Rio Tinto posts record $7.6B half year profit

Associated Press
The CEO of Rio Tinto Tom Albanese poses for photographs at the company's offices in the City of London, Thursday, Aug. 4, 2011.  Mining giant Rio Tinto's six-month profit has jumped 30 percent to a record $7.6 billion.  The Anglo-Australian company said in a statement Thursday that underlying earnings for the six months to June 30 were up 35 percent to $7.78 billion.  (AP Photo/Matt Dunham)

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SYDNEY (AP) — Mining giant Rio Tinto said Thursday its six-month profit jumped 30 percent to a record $7.6 billion, driven by strong Asian demand for iron ore and other minerals.

The company's chief executive Tom Albanese said higher iron ore prices compensated for reduced output due to cyclones that disrupted exports from Rio Tinto's mines on Australia's northwest coast.

"We largely recovered from the severe weather conditions in the first quarter," Albanese said in a statement.

The result is slightly below the average analyst forecast of $8.03 billion.

As expected, Rio increased its share buyback plan by $2 billion to $7 billion, to be completed by the end of the first quarter of 2012, subject to market conditions.

Rio has so far bought back 44 million shares through its London listing at a cost of $3 billion.

Rio Tinto chairman Jan du Plessis said the record-breaking results were achieved despite global economic uncertainty.

"Market conditions have remained favorable over the past six months due to strong Asian demand, although the volatile economic environment that we highlighted 18 months ago continues to exist," he said.

The Anglo-Australian company said underlying earnings — which strip out one-time gains and losses — for the six months to June 30 were up 35 percent to $7.78 billion.

It says cash-flow increased 31 percent to $12.88 billion.

Albanese said market expectations were for global economic growth of around 3.5 percent this year and Chinese gross domestic product to expand by 9.5 percent.

"However, there are important risks to this outlook related to the pace of credit tightening in developing countries and the threat of financial crises arising from sovereign debt problems in Europe and the United States which could destabilise commodity markets," he said.

"Looking further ahead, our view remains that our markets will continue to experience higher than average growth but they will be characterised by elevated volatility," he said.

Rio shares closed down more than 1 percent at 76.58 Australian dollars ($81.78) in line with the broader Australian stock market before the half-year results were released.

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