Proactive Investors - Rio Tinto PLC (LON:RIO) shares fell 2.5% in early trading after the interim dividend was cut 34% as profits fell more than expected in the first half of the year against a backdrop of China's slow economic recovery.
With China's demand for metals not as strong as expected, sales revenue declined 10.4% to US$26.7bn in the six months to end-June 2023, with pre-tax profits shrinking 39.4% to US$7.7bn.
Earnings per share were down 34% to 352.9 US cents and the dividend was cut by the same percentage to 177 US cents per share, as part of the policy of paying out 50% of earnings.
Net profit attributable to the owners of Rio Tinto was US$5.1bn, which was down from US$8.9bn a year earlier and below the analysts' consensus forecast of US$5.74bn.
Compared to two years ago, Rio’s underlying profits have halved and its dividend has fallen from US$9.1bn to US$2.9bn.
Profits were affected by metals prices falling, operating cash costs rising and higher exploration and evaluation expenditure, partly offset by the Australian and Canadian currencies weakening against the US dollar.
Net cash generated from operating activities shrank 33% to US$7bn.
Analysts at Hargreaves Lansdown (LON:HRGV) said: “The weaker than predicted recovery in the Chinese economy has put metals prices under a cloud in recent months. That has fed through to Rio Tinto’s revenues.”
Guidance includes around US$1.5bn over the next three years on decarbonisation projects, though this remains subject to engagement with aboriginal traditional owner and other stakeholders, regulatory approvals and technology developments.