Australian iron ore giant Rio Tinto has announced its financial results for the first half of 2013, registering decreased earnings amid lower average market prices and a higher effective tax rate. However, the decrease in the company's earnings was partly offset by record iron ore shipments and momentum in cost savings.
Rio Tinto posted a net profit of US$4.2 billion in the given period, down 18 percent compared to the net profit of US$5.15 billion in the corresponding period of 2012. The company's net debt increased from $19.2 billion as of December 31, 2012 to $22.1 billion as of June 30, 2013, as operating cash inflows were offset by outflows relating to capital expenditure and the increase in the dividend.
Rio Tinto's net profit from its iron ore unit in the first half amounted to US$4.3 million, down 14 percent year on year. Rio Tinto's underlying earnings before interest, taxes, depreciation and amortization (EBITDA) for its iron ore unit were seven percent lower year on year at US$7.6 million in the first six months of the current year.
In the first half of the current year, iron ore sales of 119 million mt set a new first half record and were four percent higher than in the same period of 2012. Sales were lower than production due to interruptions in shipping caused by a conveyor belt breakage and significant flooding in the Pilbara region of Western Australia following unseasonal weather in the second quarter of 2013. In the first half of the year, Rio Tinto's Pilbara mines achieved a record output of 120 million mt, up 5.3 percent year on year, driven by sustained period on period productivity improvements.
Commenting on the company's financial results, Rio Tinto chief executive Sam Walsh said, "In the Pilbara, we are poised to commission the first phase of our major iron ore expansion to 290 million mt a year. We have started ore stacking at the Cape Lambert expansion and will commence shipping during September. Completion of this major project on budget and ahead of the original schedule is a tremendous achievement."