Rio Tinto reported full-year revenue up 7% to $57.6bn, with underlying cash profit (EBITDA) rising 9% to $25.4bn. Performance was driven by an 8% uplift in production and higher copper, aluminium and gold prices. Cost discipline also helped, offsetting a 6% drop in iron ore prices and a c.$1bn impact from US tariffs on aluminium.
The rise in production was largely driven by a 61% increase in copper output from the Oyu Tolgoi ramp-up. Guidance for 2026 points to broadly stable production across the board.
Free cash flow fell 28% to $4.0bn, driven by a 28% increase in capital expenditure to $12.3bn. Net debt rose $8.9bn to $14.4bn, with $7.6bn associated with the Arcadium lithium acquisition.
A final dividend of $0.254 was announced, taking the total for the year to $0.402, flat on the prior year and maintaining a 60% payout ratio (40-60% target).
The shares fell 3.8% in early trading.
Our view
Rio’s full-year results were a clear indication of the industry's trajectory. Copper was the standout growth driver, and prices look set to comfortably support another strong year of growth in 2026 (if they stay put). But the flip side for Rio is that iron ore has been soft, and that’s still by far the biggest business.
December’s long‑term strategy update was well received at the time, with near‑term earnings support coming from $650mn of identified cost savings despite a mixed production outlook. While execution risk remains, the emphasis on returns rather than volume growth is encouraging, with management targeting a potential 40–50% uplift in EBITDA by 2030, supported by disciplined expansion across iron ore, copper and lithium.
Rio has an established reputation for delivering world-class mines and infrastructure, but the nature of mineral extraction means there’s always execution risk as well as economic and political factors to be mindful of.
Iron ore is set to remain the largest contributor to the bottom line, but that reliance is expected to reduce as efforts to diversify the asset base accelerate. This business is essentially a cash cow at this point. But with many major mines reaching maturity, there are signs that a supply gap could emerge.
Rio’s Simandou mine in West Africa, which has recently started production, is one of the world’s largest untapped reserves of high-grade iron ore. It’s also the only real large-scale driver of new global supply in the foreseeable future – but material uplifts to production are a few years away.
Broadly speaking, the outlook for Rio’s other key focus metals, lithium, aluminium and copper looks positive. They all benefit from improving fundamentals and are key components in the energy transition. However, the speed of the shift to clean energy is hard to predict.
Rio’s strategy is supported by a strong balance sheet and disciplined capital allocation, with the 40–60% dividend payout policy unchanged and typically delivered at the top end. While asset sales, cost improvements and tighter investment discipline could support higher distributions over time, returns are not guaranteed.
That said, after the recent share price run‑up, the valuation looks full, and while a beneficiary of higher copper prices, other names in the sector have more exposure. As a result, further upside is likely to depend on clearer execution progress or an improving iron ore environment – neither of which is guaranteed.
Environmental, social and governance (ESG) risk
Mining companies tend to come with relatively high ESG risk. Emissions, effluences and waste, and community relations are key risk drivers in this sector. Carbon emissions, resource use, health and safety and bribery, and corruption are also contributors to ESG risk.
According to Sustainalytics, Rio Tinto's management of material ESG issues is strong.
There are comprehensive policies and strong management programmes that address material ESG issues, including a target to reduce emissions across operations (Scope 1 & 2) by 50% by 2030, as well as a 2050 net zero ambition. The new CEO has promised a sharp focus on safety and community engagement. But the accidental death of a contractor in 2025 and the destruction of an important Aboriginal heritage site in Australia serve as reminders of the risks that need to be addressed.
Rio Tinto key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.