Rio Tinto slashes dividend as profit plunged on slow China demand

Rio Tinto posted a 38% drop in annual profit and more than halved its dividend on Wednesday, hurt by weaker iron ore prices as demand from China slowed, while higher labor and material costs also ate into earnings.

Strict COVID-19 curbs in top steel producer China curtailed economic activity last year, dragging down iron ore prices from lofty levels a year earlier.

The world's top iron ore producer said China's consumption showed signs of rebounding and commodity prices had found support in recent months, although the economy remained volatile.

"It is very positive that China now also comes out of COVID lockdowns ... and we are quietly confident that [China's] demand will be a stabilizing factor for the world economy in 2023," CEO Jakob Stausholm told reporters.

China, the world's second-biggest economy, in January reopened its borders and eased quarantine requirements for travelers after three years of strict controls, and is putting in place policies to boost its sagging economy.

Rio lowered its capital investments guidance for 2023 to $8 billion from a prior estimate of between $8 billion and $9 billion, while raising its estimates for 2024 and 2025 to between $9 billion and $10 billion.

On Tuesday, rival BHP Group reported a steeper-than-expected 32% fall in first-half profit but also flagged a brightening outlook in China.