View Comments
Rio Tinto confident of China recovery
Rio Tinto confident of China recovery

Rio Tinto says is it confident of seeing signs of an economic recovery in China by year's end after announcing a 22 per cent fall in interim net earnings to $US5.88 billion.

The group's underlying earnings, its preferred measure of profit, was off 34 per cent at $US5.15 billion, within analysts' expectations of a result between $US4.5 billion and $US5.7 billion.

Management said lower commodity prices were a major factor in the earnings decline, slicing $US1.9 billion off underlying profit.

Rio Tinto's dividend, however, was increased 34 per cent on the same time last year to US72.5¢ a share.

Chief executive Tom Albanese said the group continued to generate strong margins, despite the falling prices, while reaping the benefits of its multi-billlion dollar iron ore expansion in the Pilbara.

He said Rio Tinto had faced challenging conditions, but "we expect to see signs of improvements in Chinese economic activity by the end of the year".

"We have been signalling for some time that markets would remain volatile and we have seen challenging conditions in the first half,” he said.

"Although sentiment remains negative in Europe and the US, recovery is still fragile, our order books are full and we expect Chinese GDP growth to be around 8 per cent in 2012."

Net debt has increased to $US13.2 billion from $US8.5 billion.
Capital expenditure will remain at $US16 billion as it pushed ahead with massive iron ore expansion plans in the Pilbara.

Earnings from all of the company’s business divisions - excluding the small diamonds and minerals area - were down, including iron ore, aluminium, copper and energy (coal and uranium).