Rio Tinto Group, the world’s second-largest mining company, swung to its first full-year loss in at least 21 years after taking a $14 billion one-time charge on the value of its aluminum and coal businesses.
The loss was $3 billion in the 12 months to Dec. 31, from $5.8 billion profit a year ago, London-based Rio said today in a statement. The result beat the average forecast loss of $4 billion of seven analyst estimates compiled by Bloomberg.
The writedowns saw Sam Walsh last month named as chief executive officer, replacing Tom Albanese who signed off on the $38 billion takeover of aluminum producer Alcan Inc. in 2007 that saw its debt rise as much as 19-fold. Declining prices, rising costs and slowing demand saw global mining companies wipe billions off project valuations in the past year.
“We don’t expect Walsh to outline a major change in company direction, ” JPMorgan Chase & Co. analysts Lyndon Fagan and Fraser Jamieson said in a report before the results. “However, capital discipline will be front of mind following $35 billion of impairments over the past six years.”
Rio rose 2.3 percent to A$72.07 at the close of trading in Sydney. The key S&P/ASX 200 Index gained 0.7 percent. Rio’s shares rose 9.5 percent last year, compared with a 7.8 percent gain for BHP, the biggest mining company.