Rio Tinto has published its financial results for the first half of FY2023

Key Highlights: -

• Enhanced operations boost EBITDA to US$11.7 billion with 5% volume growth
• Operating activities resulted in a net cash generation of US$7.0 billion.

Rio Tinto Limited (ASX: RIO) has reported strong financial performance in the first half of 2023. The company generated net cash of US$7.0 billion from its operating activities. The profit after tax attributable to Rio Tinto's owners reached US$5.1 billion, which includes US$0.8 billion of impairments related to Australian alumina refineries. Additionally, the underlying EBITDA amounted to US$11.7 billion, with underlying earnings reaching US$5.7 billion, leading to an interim dividend of US$2.9 billion, in line with the company's practice of a 50% payout.

Looking ahead, Rio Tinto expects its share of capital investment, excluding Simandou, to be US$7.0 billion for the year 2023. In 2024 and 2025, the company projects its share of capital investment to be up to US$10.0 billion per year, including up to US$3.0 billion in annual growth, subject to available opportunities. These investments encompass sustaining capital of approximately US$3.5 billion each year, with US$1.5 billion earmarked for Pilbara iron ore (subject to inflationary pressure and exchange rates) and US$2.0 to US$3.0 billion allocated for replacement capital. Moreover, the guidance includes around US$1.5 billion over the next three years for decarbonization projects, pending Traditional Owner and stakeholder engagement, regulatory approvals, and technology developments.

Regarding exploration and evaluation expenses, excluding Simandou, Rio Tinto expects to spend US$1.0 billion in 2023. As mentioned earlier, their guidance assumes all Simandou costs will be capitalized in the second half of the year. Finally, the effective tax rate on underlying earnings is estimated to be around 30% in 2023.

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