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Rio Tinto reveals profit fall

Anglo-Australian miner Rio Tinto is up 1.2% this morning despite announcing an 18% drop in half-year profit.

All trading involves risk. Losses can exceed deposits.

Rio Tinto reported a six-month underlying profit of £2.73 billion to June, down 18% compared with the same period last year.

The miner suffered a blow when it couldn’t find a buyer for its Pacific Aluminium business, with both this and the profit fall attributed to the slowdown in China.

The drop in global demand for minerals such as iron ore has compounded Rio’s problems. Lower demand equates to falling commodity prices and less appetite to invest in mining operations, and this helps to explain why Rio hasn’t been able to find a buyer for its Aluminium business.

However, Rio has managed to trim its cost base by nearly £1 billion, and is on track to hit its cost-cutting target. In other positive news, the miner has increased its dividend by 15 cents to 83.5 cents, broadly in line with analysts’ expectations. When a firm increases its dividend it can often say a lot about its outlook for the future; a higher dividend will be welcomed by pension fund managers who look for capital growth as well as an income stream.

Rio Tinto plc (DFB) chart

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