Rio Tinto plc Announces 10% Profit Increase, Hikes Dividend

mine siteThe share price of Rio Tinto (LSE: RIO) (NYSE: RIO.US) fell 1.4% to 3,117p during early trade this morning after the miner announced a 10% increase in profit to $10.2bn.

The firm stated that the main drivers for this were its successful cost reduction initiative and increased production volumes.

Rio added that cost savings of $2.3bn included greater production efficiencies and the lower price of raw materials.

The FTSE 100 company also said that production records were set for iron ore, bauxite and thermal coal, with copper volumes recovering strongly.

In addition, net debt reduced by $1.1bn to $18.1bn.

Rio’s chief executive, Sam Walsh, commented:

“These strong results reflect the progress we are making to transform our business and demonstrate how we are fulfilling our commitments to improve performance, strengthen the balance sheet and deliver greater value for shareholders. We have achieved underlying earnings of $10.2 billion, exceeded our cost reduction targets and set production records. In turn, this has enhanced our cash flow generation and lowered net debt.”

The full year dividend was increased 15% to 116p supported by earnings per share of 333p. As such the dividend is covered by 2.9 times earnings.

Of course, the decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the mining industry — is entirely your decision.

Though I would add that our free report -- “How To Create Dividends For Life” -- contains five golden rules for building a dividend portfolio.

This report will help you best harness your earnings potential. It’s also completely free.

Simply click here for your copy.

Mark does not own shares in Rio Tinto.