Miner Rio Tinto is set to launch a share buyback programme.
The world's second biggest miner has endured some tough trading conditions of late and recently announced a nine per cent fall in profits. This came after underlying earnings dropped to $9.3 billion (£6.09 billion). However, it is still pressing on with a share buyback programme valued at around $2 billion.
Rio Tinto noted that the decline in profits has been due to falling commodity prices and "uncertain global economic trends". The company explained that the share buyback scheme represents a total cash return to shareholders of around $6 billion. Officials also praised its 62,000-strong workforce for allowing it to achieve positive results in the past year.
Sam Walsh, Rio Tinto's chief executive, conceded that trading conditions had been difficult and added: "Our combination of world-class assets, disciplined capital allocation, balance sheet strength, operating and commercial excellence, and a culture of safety and integrity gives me confidence in our ability to continue to generate sustainable returns for our shareholders."
In October 2014, Rio Tinto confirmed that it had rejected an approach from rival Glencore. At the time the company said that it turned down the takeover bid in the August of that year stating that it was "not in the best interest" of its shareholders. The news had proved positive for Rio Tinto's share price which spike nine per cent in New York.
The failed takeover bid has placed increased pressure on to Rio Tinto as the firm looks to please its investors. Mr Walsh was confident that despite the ongoing economic issues throughout the world, the company would be able to perform to the standards expected.
Following the announcement of the share buyback programme, Rio Tinto's share price increased by 3.28 per cent as of 09:46 GMT on Wednesday (February 12th).
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.