Rio Tinto plc (ADR) NYSE:RIO Earnings, Dividends and Iron Ore

Shayne Heffernan strong buy Rio Tinto plc (ADR) NYSE:RIO suffered a write down on the Alcan purchase but delivered strong results and a 34% dividend increase.

Rio boosted its full-year dividend by 34 per cent to $1.45, or $US1.29, however it did not expand its $US7 billion buyback due to be completed this quarter.

Higher prices for iron ore delivered to China, the world’s biggest buyer, have helped triple Rio’s profits since 2008. The company yesterday approved a $US3.4 billion expansion of its iron ore operations in Western Australia as part of a plan to boost output by more than 50 per cent.

The miner this evening reported an annual net income of $US5.8 billion after a one-time $US8.9 billion writedown of its aluminium business. Last year, Rio posted a net profit of $US14.32 billion.

Rio Tinto’s underlying earnings – excluding the writedown – for the 12 months to December 31 amounted to $US15.5 billion, driven by its iron ore business. This was up from a record $US14 billion in 2010, and beat analysts’ expectations. Consensus among analysts was for underlying earnings of $US15.3 billion.

Cash flows from operations also broke records, up 16 per cent at $27.4 billion.

Second-half profit from iron ore, its biggest earner, jumped 14 per cent to $6.9 billion.

The aluminium division, which the company plans to shrink by hiving off most of its Australia and New Zealand assets, just broke even with earnings of $US63 million in the December half.

Rio, cashed up from massive iron ore sales and carrying little debt, had been considered the most likely among the major miners to reward investors with a share buyback or a substantial dividend increase.

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Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services. www.livetradingnews.com

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Posted by Shayne Heffernan on Feb 9th, 2012and filed underEquities, Heffernan Capital Management, Latest News, Research, Shayne Heffernan, USA.You can follow any responses to this entry through theRSS 2.0Responses are currently closed, but you can trackback from your own site.