Rio Tinto investors partying like it's 2014
Comment of the Day

February 28 2019

Commentary by Eoin Treacy

Rio Tinto investors partying like it's 2014

This article by Cecilia Jamasmie for may be of interest to subscribers. Here is a section:

Rio Tinto’s (ASX, LON:RIO) investors will be celebrating Christmas in February, as the miner is giving them a $4 billion special dividend, or $2.43 cent a share, after posting its highest annual underlying earnings since 2014.

The world’s second largest miner reported Wednesday a 2% increase in underlying profit, up to $8.8 billion, beating market forecasts of $8.5 billion on the back of rising revenue of $40.5 billion. The special dividend also came after a string of asset divestments, including Rio’s entire interest in Indonesia’s Grasberg mine for $3.9 billion.

Since Jean-Sébastien Jacques took the helm in July 2016, Rio has focused on cutting costs, generating cash and returning as much of it as possible to investors through dividends and share buybacks.

Last year, the company waved all its coal assets goodbye and is now the only major miner with a fossil-fuel-free portfolio. In total, Rio has sold $12 billion worth of unwanted assets since 2015.

Eoin Treacy's view

The special dividend got shaved off the share’s price in the last couple of days as it tests the region of the June peak near 4500p. Nevertheless, a sustained move below the trend mean would be required to question medium-term scope for continued upside.

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