Rio Tinto annual net profit up 78% to $6.53bn

Mining giant Rio Tinto on Thursday posted a 78 percent rise in annual net profit while announcing a $2.0 billion share buyback as cost-cutting and productivity drives shielded it from lower commodity prices.
The net profit of the world's second biggest miner came in at US$6.53 billion, but underlying earnings fell.
The higher result was largely due to the 2013 numbers being hit by a series of asset writedowns, including Mongolia's Oyu Tolgoi copper and gold mine and the Gove Alumina project in northern Australia.
Its underlying profit, a measure the company prefers, was nine percent lower at $US9.3 billion, as it battled the slumping price of iron ore, its main money spinner.
"Our continued financial and operating discipline enabled us to offset much of the impact of lower commodity prices in 2014," said chief executive Sam Walsh.
"By increasing volumes and reducing costs, we achieved underlying earnings of $9.3 billion."
He added that further belt-tightening helped slash net debt by US$5.6 billion to US$12.5 billion with the company taking $US4.8 billion out of annual operating costs since 2012.
"We have one of the best balance sheets around and the confidence to sustainably make cash returns to shareholders," said Walsh.
"With lower commodity prices and uncertain global economic trends, the operating environment remains tough," he added.
"However, in these conditions Rio Tinto's qualities and competitive advantages deliver superior value."
To appease shareholders, the company boosted its dividend by 12 percent to US$1.19 while announcing a round of buybacks that represent a total cash return of US$6.0 billion.
The decision to buy back shares, at the top end of expectations, comes six months after Walsh described the company as a "cash machine" following a cost-cutting programme that helped improve profit margins.
"Decisive early action throughout the group delivered the strong balance sheet, which enables us to announce today’s additional material cash return to shareholders," said Walsh.
The buyback will be mostly focused on its London-listed shares.
The move to reward shareholders follows the Anglo-Australian resources giant last year fending off a merger proposal from Glencore.
If the deal had gone ahead it would have created the world's largest mining firm, worth an estimated US$160 billion.
- Iron ore price slump -
 Rio's profit was stunted by the struggling iron ore price, which collapsed in 2014 and has extended losses this year due to a supply glut.
Iron ore prices are now around US$62 a tonne with the Australia and New Zealand Banking Group this week cutting its 2015 forecast by more than 20 percent to US$58.
Rio's underlying earnings from the commodity last year were down 18 percent to US$8.1 billion. This was partially offset by a 124 percent spike in aluminium, which is now the second biggest contributor to the bottom line.
Copper earnings rose 11 percent while diamonds and other minerals jumped 15 percent.
Rio said it planned to cut out another US$750 million in cash costs and reduce capital expenditure from $US8.1 billion to about $US7 billion in the current year.
It forecast a tough 2015, with commodity prices remaining under pressure.
"Economic growth is likely to remain modest and the market volatility seen at the start of the year suggests that 2015 will be challenging," it said, adding that weaker oil prices were helping reduce costs.
Rio's shares closed in Australia 0.17 percent higher at Aus$59.90 ahead of the results being released.