Rio Tinto’s year of cost cutting and getting back to basics is starting to reflect on its bottom line, an initiative sparked after posting a huge loss of almost $US3 billion in 2012, the first in its history.
Speaking at the company’s Annual General Meeting in Melbourne today Rio CEO Sam Walsh admitted “we haven’t always got it right” but his cost tightening agenda is starting to work.
“As your chief executive, it is my pleasure to stand before you and present a company in good shape. We’re stronger, leaner, hungrier and poised to take advantage of the many opportunities that lie ahead,” he said.
“We have learnt lessons along the way and that is what smart companies do. They learn from their mistakes but they also learn how to make their own opportunities.”
Rio Chairman, Jan du Plessis said it has achieved an underlying earnings of $US10.2 billion in 2013 and boosted cash flows by 22 per cent year-on-year.
Net earnings for 2013 of $US3.7 billion include impairments from cost over runs at its Kitimat aluminium smelter project in Canada, the closure of its Gove refinery in the Northern Territory and a consolidation of its Oyu Tolgoi project in Mongolia.
In 2012 Rio posted a net loss of $US2.99 billion.
After announcing cost cutting measures last year Walsh said about $US2.3 billion has been removed from its cost base and it has also stacked up another $US1 billion in cost savings by cutting exploration budgets and reducing capital expenditure. It has also sold off a number of assets including the Clermont coal mine in Queensland.
The chairman said future growth in a softer commodity price environment will come from a combination of brownfields projects, productivity gains and production increases.
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