Rio Tinto annual profit surges on spiking commodity prices

[SYDNEY] Rio Tinto Wednesday reported a surge in annual net profit on the back of improving commodity prices in a strong turnaround from last year's loss, and rewarded shareholders with a buyback.

The world's second-largest miner reported an annual net profit of US$4.62 billion for the year to December 31, compared to a US$866 million net loss in the previous financial year when key metals prices plunged and Chinese demand slowed.

The result, which was slightly below analysts' expectations, is a reflection of the brighter outlook for the mining sector amid the commodity upswing in late 2016.

The price of iron ore, Rio's main commodity, has recovered from less than US$40 a tonne just over a year ago to rising above US$80 earlier this year.

"Today's results show we have kept our commitment to maximise cash and productivity from our world-class assets, delivering US$3.6 billion in shareholder returns while maintaining a robust balance sheet," chief executive Jean-Sebastien Jacques said in a statement.

"We enter 2017 in good shape," he added.

As part of the US$3.6 billion return to shareholders, Rio declared a full-year dividend of 170 US cents per share and a share buyback of US$500 million this year.

Underlying profit, a measure the Anglo-Australian giant prefers, came in at US$5.10 billion, a 12 per cent increase from the prior period.

Shares in Rio closed 0.81 per cent higher at Aus$65.69 in Sydney ahead of the release of the results.

Prices in key commodities such as iron ore have soared in recent months, supporting producers, with shares in Rio Tinto jumping more than 60 per cent from a year ago.

AFP