Rio boss waives bonus after huge write-down of aluminium assets - UPDATE

9th Feb 2012 07:03

Mining giant Rio Tinto has hiked its full-year dividend by 34% after reporting record underlying earnings in 2011, but net earnings were held back by a massive $8.9bn impairment charge relating to its aluminium businesses, prompting the group's Chief Executive to forgo his annual bonus.Underlying earnings grew 11% from $14.0bn to $15.5bn in the 12 months ended December 31st, while net earnings sank 59% to $5.8bn, from $14.2bn in 2010. As such, basic earnings per share from continuing operations also took a hit, falling 58% from 731 cents to 303.5 cents."Whilst we have today reported excellent underlying earnings numbers, we also have to recognise that we have taken a significant impairment charge in relation to our aluminium business," said Chairman Jan du Plessis.With the impairment charge largely relating to the $44bn (including debt) acquisition of Alcan in 2007, Chief Executive Tom Albanese decided to waive his annual bonus. "As the acquisition of Alcan happened on my watch, I felt it only right not to be considered for an annual bonus this year," Albanese explained.The company announced back in October than it would dispose of 13 aluminium assets "that no longer fit our strategy"."Growth in demand for aluminium remains strong but the industry has been running surpluses for the past five years. Chinese production is still tracking internal demand, but has shifted more toward the northwest, where stranded coal is being used to generate electricity," he said.Revenue from continuing operations in 2011 rose from $55.2bn to $60.5bn, but impairment charges and a surge in exploration and evaluation costs held back pre-tax profit to $13.2bn, compared with $20.5bn the year before.The group's outlook was optimistic in spite of Albanese highlighting some "short-term uncertainties". He said that global economic growth is still forecast to be around 3.3% this year and expects a soft landing in its key Chinese market, with growth in excess of 8% in 2012."Longer term, the drivers of industrialisation and urbanisation in emerging economies remain in place and will lead to an unprecedented increase in demand for metals and minerals over the next 10 to 20 years," he added.The full-year dividend was increased from 108 cents per share to 145 cents a share.BC