Instant View - Rio Tinto books first annual loss

MELBOURNE (Reuters) - World no.3 miner Rio Tinto (Xetra: 855018 - news) reported a $3 billion (1.9 billion pounds) annual loss on Thursday, its first loss since the dual-listed company was formed in 1995.

Second-half underlying earnings slumped 47 percent to $4.1 billion, ahead of market forecasts.

KEY POINTS

* H2 profit before one-offs $4.149 billion

* Analysts had been expecting H2 profit of $3.93 billion

* Final dividend 94.5 cents v 87.5 cents consensus

COMMENTARY

TIM SCHROEDERS, PORTFOLIO MANAGER, PENGANA CAPITAL

"It's pretty good. The company's probably beaten expectations with its underlying profit, its dividend was higher and its guidance in terms of 2013 is pretty positive. There aren't any real surprises there, with things more less as expected to slightly better. The dividend is better, and the company's showing a renewed focus on pleasing its shareholders through better capital discipline.

"There are substantial challenges, domestically on the IR (industrial relations) front, and managing realisation of value for those assets in the aluminium business in particular that they've slated for sale or divestiture through sale. Managing costs is going to be a challenge, in terms of meeting their prescribed targets."

TIM BARKER, PORTFOLIO MANAGER, BT INVESTMENT MANAGEMENT

"Results seem to have come in pretty close to market expectations, give or take a few elements. Clearly iron ore is the star performer. Copper is obviously significant as well, but one or two other items are a little disappointing - Alcan continues to be a problem."

GLYN LAWCOCK, HEAD OF RESOURCES RESEARCH, UBS EQUITIES AUSTRALIA:

"The headline number of $9.3 billion was two-and-a-half percent ahead of market and slightly ahead of our number, which was above consensus.

"The positive is a 15 percent lift in the dividend, rather than 10. The market will like the lift in the dividend.

"Also, what's interesting news is another quarter advance in the iron ore project in Western Australia, which is a big plus from an earnings perspective, although on the flip side it probably gets people more nervous about the amount of iron ore supplies going into the market."

HAYDEN BAIRSTOW, ANALYST, CLSA:

"Underlying earnings were in line. (The iron ore appointment) is an interesting one. I'm not surprised, it is the best business in the company and I would have thought Andrew (Harding) is the next cab off the rank to be appointed CEO - Sam (Walsh) only wants to do it for two or three years. This would make sense in that respect. It's encouraging to see, it shows there may be a succession plan in place."

MARK TAYLOR, SENIOR RESOURCES ANALYST, MORNINGSTAR (NasdaqGS: MORN - news) :

"Underlying earnings at $9.3 billion is bang on with most recent forecasts which was massaged down with a lot of other companies as well. The company did a good job with guiding the market to a realistic number.

"The new CEO Sam Walsh has come out with fighting words, it's really kind of laying down the law and it's a very stoic, serious strategy of focusing on cost-cutting driving only projects with superior returns from investment capital.

"The dividend was higher than what we were expecting so there has been talk about BHP and Rio Tinto sort of cutting back on costs and investing and focusing more on shareholder return so that full-year payout of 167 cents I think is in line with that sort of talk."

(Reporting by Sydney Newsroom; Editing by Richard Pullin)