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Rio Tinto Clocks H1 Revenue Decline Of 10%, Cuts Dividend, Yet Yields 13.4%

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  • Rio Tinto plc (NYSE: RIOreported H1 consolidated sales of $29.8 billion, a decline of 10% year-over-year.

  • Underlying EBITDA was $15.6 billion, down by 26% Y/Y, and Net earnings were down 29% Y/Y to $8.6 billion.

  • Cash Flow from operations for H1 was $10.5 billion, down from $13.7 billion in H1 2021.

  • RIO slashed its dividend by 53% Y/Y to $4.3 billion, equating to $2.67 per share. This represents 50% of underlying earnings, in line with the shareholder returns policy.

  • Underlying ROCE was 34% versus 50% in H1 2021.

  • Post the dividend cut, RIO dividend yield is still as high as 13.42%

  • The company held $0.3 billion of net cash at 30 June 2022, which compared with net cash of $1.6 billion at the start of the year, reflected the free cash flow of $7.1 billion, offset by $7.6 billion of cash returns to shareholders and the $0.8 billion Rincon acquisition.

  • FY22 Guidance: The company expects a share of capital investment of around $7.5 billion (previously $8.0 billion) in 2022. In each of 2023 and 2024, it expects a share of capital investment of $9.0 to $10.0 billion.

  • RIO expects Pilbara iron ore unit cash costs to be $19.5-21.0 per tonne, at an Australian dollar exchange rate of 0.71 (previously 0.75), excluding any additional COVID-19 response costs.

  • Price Action: RIO shares are trading lower by 0.76% at $58.97 during the post-market session on Wednesday. The stock had tumbled after reporting earnings but recovered all losses throughout the session.

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