Rio Tinto smashed by largest ever loss, new CEO vows cuts
Mining giant Rio Tinto (ASX, LON, NYSE:RIO) provided investors with a sour Valentine’s treat Thursday as the world’s second biggest miner posted a $3 billion loss, its first ever full-year loss.
Chief Executive Sam Walsh vowed a “relentless” focus on shareholder value and more discipline and accountability, adding the company plans to cut costs by over $5 billion by the end of 2014.
“Under my leadership, Rio Tinto will have an unrelenting focus on pursuing greater value for shareholders,” Walsh told reporters. “To do this we need to run the business as owners not managers and my immediate priority is to build more focus, discipline and accountability throughout the organisation,” he added.
Walsh, former head of the miner’s iron ore division, replaced Tom Albanese last month, after the company wrote down the value of its aluminum and Mozambique coal assets. The move led to $14.4 billion in writedowns and left the firm in the red.
Rio posted a 47% dive in half-year underlying profit, its worst since 2009 due to sharp falls in commodity prices. The result, however, was slightly better than analysts predicted.
In its full-year profit report, Rio beat full-year underlying earnings expectations by $200 million, logging a $9.3 billion after-tax profit.
It also announced that Andrew Harding had been appointed as the new head of its iron ore division, the company’s biggest and most profitable.
Rio is not alone. Other major miners such as Anglo American (LON: ALL) and BHP Billiton (ASX,NYSE: BHP) have found themselves forced to reduce costs and shelve projects due to weaker prices.
Last month, Anglo American, also getting ready for a CEO change, flagged a $4 billion write down on its flagship Brazilian Minas Rio iron ore project ahead of full-year results due tomorrow.
BHP Billiton is set to post half-year results on Wednesday with analysts predicting impairment charges against its aluminum and nickel assets.
(Image from interview posted at Rio Tinto's website)