7th Aug 2014 07:21
LONDON (Alliance News) - Rio Tinto PLC Thursday said its pretax profit almost doubled in its first-half and its interim dividend jumped 15% as the company passed its operating cash cost reduction target six months ahead of schedule and benefited from foreign exchange gains.
The FTSE 100-listed mining giant said its pretax profit increased to USD6.09 billion for the six months ended June 30 from USD3.21 billion the previous year.
Rio Tinto shares were up 2.2% to 3,465.00 pence, making it the top FTSE 100 riser during early trading on Thursday.
"Our outstanding half year performance reflects the quality of our world-class assets, our programme of operational excellence and our ability to drive performance during a period of weaker prices," Chief Executive Sam Walsh said in a statement.
The company said its consolidated sales revenues were down 0.7% to USD24.34 billion from USD24.51 billion with strong iron ore sales figures being offset by reduced revenues from its aluminium, copper, energy and diamonds and minerals operations due to lower commodity prices during the period.
However, Rio Tinto said its sustainable cost reductions have already exceeded its full-year target of USD3 billion, six months ahead of schedule while producing record volumes and driving productivity improvements across its business.
The company said it saw USD3.2 billion in savings and its net operating costs, excluding impairment and disposal charges, exploration and evaluation costs and undeveloped project losses, fell 6.7% during the half to USD16.89 billion.
Rio Tinto said it increased its underlying earnings, which excludes impairment charges, losses on disposals and exchange and derivative gains, by 21% to USD5.1 billion with underlying earnings per share rising to 21% to USD276.8 US cents.
As a result, the company increased its interim dividend by 15% to 96 US cents per share.
Despite this, the company's profit before finance items and taxation was lower than the previous year and Rio Tinto's comparative pretax profit gains partly resulted from a net exchange gain on its external debt and intragroup balances.
Rio Tinto posted a net exchange gain of USD707 million compared with a net exchange loss of USD2.58 billion previously, with rises from the US dollar against the Australian dollar, the Canadian dollar and the South African rand.
In July, the company said iron ore production for the second quarter grew 11% from last year, reflecting productivity improvements and the completion of ramp up of mining operations in the Pilbara region of Australia.
At the time, Rio Tinto also maintained its full-year 2014 iron ore production guidance at 295 million tonnes from its global operations in Australia and Canada, but raised its mined copper production guidance by 15,000 tonnes to 585,000 tonnes and refined copper production by 40,000 tonnes to 300,000 tonnes.
On Thursday, Rio Tinto said its rate of cost savings is expected to slow to around USD250 million in the second-half due to planned operational activities, in particular a maintenance shut down at its Kennecott Utah Copper smelter. In 2015 the pace of cost savings is expected to increase again, to around USD750 million in 2015 compared with 2014.
The company also said it remains confident of the long-term fundamentals of demand for its products.
By Tom McIvor; [email protected]; @TomMcIvor1
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