What happened to the Rio Tinto share price?
Rio Tinto Limited [ASX:RIO] shares are 6.61% higher today, at $63.86 per share. This follows a challenging year, during which RIO shares fell by more than 11%.
Why did this happen to RIO shares?
The share price rise comes after the company reported its lowest underlying profit since 2009.
Sharp falls in commodity prices were largely to blame. However, CEO Sam Walsh said the company was able to partially offset lower commodity prices with financial and operating discipline.
The result was well received by shareholders as it was better than analysts were expecting.
Shareholders were also pleased that the company has stood by its earlier commitment to ‘materially increase’ shareholder returns. It announced a final dividend of US$1.19 per share, taking the total annual dividend to US$2.15 per share, up 12% from a year earlier. Additionally RIO announced a US$2 billion share buyback, its first major buyback since 2011.
What now for Rio Tinto Ltd?
Going forward, RIO says it will focus on further reducing costs. And despite lower iron ore prices, the company has no plans of halting its iron ore expansion in Western Australia. Instead RIO intends to increase its iron ore exports.
for The Daily Reckoning Australia