Rio Tinto (ASX: RIO) has reported its first-half results for FY20. We take a look at the company's headline figures, key commentary and guidance outlook, plus review the share market's reaction across the trading day

Headline result

Rio Tinto reported a 6% drop in underlying EBITDA to US$9.6 billion.

In terms of net cash generated from operating activities, there was a 12% reduction from the corresponding period in 1H19, resulting in US$5.6 billion.

The company has declared an interim dividend of US$1.55 per share, with the stock set to trade ex-dividend on August 6, 2020.

As Rio Tinto's results were released after the close on Wednesday, the market's reaction to the result was not picked up until the following day. In the next trading session, shares in Rio Tinto edged higher by 1.1% to $104.50.

Key commentary

Due to timing differences and a slightly lower average iron ore price across the half, Rio Tinto's operating cash flow of US$5.6 billion was weighed down. Furthermore, the impact of a $1 billion income tax payment to the ATO with respect to FY19 also resulted in a lower number compared with 1H19.

A 13% rise in capital expenditure to US$2.7 billion meant that the miner was unable to match the level of free cash flow from last year. In the first half of FY20, free cash flow was US$2.8 billion, which was 28% down from last year.The impact of the pandemic hit commodities like copper and aluminium throughout the first six months of the year. As such, price weakness in these base metals dragged on underlying EBITDA, mentioned earlier. The resilience of iron ore amid the pandemic cushioned the blow, with underlying EBITDA margin at 47%, with iron ore unit cash costs of US$14.50 per tonne.Rio Tinto announced a US$1.0 billion impairment across four of its aluminium smelters and the Diavik diamond mine, while the impact of foreign exchange movements also accounted for some of the variance between underlying earnings of US$4.8 billion, down 4% year-on-year, and net earnings of US$3.3 billion.At the end of the half, the company had US$4.8 billion in net debt on its balance sheet, with a large portion of this attributable to cash returns paid to shareholders. Rio Tinto's interim dividend of US$1.55 per share represents a 53% pay-out ratio.

Guidance outlook

Management have reconfirmed the company's production guidance across all commodities for 2020. Of this, Pilbara iron ore shipments are anticipated to come in between 324 to 334 Mt. Unit cost guidance for Pilbara iron ore is in the range of US$14-15 per tonne. Meanwhile, in terms of production for other resources, alumina is predicted to total 7.8 to 8.2 Mt, while aluminium is set to be 3.1 to 3.3 Mt. The guidance provided for mined copper is 475 to 520 kt, and for refined copper it has been set at 165 to 205 kt.Capital expenditure is expected to be around US$6 billion this year, before increasing to US$7 billion across each of the next two years. Cumulative expenditure is in line with the company's forecast provided back in October 2019.For shareholders, the company has reiterated that it will continue to target a dividend pay-out ratio of between 40-60% of underlying earnings.