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Rio Tinto paying US$3.5B in dividends as underlying H1'19 profit rises 12% YOY

Rio Tinto said Aug. 1 that it will increase shareholder returns to US$3.5 billion, comprising an interim dividend of US$2.5 billion, or US$1.51 per share, and a US$1.0 billion special dividend.

The first-half dividend surpassed the year-ago payout of US$2.2 billion, or US$1.27 per share, which was a record at the time.

Net profit in the first half slipped 6% yearly to US$4.13 billion, or US$2.51 per share, attributed to impairment charges for the Oyu Tolgoi copper-gold mine in Mongolia, held by majority-owned Turquoise Hill Resources Ltd. Net impairment charges soared to US$859 million from US$98 million year over year, mostly due to the write-downs at Oyu Tolgoi.

Underlying earnings for the half — excluding impairment, one-off items and the effects of asset disposals — grew 12% yearly to US$4.93 billion, or US$3.02 per share.

Consolidated sales revenue grew to US$20.72 billion from US$19.91 billion as higher iron ore prices offset lower sales volumes and weaker aluminum prices.

Recovery work undertaken after the impact of Tropical Cyclone Veronica impacted the miner's second-quarter iron ore shipments from its Pilbara operations in Western Australia, which slid 3% yearly to 85.4 million tonnes.

Underlying EBITDA for the first half increased 19% year over year to US$10.25 billion.

Weather-related operational challenges at Rio Tinto's Pilbara iron ore operations resulted in its run rate from its mine-to-market productivity program slumping to US$200 million. The program is now aiming to deliver an additional free cash flow run rate of between US$1.0 billion and US$1.5 billion from 2021, compared to US$1.5 billion previously forecast.

Net debt as of June 30 totaled US$4.86 billion, compared to net cash of US$255 million at the end of 2018.

Capital expenditure rose 1% to US$2.39 billion, which was spent primarily on the company's development projects and to sustain capacity at its operations. Forecast capex for 2019 stood at US$6.0 billion, with the figure to rise to US$6.5 billion in 2020 and 2021 as it will include sustaining capex of about US$2.5 billion per year.