The Rio Tinto Limited (ASX: RIO) share price will be on watch tomorrow after the release of its half year results after the market close.
What happened in the first half?
In the first half of FY 2019 Rio Tinto recorded underlying EBITDA of US$10.3 billion, which was an 11% increase on the prior corresponding period.
This was driven by a 3% lift in gross revenue to US$21.8 billion and the widening of its underlying EBITDA margin to 47%.
Underlying earnings came in 12% higher than the first half of FY 2018 at US$4.9 billion and 301.5 U.S. cents on a per share basis.
The mining giant generated a 39% lift in cash flow from operations to US$7.2 billion, leading to total free cash flow of US$4.7 billion during the half.
In light of this, the company has announced cash returns of US$3.5 billion, comprising a record interim ordinary dividend of US$2.5 billion, equivalent to 151 US cents per share, and special dividend of US$1 billion, equivalent to 61 US cents per share.
Rio Tinto's chief executive J-S Jacques appeared to be rightfully pleased with the company's performance during the half.
He said: "We have delivered strong financial results with underlying EBITDA of $10.3 billion and EBITDA margin of 47%. Our financial performance was driven by our Pilbara operations with a 72% EBITDA margin, underpinned by strong iron ore prices."
Mr Jacques added: "We are taking actions to protect the Pilbara Blend and optimise performance across our iron ore system, following the operational challenges which emerged in the first half. Our world-class portfolio and strong balance sheet serve us well in all market conditions. This, together with our disciplined capital allocation, underpins our ability to continue to invest in our business and deliver superior returns to shareholders in the short, medium and long term. Our delivery is in evidence today, with our record interim returns of $3.5 billion."
How does this compare to expectations?
According to a note out of Goldman Sachs, it was expecting Rio Tinto to deliver earnings of US$5 billion compared to the analyst consensus estimate of US$4.96 billion. Goldman had also forecast earnings per share of US$3.08 and a US$2.00 per share interim dividend.
Whilst it looks as though its earnings have fallen ever so slightly short of expectations, the combination of its interim and special dividends has beaten Goldman's forecast.
