120 Collins StreetMelbourne 3000 AustraliaT +61 (0) 3 9283 3333F +61 (0) 3 9283 3707 ABN 96 004 458 404
Rio Tinto results for the year ended 31 December 2012
14 February 2013
Rio Tinto chief executive Sam Walsh said “Today I am setting out how we can build on ourstrengths and improve this great company. Under my leadership, Rio Tinto will have anunrelenting focus on pursuing greater value for shareholders. To do this we need to run thebusiness as owners not managers and my immediate priority is to build more focus, disciplineand accountability throughout the organisation. Demonstrating this commitment, we will deliverour capital reduction and cost savings targets and improve performance across our business.”
Reinforcing capital allocation discipline
– Pursuing greater value for shareholders by investing capital only in assets that, afterprudent assessment, offer attractive returns that are well above our cost of capital. – Balancing the use of capital between returns to shareholders and capital expenditure,while aiming to maintain a strong balance sheet with a single A credit rating.
Improving performance at existing businesses
– Targeting cumulative cash cost savings of more than $5 billion by the end of 2014,equivalent to an annual run rate of $3 billion by 2014, assuming stable market andoperating conditions. – Reducing capital expenditure on approved and sustaining projects to approximately $13billion in 2013. – Lowering exploration and evaluation spending by $750 million (pre-tax) in 2013 comparedwith 2012.
Delivering approved growth projects with two significant milestones in 2013:
– Phase one Pilbara iron ore expansion to 290 Mt/a has been accelerated and is nowscheduled for completion during the third quarter of 2013. Phase two expansion to 360Mt/a to be operational by the first half of 2015. – Oyu Tolgoi copper-gold mine now being commissioned with first commercial productionscheduled by the end of June 2013. Discussions with the Government of Mongoliaregarding the continuing implementation of the Investment Agreement are ongoing.
2012 financial results
2012 underlying financial results reflect record iron ore production and shipments and a secondhalf recovery in copper volumes. This was in the context of lower average market prices in 2012which reduced underlying earnings by $5.3 billion compared with 2011: – Underlying earnings
of $9.3 billion. – Net loss of $3.0 billion after impairments of $14.4 billion, primarily relating to aluminiumbusinesses as well as coal assets in Mozambique. – 15 per cent increase in full year dividend to 167 cents per share.Twelve months to 31 December
(All amounts are US$ millions unless otherwise stated)
2011 ChangeUnderlying earnings
15,549 -40%Net (loss) / earnings
5,826 -151%Cash flows from operations
27,388 -40%Capital expenditure
12,298 +42%Underlying earnings per share – US cents
808.5 -38%Basic (loss)/earnings per share from continuing operations – UScents
303.5 -153%Ordinary dividends per share – US cents
The financial results are prepared in accordance with IFRS and are unaudited.
Underlying earnings is the key financial performanceindicator which management uses internally to assess performance. It is presented here to provide greater understanding of theunderlying business performance of the Group’s operations attributable to the owners of Rio Tinto. Net earnings and underlying earningsrelate to profit attributable to owners of Rio Tinto. Underlying earnings is defined and reconciled to net earnings on page 12.