Feb. 13 - Rio Tinto surprises investors with a 15% increase in its dividend as it sets the pace in a drive by mega miners to axe costs and cut debt. Joanna Partridge reports.
A surprise windfall for investors in Rio Tinto. The mining giant revealed a 15% hike in its dividend after reporting a huge jump in second-half profit. Rio met or exceeded all the targets set out by CEO Sam Walsh for 2013 - such as cutting capital spending by 26%, slashing over $2 billion of costs and reducing its net debt. That helped boost cash flows by 22 percent to $20.1 billion for the full year. This all puts the company in a strong position for a big capital return in 2015. Walsh said on a conference call that Rio was "delivering greater shareholder value". Its shares hit an 11-month high in London after the results, before slipping into negative territory. Rio's the first of the global miners to report and will set the pace. Its rivals have cut costs, postponed projects, sold assets and cut their debt over the past 18 months as shareholders call for a bigger share of profits from the mining boom. Shares in the sector have underperformed broader markets over the past year. Investors have shunned miners over fears of cooling growth in China and an expected slump in iron ore prices.