Yahoo Finance FTSE 100 Miner Rio Tinto Reports £600m Loss
The world's second-largest mining firm, Rio Tinto (Other OTC: RTPPF - news) , has reported an annual loss of $866m (£597m) for 2015 having posted huge profits of $6.5bn (£4.5bn) in the previous year.
The FTSE 100 company, which has lost almost half its market value over the past two years amid the slowdown in emerging market economies, said it had embarked on a new round of cost-cutting amid the collapse in world commodity prices.
Its debt pile grew 10% over the 12 months to $13.8bn (£9.5bn) and said that while its 2015 dividend would be maintained, it could no longer support its "progressive" dividend policy and levels would be set by the board in future.
Miners and other commodity-related firms such as oil majors have been slashing jobs and investment to take account of the pullback in demand for their products - particularly in China.
Rio's primary income source is from iron ore - used in steel.
It charted an 80% decline from its price peak in 2011.
Underlying earnings in its iron ore division slumped 50% in the year but - amid controversy in Britain over cheap Chinese steel forcing UK producers out of business - Rio said demand for its iron ore in China proved stable "due to a combination of record steel exports and a declining share in scrap use".
The Melbourne-based company's chief executive, Sam Walsh, said: "Against a highly challenging environment, Rio Tinto delivered a strong performance in 2015 with underlying earnings of $4.5bn.
"We continued to take decisive action to preserve cash through further cost reductions, lower capital expenditure and the release of working capital."
He added: "The continued deterioration in the macro environment has generated widespread market uncertainty.
"We are embarking on a new round of proactive measures to cut our operating costs by a further $1bn in 2016 followed by an additional goal of $1bn in 2017.
"We are also reducing our capital expenditure to $4bn in 2016 and $5bn in 2017.
"These significant actions provide us with the confidence that we remain robustly positioned to maintain both balance sheet strength and deliver shareholder returns through the cycle."
