Rio Tinto announces operating cash generation of $13.9 billion, record full year dividend of $5.2 billion and an additional $1 billion share buy-back


07 February 2018

Rio Tinto chief executive J-S Jacques said "Today we have announced a strong set of results with operating cash flow of $13.9 billion, a record full year dividend of $5.2 billion and an additional $1 billion share buy-back. This brings total cash returns to shareholders to $9.7 billion declared for 2017.

"The strength of our cash flow is a result of resilient prices during the year coupled with a robust operational performance and a focus on mine to market productivity.


"Our strong balance sheet, world-class assets and disciplined allocation of capital puts us in the unique position of being able to invest in high-value growth through the cycle, and consistently deliver superior cash returns to shareholders."

2017 highlights

  • Record full year ordinary dividend announced today of $5.2 billion, equivalent to 290 US cents per share, includes final dividend of $3.2 billion, equivalent to 180 US cents per share
  • Additional share buy-back of $1.0 billion in Rio Tinto plc shares announced today, to be completed by the end of 2018
  • Generated operating cash flow of $13.9 billion, underlying EBITDA1 of $18.6 billion and a ten year record EBITDA margin2 of 44 per cent
  • Delivered underlying earnings of $8.6 billion and net earnings of $8.8 billion
  • Achieved $0.4 billion of additional free cash flow from mine to market productivity programme3, against a backdrop of rising raw material costs across the industry
  • Investing in growth with Silvergrass in production, Amrun and Oyu Tolgoi projects on track
  • Reshaping the portfolio with $2.7 billion of divestments in 2017
  • Reduced net debt to $3.8 billion

Year to 31 December

2017

2016

Change

Net cash generated from operating activities (US$ millions)

13,884

8,465

+64%

Underlying EBITDA1 (US$ millions)

18,580

13,510

+38%

Underlying earnings1 (US$ millions)

8,627

5,100

+69%

Net earnings (US$ millions)

8,762

4,617

+90%

Capital expenditure4 (US$ millions)

(4,482)

(3,012)

+49%

Underlying earnings1 per share (US cents)

482.8

283.8

+70%

Basic earnings per share (US cents)

490.4

256.9

+91%

Ordinary dividend per share (US cents)

290.0

170.0

+71%

 

At 31 Dec 2017

At 31 Dec 2016

Change

Net debt5, 7 (US$ millions)

3,845

9,587

-60%

Net debt to underlying EBITDA6, 8

0.2

0.7

Net gearing ratio7, 8

7%

17%

The financial results are prepared in accordance with IFRS and are unaudited.
1 Underlying EBITDA and earnings are key financial performance indicators which management use internally to assess performance. They are presented here to provide greater understanding of the underlying business performance of the Group’s operations. Net and underlying earnings relate to profit attributable to the owners of Rio Tinto. Underlying EBITDA and earnings are defined on page 15. Underlying earnings is reconciled to net earnings on page 49.
2 EBITDA margin is defined as Group underlying EBITDA divided by Product Group total revenues as per the Financial Information by Business Unit on page 13 where it is reconciled to profit on ordinary activities before finance items and taxation and consolidated sales revenue. This financial metric is used by management internally to assess performance, and therefore is considered relevant to users of the accounts.
3 Mine to market productivity improvements refer to the additional free cash flow generated from post-tax operating cash cost improvements and post-tax volume gains from productivity programmes. This financial performance indicator is used by management internally to assess performance, and therefore is considered relevant to users of the accounts
4 Capital expenditure is presented gross, before taking into account any cash inflows from disposals of property, plant and equipment.
5 Net debt is defined and reconciled to the balance sheet on page 42.
6 Net debt to underlying EBITDA is defined as the period end net debt divided by the previous 12 months’ underlying EBITDA.
7 Net gearing ratio is defined as net debt divided by the sum of net debt and total equity at each period end.
8 These financial performance indicators are those which management use internally to assess performance, and therefore are considered relevant to users of the accounts.
9 Free cash flow is defined as Net cash generated from operating activities less Purchases of property, plant and equipment (PP&E) plus Sales of PP&E. It is a key financial indicator which management uses internally to assess performance and is therefore considered relevant to users of the accounts.
10 This production target was disclosed in a release to the market on 6 May 2016. All material assumptions underpinning that target continue to apply and have not materially changed.