Rio records 9% profit rise

Rio Tinto recorded a 9% rise in underlying profit, to $3.91 billion, in the second half of 2007.

The news was accompanied by a rebuttal of BHP Billiton’s hostile bid for the group with Rio’s chairman, Paul skinner, stating that the bid: “still fails to recognise the underlying value of Rio Tinto’s quality assets and prospects”.

Profit for the whole year rose to $7.44 billion from $7.34 billion in 2006, and analysts are forecasting a further increase to around $9.5 billion, in 2008.

Rio’s highest source of earnings is copper and supply shortages predicted this year, as demand for the metal rises faster than expected in China, could enhance profit further.

Paul Adams, of stock broking firm DJ Carmichael & Co, comments: “This was a strong result, better than expected given the cost pressures the mining industry is facing right now … it looks as if their cost management efforts have come in ahead of expectations.”

The contribution to earnings over nine weeks from Rio’s acquisition of Alcan was $424 million.

The company has raised its annual dividend 31% to $1.36 and plans to increase the payout over each of the next two years by at least 20%.