Anglo-Australian miner Rio Tinto PLC said Thursday its net profit for 2006 surged 42.6 percent to a record $7.44 billion on higher commodity prices and strong global demand for iron ore, copper and other resources.
Rio Tinto, the world's second biggest iron ore producer, said underlying earnings - which excludes one-off items such as asset sales - rose 48 percent to $7.34 billion.
Annual sales rose 22.6 percent to $25.44 billion. The result was roughly in line with analysts' forecasts, which on average were for US$7.4 billion with an upper range of $7.8 billion and a low of $7.2 billion.
Chairman Paul Skinner said the company sees a number of uncertainties in the global economy and expects some moderation of growth. But growth in China remains strong and well-balanced.
"We continue to view the overall outlook for commodities as positive, with prices remaining well above their long run averages in 2007," he said.
Higher commodity prices lifted earnings by $3.07 billion, the company said. But sales volumes were lower, cutting earnings by $135 million, with lower grades at the Grasberg copper mine in Indonesia the main cause. Cost pressures cut earnings by $741 million. Rio Tinto said acute shortages of mining equipment and skilled workers in the industry are driving up costs, particularly at its iron ore operations in the Pilbara region in Australia's remote northwest.
"The operating and project environment for mining companies remains challenging, with shortages in key mining supplies and skills leading to continued industry wide cost pressure," chief executive Leigh Clifford said.
Rio Tinto's biggest earner was its copper division, which contributed $3.56 billion to net earnings, up 76 percent on last year. Iron ore was the next biggest, adding $2.28 billion to net earnings, up 32.3 percent. The company boosted its final dividend to 64 U.S. cents from 41.5 U.S. cents in 2005, taking the total ordinary dividend payout for the year to $1.04, up 30 percent on the 80 U.S. cents paid out in 2005.
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