New Rio boss calls for fresh approach
So said new Rio Tinto chief executive Sam Walsh on Monday in a memo to as many as 68,000 employees worldwide.
Mr Walsh, whose elevation last Thursday night followed the shock "dismissignation" of former CEO Tom Albanese, told staff the anticipated $US14 billion in write-downs against its Mozambique coal assets and aluminium businesses were "very disappointing".
"We have a great company and I remain committed to making sure we address challenges and create more opportunities within our business to deliver greater value for our shareholders," he said.
"Unlocking greater value for our shareholders, and other stakeholders, will mean we need to start to do some things differently but not lose sight of what we do well.
"This is about creating greater accountability and responsibility - we must treat the company's money like it is our own and act like owners of our businesses, not managers - while retaining our focus on being the best operators in the industry with a relentless focus on safety and optimising our performance."
Mr Walsh also acknowledged Mr Albanese and former head of energy Doug Ritchie, who was also dumped last week.
Both men, Mr Walsh said, had been "colleagues of mine during my 21 years with the business and I am grateful for the experience of working closely with them throughout this time. It is difficult to do careers spanning over 25 years each justice in a few sentences, so I won't try, but I would like to wish them all the best for the future."
Despite the write-downs, to be confirmed when the company releases its 2012 earnings results on February 14, Rio shares have lifted 3.5 per cent since the announcement - closing on Wednesday at $66.45, down 44¢ - as investors welcomed the appointment of Australian-born Mr Walsh, the long-serving former iron ore chief who is considered a "safe pair of hands" and will introduce greater capital discipline.
Mr Walsh said the company had "world-class assets, outstanding people and great performance potential" and he would "work flat out to build an even stronger Rio Tinto".
Frequently Asked Questions about this Article…
Sam Walsh is the new Rio Tinto chief executive. He is the long-serving, Australian-born former iron ore chief who is seen as a “safe pair of hands.” Investors welcomed his appointment because he is expected to introduce greater capital discipline and steady leadership, and Rio shares rose about 3.5% since the announcement.
In a memo to up to 68,000 employees, Walsh said Rio needs to 'do some things differently' without losing sight of what it does well. He emphasised creating greater accountability and responsibility, treating the company’s money like your own, acting like owners not managers, and retaining a relentless focus on safety and optimising performance.
Rio Tinto is anticipating about US$14 billion in write-downs related to its Mozambique coal assets and its aluminium businesses. The company described these expected write-downs as 'very disappointing.'
Rio Tinto is set to confirm the write-downs when it releases its 2012 earnings results on February 14, 2012. Investors should review that earnings release for the official figures and management commentary.
Despite the anticipated write-downs, Rio shares lifted about 3.5% since the leadership announcement. The stock closed on Wednesday at $66.45, which was down 44 cents that day, as investors appeared to welcome Walsh’s appointment and expected greater capital discipline.
Walsh highlighted a focus on being the best operators in the industry, with a relentless emphasis on safety and optimising performance. He also stressed capital discipline and treating company funds responsibly—areas investors can monitor through operational updates and earnings reports.
Walsh acknowledged Tom Albanese and Doug Ritchie, noting they had been colleagues during his 21 years with the business and expressing gratitude for the experience of working with them. He wished them well and recognised their long careers of more than 25 years each.
According to the article, the leadership change signals a push to 'unlock greater value' for shareholders through increased accountability, capital discipline and stronger operational focus. While the company faces large write-downs, management’s stated priorities and the positive near-term share reaction suggest a renewed emphasis on stability and shareholder value.
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