Rio Tinto posts unprecedented $2.99B loss
SYDNEY (AFP) – Anglo-Australian mining titan Rio Tinto posted its first annual loss in 18 years Thursday, plunging US$2.99 billion into the red on hefty writedowns on its Mozambique coal and aluminium businesses.
The $14.4 billion in impairments, announced last month, prompted the resignation of chief executive Tom Albanese and saw Rio slump on underlying earnings of $9.3 billion.
“Our business performed well in 2012, generating strong cash flows and underlying earnings of $9.3 billion,” said Rio chairman Jan du Plessis.
“However, we are deeply disappointed by the $14.4 billion writedowns that we have taken in 2012, primarily in our aluminium and energy businesses, which led to the group recording a net loss of $3.0 billion.”
The result for the 12 months to December 31 was a 151 per cent plunge on last year’s $5.83 billion profit.
Incoming chief Sam Walsh, who is to formally replace Albanese at the helm in July, said the company was targeting cash savings of more than US$5.0 billion by the end of 2014 and reducing capital expenditure to US$13 billion this year.
“My immediate priority is to build more focus, discipline and accountability throughout the organisation,” said Walsh, promising “aggressive” cost-cutting.
“Demonstrating this commitment, we will deliver our capital reduction and cost savings targets and improve performance across our business.”
Rio said the full-year loss – its first since becoming a dual listed company in 1995 – had also been due to a dip in commodity prices which had wiped $5.3 billion off the bottom line.
Iron ore plunged 24 per cent compared with 2011, copper was 10 per cent lower and aluminium was down 16 per cent.
Rio’s unpopular $38 billion acquisition of Canadian firm Alcan in 2007 cost it dearly, with lagging profits from the metal eating into its bottom line and seeing full-year earnings slump 59 per cent in 2012 to US$5.8 billion.