First-half results weighed by one-time items
SYDNEY— Rio Tinto PLC said first-half net profit plunged from a year earlier, as the Anglo-Australian miner grappled with a sharp slump in prices for commodities such as iron ore, coal and copper.
Rio Tinto, the world’s second-largest producer of iron ore behind Brazil’s Vale SA, said it was targeting cost cuts of $1 billion this year compared with an earlier target of $750 million. It also said it would spend less than it had expected on projects, paring its capital-expenditure budget for this year to around $5.5 billion from an earlier forecast of as much as $7 billion.
The resources giant Thursday reported a net profit of $806 million for the six months through June, down from $4.4 billion in the same period a year earlier. That was weighed by noncash exchange-rate and derivative losses of $1.3 billion and impairment charges of $400 million, mainly relating to its stake in Energy Resources of Australia, it said.
Underlying earnings, stripping out one-off charges, were down 43% at $2.92 billion, it said, above the $2.42 billion median of seven analysts’ forecasts compiled by The Wall Street Journal.
An interim dividend of $1.075 a share was declared, up 12% from a year earlier, and in line with analysts’ expectations.
Chief Executive Sam Walsh said the miner maintained its commitment to capital returns for investors despite challenging commodity markets.
Earlier this year, the miner said it would repurchase $2 billion of its shares in 2015—a clear shift toward higher investor returns for a company that had spent years investing heavily in new mines to meet a seemingly unstoppable rise in demand from China. The share buybacks also came after the company received an approach from Switzerland-based Glencore PLC in July 2014 about a potential tie-up.
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