Rio Tinto EBITDA jumps 28% to $14.8B on copper and aluminium strength

Rio Tinto reported H1 underlying EBITDA of $14.8 billion, up 28%, as higher copper and aluminium prices combined with productivity gains to drive a step-change in earnings.

"We achieved a step-change in performance in the first half, which, alongside favourable commodity prices, delivered a 28 percent increase in underlying EBITDA and a 75 percent rise in free cash flow," Chief Executive Simon Trott said.

Revenue rose 15 percent to $31 billion, while free cash flow jumped 75 percent to $3.8 billion. Net earnings attributable to shareholders climbed 47 percent to $6.7 billion, and underlying earnings per share reached 421.4 US cents, up 42 percent. The company declared an interim dividend of $3.4 billion, or 211 US cents per share, a 43 percent increase from the prior period, representing a 50 percent payout ratio.

The results mark a strategic shift in Rio Tinto's earnings mix, with copper, aluminium and lithium now contributing more than half of underlying EBITDA. Copper was the strongest-performing product group, with EBITDA up 84 percent and free cash flow more than tripling, driven by improved prices and the continued ramp-up at Oyu Tolgoi in Mongolia. Aluminium EBITDA rose 31 percent, supported by strong smelting performance and favourable market conditions. Pilbara iron ore operations recorded their highest first-half production since 2018.

Chief Financial Officer Peter Cunningham said higher commodity prices added $3.6 billion to underlying EBITDA, including $2 billion from copper and $1.3 billion from aluminium, more than offsetting $1.5 billion in headwinds from foreign exchange, inflation and higher input costs. The company also reported $1.2 billion in controllable improvements, with $870 million in productivity benefits already banked through the end of June. Rio Tinto now targets a year-end productivity run rate of $1.8 billion, nearly triple the level anticipated at its capital markets day in December.

The company reduced net debt to $14.1 billion during the half despite spending $5 billion on capital expenditure and paying a $4.2 billion final dividend for 2025. Cunningham described the balance sheet as being in "very good shape," with Rio Tinto retaining a single-A credit rating. Capital expenditure guidance remains at up to $11 billion in both 2026 and 2027, with spending expected to decline from 2028.

Rio Tinto is advancing major growth projects across multiple commodities. The company is targeting 1 million tonnes of annual copper production by 2030, with Oyu Tolgoi ramping toward 500,000 tonnes a year and Kennecott targeting production growth of 40 percent to 50 percent. Construction of the Simfer mine and port components of the Simandou iron ore development in Guinea is more than three-quarters complete, with first high-grade iron ore sales achieved in April. In lithium, the company achieved first production at Fénix 1B and Sal de Vida in Argentina ahead of schedule and is targeting 200,000 tonnes of lithium carbonate equivalent capacity by 2028.

The guidance raise and strong cash generation signal that management expects the commodity cycle to remain supportive. Investors will watch for further updates on the Kennecott Apex extension decision and progress at Simandou, with full completion planned by the end of 2027.

This article is for informational purposes only and does not constitute investment advice.