MELBOURNE--Rio Tinto PLC (RIO) cautioned Wednesday of near-term uncertainties and said it was focusing on improved productivity, although it remained confident demand would remain strong in the long run despite its first-half earnings falling 22% with a slump in prices for iron ore and other key commodities.
The Anglo-Australian company, the world's second-largest producer of iron ore after Brazil's Vale SA (VALE) and a major exporter of other raw materials that have helped feed China's rapid industrialization in recent years, said it was holding to earlier capital spending plans and would lift its interim dividend, although all capital allocation decisions would be balanced against a goal of retaining a single A credit rating.
"We continue to generate strong margins despite falling prices," Chief Executive Tom Albanese said in a statement. "We are reaping the benefits of investing early in iron ore, which is producing consistently high returns."
Rio Tinto's net profit fell to US$5.89 billion in the first six months of the year from a record US$7.59 billion a year earlier, while revenue dropped to US$25.34 billion from US$29.06 billion. It said it would pay an interim dividend of 72.5 cents a share, up 34% year-on-year.
Underlying earnings, which strip out one-time items and is the measure the company follows to gauge its performance, dropped 34% to US$5.15 billion from US$7.78 billion last year but were ahead of market expectations for US$4.94 billion, based on the consensus of 20 analysts' forecasts compiled by the company.
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