Rio Tinto first-half profit drops but beats expectations

6th Aug 2015 07:40

(ShareCast News) - Mining giant Rio Tinto reported a 43% drop in underlying first-half profit as it took a hit from declining commodity prices, iron ore in particular, although the figures still beat expectations.For the six months ended 30 June, underlying profit came in at $2.9bn from $5.12bn in the same period last year as the company said cost improvements, lower energy costs and positive currency movements offset nearly 40% of the $3.6bn impact of lower prices.The figures comfortably beat analysts' expectations of around $2.5bn.Chief executive Sam Walsh said "This is a robust set of results, given the tough operating environment. A continued focus on financial and operating discipline delivered first half cost savings of $641m, representing 85% of our original full year target, which we have now increased to $1.0bn."We continue to invest in growth, and have reached key milestones in three of our growth projects with the expansion of our Pilbara iron ore infrastructure, first production from our expanded Kitimat aluminium smelter and an agreement to progress the development of the Oyu Tolgoi underground copper mine."The miner lifted its interim dividend by 12% to 107.5 cents, in line with its policy of setting the interim dividend at half of the total dividend per share of the previous year.Investec said: "A good set of results, suggesting the company is hunkering down for tough times. The next six months are likely to be an even more challenging period, given the price declines we have seen so far, with the anticipated oversupply of iron ore yet to fully play out."At 10:11, Rio shares were up 0.2% at 2572.50p.