Australia Markets closed

Rio Tinto profit down 34%


Resources giant Rio Tinto has reported a 34 per cent drop in its underlying first half profit to $US5.2 billion ($A4.95 billion).

Lower commodity prices in iron ore mainly have been blamed for the fall.

Its net profit for the half was down 22 per cent to $US5.9 billion, including a $US1 billion ($A951.07 million) deferred tax asset following the introduction of the Minerals Resource Rent Tax (MRRT) in Australia.

The result is above market expectations of about $US4.94 billion.

The size of the interim dividend was increased by 34 per cent as expected to US 72.5 cents a share.

Despite falling commodity prices reducing earnings, the company described it as a solid financial result.

"We have been signalling for some time that markets would remain volatile and we have seen challenging conditions in the first half," chief executive Tom Albanese 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 eight 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).