Mining giant Rio Tinto (ASX, LON, NYSE:RIO) staged a spectacular comeback last year, achieving a US$3.67 billion annual net profit, thanks mainly to CEO Sam Walsh’s major cost-cutting plan that saw thousands of workers fired, projects halted, assets sold and capital spending slashed.
The world’s second largest miner said Thursday it has rebounded from its $3.03 billion loss in 2012, meeting or beating all the targets set out by Walsh for the year, which has let it raise its annual dividend by 15% to $1.92, higher than the $1.81 estimates.
Rio Tinto, the world’s second-largest iron ore miner after Brazil’s Vale SA, said earnings from the commodity jumped 6.6% on the back of higher production in Australia’s Pilbara region to feed increased Asian demand for the steelmaking material.
Copper production increased by 15% and refined copper was ahead 7% from 2012, though earnings were down 22% at $821 million reflecting lower prices, a pit wall slide at its Bingham Canyon copper mine in Utah, and writedowns worth $131 million.
But among the healthy-looking report, there were some downers. The company said it would write down assets including its Oyu Tolgoi copper project in Mongolia by $3.4 billion.
Rio Tinto has been among the most aggressive cost-cutters, exceeding its target of reducing operating costs by US$2 billion in 2013 with plans to find a further US$3 billion in savings this year.