RIO Rio Tinto Plc

SYDNEY—Rio Tinto PLC swung to an annual loss and scrapped its progressive dividend policy, citing a worsening global economy and a sharp downturn in commodity prices.

On Thursday, the mining company reported a net loss of US$866 million for 2015, compared with a US$6.53 billion profit the year prior. The result was weighed by impairment charges totaling US$1.8 billion against an African iron-ore project and uranium assets, as well as US$3.3 billion in foreign exchange and derivatives losses.

Underlying earnings, a measure tracked by analysts that strips out some one-time costs, fell 51% to US$4.54 billion, it said. That fell short of the US$4.66 billion median of seven analyst forecasts compiled by The Wall Street Journal.

Rio Tinto said it would pay a full-year dividend of US$2.15 a share, in line with the payout for 2014.

"However, with the continuing uncertain market outlook, the board believes that maintaining the current progressive dividend policy would constrain the business and act against shareholders' long-term interests," Rio Tinto Chairman Jan du Plessis said.

Rio Tinto said it would now take into account its profit performance, the outlook for major commodities, and the health of its balance sheet before setting future dividends. In the current financial year, the mining company aims to pay a full-year dividend of at least US$1.10 a share, which would be equivalent to US$2 billion.

Rio Tinto has pursued a risky but calculated strategy to keep expanding the vast Australian iron-ore operations it relies on for most of its earnings, even as prices of the commodity began a long slide to their lowest level in a decade.

By doubling down on iron ore, Chief Executive Sam Walsh bet that Rio's economies of scale in Australia's remote Pilbara region—which accounts for three in every five tons of iron ore traded by sea—meant it could still make a healthy profit, while other companies with higher costs struggle.

Still, Rio Tinto said it was working to counter weaker prices of iron ore and other key products such as aluminum and copper by continuing to rein in spending. It said capital expenditure totaled US$4.69 billion in 2015, down 43% on the previous year.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

February 11, 2016 02:25 ET (07:25 GMT)

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