Rio Tinto profits slump 50%

20th Aug 2009 07:19

Mining giant Rio Tinto saw profits fall by more than half in the six months to June 30 as it felt the impact of sharply lower commodity prices amid tough economic conditions globally.Pre-tax profits for the period totalled $4.39bn, compared with $9.82bn over the same period the previous year, as sales fell to $19.52bn from $30bn.'Prices declined for nearly all of Rio Tinto's major commodities; average copper and aluminium prices were 50 per cent lower while average molybdenum prices were 74 per cent lower than 2008 first half,' the firm said.Coal prices were also sharply lower, it added.'We remain cautious about the recent rally in prices,' said chairman Jan du Plessis, who was appointed in April and will soon leave his position as chairman of British America Tobacco.'However, the expectation that development in emerging markets will generate underlying strength in metals and minerals demand over the long term remains broadly unchanged.'Copper prices have rallied by about 80% since the beginning of the year, while aluminium prices have rebounded by about 65% since lows in February.Rio has been taking measures to cope with the downturn, including laying off 16,000 staff during the first half, ahead of its target of 14,000, cancelling the interim dividend, announcing a rights issue and divesting acquisitions.On Tuesday it announced that it had received a $2.025bn offer for the majority of its Alcan packaging business, taking the total gained from divestments during 2009 to $3.7bn.It has now reduced its debt pile by $14.8bn to $39.1bn.Debts ballooned following Rio's purchase of the Canadian aluminium producer Alcan in 2007 for $38.1bn. Prices for the metal slumped the following year.As previously announced, Rio will not pay an interim dividend. It said it expects to make a final dividend payment 'subject to satisfactory trading results.'