Mining giant Rio Tinto Ltd has unveiled a strong jump in first half profit, thanks to booming commodity prices, but says economic conditions globally remain volatile.
Rio Tinto’s net earnings for the six months to June 30 were $US5.85 billion ($A6.38 billion), up 260 per cent on the prior corresponding period, and underlying earnings were $US5.78 billion ($A6.3 billion), up 125 per cent.
The figures were in line with analysts’ expectations of underlying profit in the range of $US4.7 billion ($A5.12 billion) to $US7 billion ($A7.63 billion).
Net debt for global miner was reduced to $US12 billion ($A13.08 billion), well below the $US39 billion ($A42.51 billion) recorded at June 30 last year.
Chief executive Tom Albanese said growth predictions for China and the globe for this year and the next had positive implications for metals and minerals markets.
“But it is clear that economic conditions on a global scale will be unpredictable,” Mr Albanese told journalists.
“I have been saying for quite a while now that I expect to see volatility in global economic activity to continue, but the long-term picture continues to remain absolutely intact,” he said.
Company chairman Jan du Plessis said Rio’s results were due to higher prices and operational strength.
An interim dividend of 45 US cents per share was declared, in line with guidance.
Analysts had been expecting Rio Tinto’s earnings numbers to be much higher than the equivalent period of 2009, when it was heavily debt laden and prices for key goods were lower.
Bell Potter Securities client adviser Chris Kimber said Rio Tinto’s result was slightly better than most expected.
“We were bullish anyway and it was slightly above our expectations,” Mr Kimber said.
Mr Kimber said he was not too concerned about Rio’s comments on global volatility given the amounts the company was planning to invest.
Capital expenditure for Rio Tinto in 2010 is expected to be close to $US6 billion, rising to $US9 billion next year.
“Their actions speak louder than words,” Mr Kimber said.
The company also said that while not perfect, it had accepted the proposed minerals resource rent tax.
The iron ore division grew strongly compared to the previous corresponding half, with underlying earnings of $US4.11 billion ($A4.48 billion), compared to $US1.93 billion ($A2.1 billion), and production was up 15 per cent.
Net earnings from the copper division increased to $US1.06 billion ($A1.16 billion), up from $US529 million ($A576.57 million), although mined production fell 18 per cent.
The energy division, which includes coal and uranium interests reported a fall in net earnings to $US642 million ($A699.73 million), from $US754 million ($A821.8 million) previously.
The aluminium division, which made a loss in first first half of 2009, returned to profit with $US358 million ($A390.19 million) in the six months to June 30, 2010.
Shares in Rio Tinto closed up 17 cents, or 0.23 per cent, at $73.01.