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Headlines:
- Dividend and Earnings Performance: Rio Tinto (ASX:RIO) declared its fourth-largest interim dividend in history at $US1.77 per share, totaling $US2.9 billion, despite the payout falling short of market expectations. The company's net profit for the first half of 2024 rose 14% to $US5.8 billion, while underlying earnings were nearly flat at $US5.75 billion.
- Growth Investments: CEO Jakob Stausholm emphasized Rio Tinto's commitment to growth, with plans for an annual expenditure of $US10 billion on projects such as developing a new iron ore province in Guinea and constructing a new iron ore mine in Western Australia each year for the rest of the decade.
- Market Conditions: Despite a softening in prices for its major products, including a 1.3% drop in iron ore prices and a 4% decline in aluminum prices, Rio Tinto's dividend policy remains consistent, aiming to return 50% of net earnings at the half-year mark. The company has only issued larger interim dividends three times in its history.
Rio Tinto (ASX:RIO) shareholders will receive the fourth-largest interim dividend in the company's 151-year history. However, the payout fell short of market expectations as Rio prepares for significant growth projects. For the six months ending June 30, Rio Tinto's net profit rose 14% to $US5.8 billion ($8.9 billion). Despite this increase, the interim dividend remained flat year-on-year at $US1.77 per share, totaling $US2.9 billion.
The miner's underlying earnings for the past six months were just under 1% higher than the same period last year, at $US5.75 billion. Analyst consensus, as measured by VUMA, had predicted underlying earnings of $US5.79 billion and dividends of $US1.81 per share.
Rio Tinto's CEO, Jakob Stausholm, stated that the company remains "consistently very profitable and growing," hinting at the projected annual expenditure of $US10 billion in the coming years. This includes the development of a new iron ore province in Guinea's Simandou mountains and the construction of a new iron ore mine in Western Australia each year for the rest of the decade.
Stausholm emphasized, "We continue to invest with discipline to shape Rio Tinto into an even stronger company."
Rio Tinto explained that the dividend aligns with the company's policy of returning only 50% of net earnings at the half-year mark. The company typically boosts the full-year dividend each February when it has the capacity to do so.
Despite the weaker-than-expected dividend, Rio Tinto shareholders have only received larger interim dividends on three previous occasions: in 2019 due to asset sales, and in 2021 and 2022 when iron ore prices were booming.
This result came even as prices for Rio's major products softened; iron ore prices received were 1.3% lower than the same time last year, and aluminum prices were 4% weaker. The exception was copper, where Rio's average received price was 6% higher than the same period last year.
