Anglo-Australian metals and mining titan Rio Tinto released results for 2016 yesterday. The firm touted the US$8.5 billion in cash generation and US$3.6 billion in shareholder returns it generated over the course of last year.
Net cash generation was down ten percent year-on-year from US$9.383 billion, but underlying earnings were up, coming in at US$5.1 billion, a 12% increase over last year’s total of US$454 billion. Net earnings ended the year in the black at US$4.617, a turn-around from last year’s net loss of US$866 million.
As of the last day of 2016 Rio carried a net debt of US$9.587 billion, which is 30% less than at the end of 2015 when net debt totaled US$13.783 billion.
Rio Tinto placed a particular emphasis on developing its aluminium and bauxite trade during the last fiscal year, but production gains were largely offset by a drop in the market’s prices. The firm delivered 47.7 million metric tons last year, 9% above 2015’s production of 43.7 million tons. Alumina production ended the year at 8 million metric tons, 5% more than the previous year’s total of 7.8 million metric tons. Primary aluminium production rose as well, from 2015’s total of 3.3 million metric tons to 3.6 million metric tons last year, which was good for a 10% increase.
The firm said it set production records in all three areas – at Weipa and Gove for bauxite, Yarwun, Jonquière, and São Luis for alumina, and at ten of the company’s smelters, including Kitimat, for primary aluminium. Kitimat was particularly notable for reaching its nameplate capacity of 420 thousand metric tons per annum in the spring of last year.
Gross sales of aluminium, alumina, and bauxite for the year totaled US$9.5 billion, down 7% from 2015’s US$10.1 billion. Underlying EBITDA dropped 10% year-on-year, from US$2.7 billion in 2015 to US$2.5 billion last year. Underlying earnings fell 15% to US$947 million last year fro US$1.2 billion in 2015.
“Today’s results show we have kept our commitment to maximise cash and productivity from our world-class assets, delivering $3.6 billion in shareholder returns while maintaining a robust balance sheet,” opined Rio Tinto’s CEO J-S Jacques. “At the same time, we strengthened the portfolio and advanced our high-value growth projects as we look to the future.”
“We enter 2017 in good shape,” he went on. “Our team will deliver $5 billion of extra free cash flow over the next five years from our productivity programme. Our value over volume approach, coupled with a robust balance sheet and world-class assets, places us in a strong position to deliver superior shareholder returns through the cycle.”
Rio Tinto expects to finish the year having produced 48 to 50 million metric tons of bauxite, 8.0 to 8.2 million metric tons of alumina, and 3.5 to 3.7 million metric tons of primary aluminium.