After years as a frigid conservative, in 2007 Rio Tinto surrendered to pressure and, right at the peak of the cycle, purchased Alcan for US$40bn. Having already written off asset values, raised billions in equity and sacked thousands of employees, the decision continues to haunt the company. The pain was again evident in Rio’s full year results for 2011, released last week.
Although revenue rose 10% to over US$60bn, net profit after tax fell 59% to US$5.8bn. That caused a similar fall in earnings per share to US$3.03, although a dividend of $1.45 per share was declared (ex-date Feb 29th), 34% higher than last year.