Rio Tinto announced that its full-year underlying earnings for 2023 were in line with analysts’ expectations, with robust production in its iron ore division offsetting weaker aluminium prices. The company cautioned about the prospect of rising costs in the coming year.
While Rio Tinto experienced growth in production across major commodities, the average prices for aluminium declined throughout 2023 from the peaks seen during the COVID-19 era. This decline was attributed to the normalization of supply chains and reduced demand from Western markets.
For the fiscal year 2023, the world’s largest iron ore producer reported underlying earnings of $11.8 billion, compared to $13.4 billion in the previous year, aligning closely with the consensus estimate of $11.70 billion from the LSEG.
Rio Tinto anticipates an increase in unit costs for its Pilbara iron ore operations in 2024 due to ongoing inflation in labor and parts in Western Australia. The company noted that while inflationary pressures have moderated, there are still lag effects impacting third-party costs, including contractor rates and raw materials. It expects these effects to stabilize in the upcoming year.
Despite the challenges, Rio Tinto declared a final dividend of 258.0 cents per share for 2023, demonstrating confidence in its financial position and outlook. This dividend payout surpassed the LSEG estimate of 247.0 cents per share.
The mining giant also reported net impairment charges of $0.7 billion, after tax, primarily linked to its alumina refineries in Queensland. These charges were incurred in the first half of 2023 due to challenging market conditions faced by the assets.
As Rio Tinto navigates through fluctuating market dynamics and cost pressures, its strategic focus remains on optimizing operations and maintaining shareholder value amidst evolving industry landscapes.
