Rio Tinto hikes full-year divi 12%, proposes $2bn cash return

12th Feb 2015 07:21

Mining group Rio Tinto has pledged to return nearly $6bn to shareholders in respect of 2014 after hiking its full-year dividend by 12% and announcing a $2bn share buyback."Last year, we made a clear commitment to materially increase cash returns to our shareholders. We have delivered this today," said chief executive Sam Walsh.The group reported a 9% decline in underlying earnings last year to $9.3bn, as increased volumes and lower costs helped to partly mitigate weaker commodity prices throughout the year. At the same time, operating margins were held steady at 39%.Revenues totalled $47.7bn in 2014, down from $51.2bn in 2013, as a $5.4bn decline in pricing was partially offset by $3bn from higher volumes.Meanwhile, free cash flow was helped by a 37% drop in capital expenditure to $8.2bn and a programme to release working capital, meaning that net debt was cut by 31% to $12.5bn.The company increased its full-year dividend by to 215 cents per share, up from 192 cents in 2013, and proposed a capital return of $2bn. The total cash return for last year, of almost $6bn, is a 64% increase on 2013.Looking ahead, the company said it is targeting further cash-cost improvements of $750m to be realised in 2015.Capital expenditure is also expected to fall to under $7bn in 2015 and remain around $7bn in 2016 and 2017.