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Highlights
- Revenue and earnings faced slight declines, but profitability remains solid.
- Copper and aluminum segments saw significant growth, balancing iron ore weakness.
- Expansion projects and acquisitions set the stage for long-term growth.
Rio Tinto (ASX:RIO) has been at the center of investor attention following its FY24 earnings report. The mining giant, known for its operations in iron ore, copper, aluminum, and other key resources, reported mixed financial results. Despite revenue and earnings declining slightly, the company remains focused on strategic growth projects and maintaining financial strength.
FY24 Performance Snapshot
- Revenue declined by 1% to US$53.7 billion.
- Underlying EBITDA dropped 2% to US$23.3 billion.
- Operating cash flow increased 3% to US$15.6 billion.
- Free cash flow saw a 27% decline, landing at US$5.5 billion.
- Underlying EPS fell 8% to US$6.69.
- Dividend per share reduced by 8% to US$4.02.
- Statutory net profit increased 15% to US$11.5 billion.
One of the key factors behind the free cash flow drop was a 36% rise in capital expenditure, totaling US$9.6 billion. This reflects Rio Tinto’s investment in future production capacity and efficiency improvements.
Strength in Copper and Aluminum Balancing Iron Ore Weakness
Iron ore remains Rio Tinto’s primary revenue driver, but its underlying EBITDA declined 19% to US$16.2 billion due to pricing pressures. However, other segments performed strongly:
- Aluminum EBITDA surged 61% to US$3.7 billion.
- Copper EBITDA jumped 75% to US$3.4 billion, driven by higher volumes and cost efficiencies.
The company highlighted a 27% reduction in copper net unit costs, contributing to stronger profitability. The surge in aluminum and copper earnings has helped balance the challenges faced by the iron ore segment.
Strategic Growth Initiatives and Expansion Plans
Rio Tinto is actively working on various large-scale projects that could support long-term profitability, including:
- Oyu Tolgoi copper mine in Mongolia – A significant project expected to enhance copper output.
- Simandou iron ore project in Guinea – One of the world’s largest undeveloped iron ore deposits.
- Expansion of iron ore assets in Australia – Ensuring stable production for years to come.
- Lithium ventures – Strengthening its footprint in battery materials through the Arcadium Lithium CDI (ASX:LTM) acquisition and development of the Rincon lithium project in South America.
Market Outlook and Future Considerations
Since February 21, 2025, Rio Tinto’s share price has dropped 6%, reflecting broader market sentiment and commodity price movements. While iron ore prices remain volatile, the company's diversified operations and focus on copper and lithium could support future growth.
With a strong project pipeline and continued investment in key resources, Rio Tinto is positioning itself to navigate market fluctuations while capitalizing on emerging opportunities.
