Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) shares slipped lower on Wednesday after interim results showed the mining major’s softest first half profit for five years.
At $4.81 billion first-half underlying earnings were down 16% on the same period a year ago.
Nevertheless, Rio chief executive Jakob Stausholm described the results as “very resilient” given weaker metal prices in the period.
Average realised iron ore prices dropped by 15% to $89.70 per dry metric tonne, amid weaker demand and increased global supply.
Pilbara unit cash costs rose to $24.30 per wet metric tonne, impacted by lower volumes and cyclone recovery costs.
Rio Tinto maintained its shipment guidance for Pilbara iron ore at the lower end of the 323 million tonnes to 338 million tonnes range.
Earnings from copper rose 69% to $3.10 billion, and aluminium earnings rose 50% to $2.40 billion, helping offset the drop in iron ore income.
The company generated $6.92 billion in net operating cash flow.
Free cash flow fell 31% to $1.96 billion, reflecting higher capital expenditure and lower iron ore prices.
"We are delivering very resilient financial results with an improving operational performance helped by our increasingly diversified portfolio,”
Stausholm, meanwhile, highlighted that Rio will persist with recent dividend practice – with $2.4 billion of payouts lined up – as the mining major aims to ‘continue a disciplined investment in profitable growth while retaining a strong balance sheet’.
He added: "We are well positioned to generate value from our best-in-class project execution, together with growing demand for our products, now and over the coming decades.
“We remain on track to deliver strong mid-term production growth, with solid foundations in place and a diverse pipeline of options for the future."
In London, Rio shares were down 1.6% changing hands at 4,572.5p.