Rio Tinto (ASX:RIO) share price in focus today following record-breaking results

Iron ore prices rebounded in the latter months of 2021.

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Key points

  • Rio Tinto share price in focus after record-smashing results
  • Total dividend payout almost doubled
  • Earnings and profits were well up year-on-year

The Rio Tinto Ltd (ASX: RIO) share price closed up 1.2% yesterday.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant finished the day trading at $119.87.

The Rio Tinto share price is in focus today after the company posted record results for the 2021 financial year (FY21).

Below we look at the highlights from those results, released after market close yesterday.

Rio Tinto share price in focus following record results

  • Net cash from operating activities increased 60% year-on-year to US$25.35 billion
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$37.72 billion, up 58% from FY20
  • Underlying earnings per share (EPS) of US$13.21, up from US$7.70 in FY20
  • Total dividend payout increased 87% year-on-year to US$10.40

What else happened during the year?

Driven by the strong earnings, the miner's net cash leapt to US$1.58 billion as at 31 December. That compares to a net debt of US$664 million the prior year end.

The Rio Tinto share price is also in focus after the company reported an 88% leap in its free cash flow, which climbed to US$17.66 billion.

With mining activities coming with inherent associated risks, the ASX 200 miner highlighted its focus on safety, noting that 2021 was its third successive fatality-free year of operations.

Rio Tinto also actively worked on rebuilding its relationships with Traditional Owners across its global operations over the course of the year.

And in October, the company released its longer-term strategy to ensure it remains profitable in a decarbonising world. Rio's new target to reduce its Scope 1 and 2 carbon emissions by 50% by 2030 is more than triple its previous target.

2021 also saw the company progress with its Battery Minerals portfolio. Among the achievements on this front, Rio Tinto signed a binding agreement to acquire the Rincon lithium project in Argentina.

What did management say?

Commenting on the results, Rio Tinto CEO Jakob Stausholm said:

The recovery of the global economy, driven by industrial production, resulted in significant price strength for our major commodities, which we were able to capture, achieving record financial results…

With the launch of our new strategy, we have set a new direction for Rio Tinto to thrive in a decarbonising world. We have a portfolio that is well-positioned, and are targeting disciplined investment in commodities that will see strong demand in the coming decades.

What's next?

Looking to the year ahead, Rio Tinto expects capital expenditure of roughly $8.0 billion. That takes into account potential increases of approximately 15% for the Pilbara replacement projects.

There's still a hefty tax bill due to the Australian Taxation Office (ATO). Rio intends to make a final US$1.1 billion payment to the ATO in June.

Citing rising input prices and labour costs, an increased mining work index and higher mine processing plant maintenance, Rio expects its Pilbara iron ore unit cash costs to increase to $19.5-$21.0 per tonne.

Production guidance remained unchanged from its Q4 report.

Rio Tinto share price snapshot

The Rio Tinto share price has been a strong performer in 2022, up 20.2%. That compares to a year-to-date loss of 5.1% posted by the ASX 200.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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