7% in 2021, with the increase primarily owing to the $0.8-billion writedown of deferred tax assets in the US.

“We are building a stronger Rio Tinto and delivering against our four objectives. Our operational performance has improved, as evidenced by a number of second-half records being set at our Pilbara iron-ore mine and rail system. We are also investing for the future, doubling our stake in the Oyu Tolgoi copper/gold project in Mongolia through the acquisition of Turquoise Hill Resources, progressing the Rincon lithium project in Argentina and reaching milestone agreements that underpin the long-term success of our Pilbara iron-ore business,” said Rio Tinto CEO Jakob Stausholm.

“We continue to focus on making lasting change to strengthen our workplace culture and building better relationships with Indigenous peoples, communities and other partners. At all times we will seek to find better ways, in line with our purpose. We clearly have more to do but I am encouraged by the progress we are making.

“Despite challenging market conditions, we remain resilient because of the quality of our assets, our great people and the strength of our balance sheet. That is why we delivered strong financial results with underlying Ebitda of $26.3-billion, free cash flow of $9-billion and underlying earnings of $13.3-billion, after taxes and government royalties of $8.4-billion. This enables us to continue to invest in strengthening the business while also paying a total dividend of $8-billion, a 60% pay-out, in line with our policy,” Stausholm said.

“The uplift in our operational performance, strengthening of external relationships and investment in the long-term strength of the business ensure we will be able to continue to pay attractive dividends and invest in sustaining and growing our portfolio, while contributing to society's drive to net zero.”

In 2023, Rio expected its share of capital investment to be around $8-billion, including growth capital of around A$2-billion, depending on the ramp-up of spend at Simandou.

In 2024 and 2025, this rises to $9-billion to $10-billion a year, including the ambition to invest up to $3-billion in growth a year, depending on opportunities. Each year also includes sustaining capital of around $3.5-billion, of which around $1.5-billion a year is for Pilbara iron-ore, and $2-billion to $3-billion of replacement capital.

Rio said that the guidance included around $1.5-billion over the next three years on decarbonisation projects, mainly relating to Pilbara renewables, with spending to accelerate thereafter, bringing best estimate to around $7.5-billion, in aggregate, out to 2030.

This remains subject to Traditional Owner and other stakeholder engagement, regulatory approvals and technology developments.

Edited by Creamer Media Reporter


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