Shares of Rio Tinto experienced a notable decline during early Thursday trading in London, shedding 3.1% to reach 7,163 pence. The downward movement followed the release of the mining giant's full-year financial results, which did not meet market expectations. The stock traded within a range of 7,128 to 7,259 pence during the session.
Earnings Miss and Dividend Declaration
For the 2025 fiscal year, Rio Tinto reported underlying earnings of $10.9 billion, a figure that fell short of the Visible Alpha consensus estimate of $11.03 billion. Chief Executive Simon Trott highlighted that the company's robust cash flow and solid balance sheet supported a sustained 60% payout ratio. This translated to an ordinary dividend of $6.5 billion, with a final dividend declared at 254 U.S. cents per share.
The flat earnings performance was attributed to a balancing act between operational gains and market pressures. Record volumes from its Pilbara iron ore operations and increased copper production helped offset the impact of declining commodity prices during the period.
Rising Costs and Market Context
A significant point of focus for investors was the company's cost guidance. Rio Tinto forecast that its Pilbara iron ore unit costs would rise to a range of $23.50 to $25 per tonne by 2026. This increase factors in both broader inflationary pressures and specific weather-related disruptions that affected costs in 2025.
Andy Forster of Argo Investments noted that while the result was positive, it appeared less impressive compared to sector peer BHP, particularly regarding capital liberation strategies, which include upcoming asset sales. The announcement comes amid a generally supportive environment for miners in London, with the FTSE 100 recently reaching an all-time high. This strength has been fueled by expectations for interest rate cuts and rising metals prices, with copper-related equities performing especially well.
Strategic Moves in Lithium
Separately, Rio Tinto advanced the announcement of a strategic development in its lithium business. The company disclosed it has increased its stake in Canada's Nemaska Lithium to 53.9% and will assume management control of the operation. Jérôme Pécresse, head of Aluminium & Lithium, described the move as an "evolution" that will aid Rio Tinto in meeting its targets and better supporting Nemaska Lithium's long-term development.
Broader Implications and Investor Focus
The market reaction underscores Rio Tinto's ongoing strategic challenge. The company remains heavily reliant on iron ore for its current cash flows, while its future growth narrative is increasingly tied to copper and lithium projects, which typically have longer development timelines. Analysts point out that the dividend outlook could face pressure if Chinese steel demand weakens further or if Pilbara operational expenses hit the upper end of the projected range.
Investor attention now turns to the company's scheduled presentation and question-and-answer session at 08:30 GMT on Thursday. Market participants will be keen to hear updated details on the 2026 cost guidance, the timeline for planned asset disposals, and management's expectations for when copper and lithium operations will contribute more substantially to growth.
The session will provide a crucial opportunity for the leadership to address concerns about cost inflation and articulate the path forward for its portfolio diversification beyond its traditional iron ore strength.
