Rio Tinto posts record half-year profit
Rio Tinto Ltd., the world’s third-largest mining company, said Tuesday that half-year profit more than doubled to a record on strong demand from China for iron ore and other metals.
Profit for the six months through June 30 surged 112.5 percent to $6.91 billion from $3.25 billion the year before, largely due to higher commodity prices and production, particularly iron ore.
“The group continues to perform strongly, and the outlook remains positive,” Rio Tinto Chairman Paul Skinner said in a statement.
The statement forecast higher prices for the company’s core commodities of iron, alumina and copper.
Underlying profit, or earnings before interest and tax, rose 55 percent to $5.47 billion, in line with analysts’ forecasts.
Rio Tinto is reaping the rewards from the rapid urbanization of China and other developing nations that has been driving greater demand for commodities and rising commodity prices for the past seven years.
“We expect prices for Rio Tinto’s major commodities to remain substantially above the long-run trend in 2009,” Skinner told reporters.
Shares in Rio Tinto, which is the focus of a hostile $150 billion takeover proposal from rival BHP Billiton Ltd., gained 1.44 percent to close at A$124.06 ($105.63) on the Australian Securities Exchange.
The company, which is based in London and also has offices in Melbourne, is listed in both London and Sydney.
“It was a great result and it keeps the pressure on BHP as it continues the chase,” Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney. “The only black spot was that copper earnings were down slightly after they had some mining issues during the year.”
Underlying earnings for the iron ore division grew 161.8 percent to $2.88 billion.
Rio Tinto, the world’s second largest aluminum producer, posted a 145 percent increase in underlying earnings from its aluminum division to $995 million after its acquisition of Canada-based Alcan Inc. last year.
Chief Executive Tom Albanese told reporters that the outlook for iron ore and coal demand was “excellent” and that Chinese demand for aluminum continued to grow strongly.
The company said increased energy costs reduced earnings by $132 million, with higher freight, contractor, maintenance and input costs experienced throughout the group.
Rio Tinto said it was on track to divest $10 billion of assets this year to help pay down debt after its $38.1 billion Alcan purchase.
“Rio Tinto is in great shape, and is getting stronger,” Albanese said.
The company declared a final dividend of 68 US cents per share, up 31 percent on the previous half.