Rio Tinto (ASX: RIO) has reported its full-year 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

Releasing its results after the market closed today, Rio Tinto has delivered its largest profit in nine years.

In total, the company reported a 20% increase in underlying earnings for FY20 to US$12.4 billion, significantly above analysts' forecasts of circa US$11.7 billion.Capping off the result, management will reward shareholders with the company's largest-ever full-year dividend. The company has today declared a final ordinary dividend of US$3.09 per share, however, it is also supplementing this with a special dividend of US$0.93 per share. The ex-dividend date for Rio Tinto shares will be Thursday, March 4, with the payment date set to follow on Thursday, April 15.Shares in the iron ore giant reached an all-time high today in the lead-up to the company's results, closing at $127.47 per share.

Key commentary

Amid the strength of commodity prices throughout the year, Rio Tinto delivered underlying EBITDA of US$23.9 billion, 13% higher than the prior corresponding period, at a margin of 51%. In doing so, the miner saw its Return on Capital Employed (ROCE) come in at 27%, a notable improvement on the 24% return in FY19.Aiding commodity prices was the stability of the company's operating performance, which went a long way in ensuring that cash flow improved. Net cash generated from operating activities rose 6% to US$15.9 billion, while free cash flow grew by 3% to US$9.4 billion.This free cash flow also flowed through to the company's balance sheet, where net debt has decreased US$3 billion to just US$0.7 billion, despite a large impact from the cash returns paid to shareholders over the course of 2020. The miner was also able to fund its capital expenditure from its operating activities, with US$6.2 billion in capex realised across the year, apportioned between US$3.2 billion in development capital and US$3 billion in sustaining capital.Rio Tinto's underlying earnings exclude principal adjustments such as US$1.1 billion in impairments related to its aluminium smelters and Diavik diamond mine, in addition to US$1.3 billion in foreign exchange losses. As such, net earnings were US$9.8 billion, still 22% above those from a year prior.

Following the events at Juukan Gorge last year, the company has adopted a more cautious approach to some of its Reserves, now opting to protect or abandon its plans to seek regulatory approval at a number of sites. The impact sees 54 million dry tonnes of iron ore removed from its Reserves.

Full-year dividends of US$5.57 per share represent a pay-out ratio of 72% of underlying earnings, equivalent to US$9 billion. The final dividend makes up US$5 billion of this figure, whereas the accompanying special dividend accounts for a further US$1.5 billion.

Guidance outlook

Due to a higher Australian dollar, management has increased the company's capital expenditure guidance for 2021 and 2022, with both years now set to see approximately US$7.5 billion in capex compared with previous estimates of US$7 billion. It is also expected that 2023 will see a similar level of capital expenditure.Elsewhere, Pilbara iron ore unit cash costs are expected to rise from US$15.4 per wet metric tonne to somewhere in the vicinity of US$16.7 to US$17.7 per wet metric tonne, while COVID-19 costs have been stripped from guidance altogether. Again, the appreciation in the AUD relative to the US dollar has driven this movement, with management forecasting an exchange rate of US 77 cents this year. Also weighing on unit costs are commissioning costs and start-up costs for some of the miner's production volume coming online in 2021.Turning to copper and Rio Rinto anticipate that copper C1 unit costs will improve amid a gradual return of higher copper grades at Kennecott, plus a one-off benefit arising from higher gold grades at Oyu Tolgoi. The company sees prices averaging US$0.60 to US$0.75 per pound in 2021, significantly down on last year's realised costs of US$1.11 per pound.Production guidance for 2021 remains unchanged, with Pilbara iron ore forecast to range between 325 to 340 Mt. Mined copper is forecast to come in between 500 to 550 kt, also in line with the result from last year.