More disciplined approach as Rio posts loss

SAM Walsh has presided over his first set of financial results as the boss of Rio Tinto, delivering a net loss of $US3 billion ($A2.9 billion), while setting out his priorities as leader.
More disciplined approach as Rio posts loss More disciplined approach as Rio posts loss More disciplined approach as Rio posts loss More disciplined approach as Rio posts loss More disciplined approach as Rio posts loss

Sam Walsh

Kristie Batten

Underlying earnings were $9.3 billion, down by $5.3 billion due to commodity prices, while the loss was delivered after $14 billion in impairments.

Rio softened the blow last month when it announced the writedowns across its aluminium and coal businesses.

As a result, today’s loss was expected, but actually not as bad as feared.

Macquarie had flagged a $4.3 billion loss on earnings of $9 billion.

Rio chairman Jan du Plessis said he was “deeply disappointed” with the loss, but Walsh was ideally placed to pursue greater value for shareholders.

Walsh, who replaced Tom Albanese, outlined his plans as chief executive officer.

“Under my leadership, Rio Tinto will have an unrelenting focus on pursuing greater value for shareholders,” he said.

“To do this we need to run the business as owners, not managers and my immediate priority is to build more focus, discipline and accountability throughout the organisation.

“Demonstrating this commitment, we will deliver our capital reduction and cost savings targets and improve performance across our business."

Rio reiterated its more disciplined capital allocation approach and said it would balance the use of capital between returns to shareholders and capital expenditure, while maintaining a strong balance sheet.

The company announced a 15% increase in full year dividend to 167c per share.

Rio said it would target cumulative cash cost savings of more than $5 billion by the end of next year, equating to an annual run-rate of $3 billion.

Capital expenditure of approved and sustaining projects will be reduced to about $13 billion this year and cutting exploration and evaluation spending by $750 million.

Pre-tax and pre-divestment exploration and evaluation expenditure charged to the profit-and-loss account for 2012 was $1.9 billion.

The focus would be on delivering the phase one Pilbara iron ore expansion to 290 million tonnes per annum during the quarter, and achieving commercial production at the Oyu Tolgoi copper-gold mine, as discussions with the Mongolian government continued.

A deferred tax asset of just over $1 billion was recognised in the first half of 2012 following the introduction of the Minerals Resource Rent Tax, which had grown to $1.1 billion by the end of 2012.

Net debt increased from $8.5 billion at the end of 2011 to $19.3 billion.

Rio shares closed 2.3% or A61c up to $72.07.

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