The dual-listed miner’s shares were down over 4% by mid morning on Thursday at 1690p after it revealed earnings had halved to $4.54bn in 2015, from $9.31bn a year earlier.
Rio Tinto’s woes contributed to downbeat sentiment which saw the FTSE 100 around 2% down during morning trading.
The company also spooked investors by saying it was abandoning its policy of either maintaining or raising its dividends payments each year.
Rio Tinto chief executive Sam Walsh put a positive spin on the numbers, citing ‘a highly challenging environment’ and signalled some cost cutting is on the cards.
“Rio Tinto delivered a strong performance in 2015 with underlying earnings of $4.54 billion,” he said. “We continued to take decisive action to preserve cash through further cost reductions, lower capital expenditure and the release of working capital. 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 $1 billion in 2016 followed by an additional goal of $1 billion in 2017,” Walsh added.
Despite the troubles Helal Miah, investment research analyst at The Share Centre sees Rio Tinto as a ‘buy’.
“Compared to its peer group, we believe Rio Tinto is better positioned to ride out the commodities downturn with some of the lowest cost of production due to economies of scale. As a result, we continue to recommend the company as a ‘buy’ albeit for those investors willing to accept a higher level of risk and taking a contrarian approach and hoping for a longer term recovery in the commodities sector.”
