Rio Tinto (RIO.AX)(RIO.L) trashed its generous payout policy in the face of a dismal prognosis for the international market after it fell off into a net loss for 2015 and posted its worst underlying gains in 11 years.
The macro outlook remains difficult,” Chief Executive Sam Walsh told reporters. Rio still was able to hold its 2015 full-year dividend constant at $2.15, although below market forecasts, at a time when all its peers are tipped to cut or freeze their payouts.
It guaranteed to pay at least $1.10 in 2016 as a transition to the new policy, restricting any reduction to 49 percent.
“This is a really pleasant way for the marketplace to take on board that BHP will declare in two weeks it’ll cut (its dividend). Any uncertainty is finished,” said Peter O’Connor, an analyst at Shaw and Partners in Sydney.
BHP is likely to cut on its interim dividend at least. Rio Tinto shares dropped 5.9 percent in early trade in London, while BHP Billiton was down 4.8 percent.
Walsh said a quick fall in commodity prices in the last two months as well as doubt had hit on all areas of the worldwide market, calling for a shift in how its money is spent by the organization.
Rio planned to slit an additional $2 billion off operating costs during the following couple of years, after having cut $1.3 billion last year, surpassing its own goal.
Inherent earnings dropped 51 percent to $4.54 billion in 2015 from $9.31 billion a year previously strike by poorer iron ore, copper and aluminium costs, and in line with analysts’ predictions.
Gains in the six months to December decreased to $1.6 billion, just over half what it brought in in the first six months of the year.
Standard & Poor’s and Moody’s have warned they may cut on miners’ standings, citing worries above their dividend policies. As it’s reduced net debt dramatically in the last three years, Rio Tinto is in a more powerful position than its competitors.