Anglo-Australian mining giant Rio Tinto said Thursday its first-half net profit more than doubled to US$4.4 billion, driven by surging iron ore shipments as it continued a cost-cutting programme.
Remote-controlled stackers and reclaimers move iron ore to rail cars at Rio Tinto's Port Dampier operations in Western Australia's Pilbara region on March 4, 2010
The bumper result in the six months to June 30, a strong rise from the US$1.72 billion net profit recorded in the first-half of 2013, came despite softening commodity prices.
"These results show that our current strategic and management focus is making a meaningful contribution to cash flow generation," Rio chief Sam Walsh said of the "outstanding" performance.
"During the first half we have increased underlying earnings by 21 percent to US$5.1 billion and enhanced operating cash flow by eight percent."
Underlying earnings, the measure preferred by the company, were US$4.23 billion in the corresponding period in 2013.
Rio declared an interim dividend of 96 US cents, a 15 percent increase from 2013, and in line with analysts' expectations.
The miner's shares closed 0.76 percent higher at Aus$66.32 ahead of the results.
"'World class' is the line CEO Sam Walsh is using to describe the results and the proof is plain to see," said IG market strategist Evan Lucas, adding that "the iron ore numbers are the headline grabber".
The world's second-largest miner posted a 10 percent increase in underlying earnings for iron ore to US$4.68 billion. The gains came even as iron ore prices slumped by 30 percent in the same period owing to a supply glut.
"With further production upgrades nearing completion it will remain the feather in the cap for Rio," Lucas said of the metal, which dominated Rio's earnings.
Rio said its belt-tightening measures -- which totalled US$3.2 billion since 2012, coupled with record production volumes and a company-wide productivity drive -- allowed it to slash its net debt by US$1.9 billion to US$16.1 billion.
Some 2,200 jobs were cut from the business, with the firm adding that it expected to reduce costs by a further US$1.0 billion by the end of 2015.
The result continued a dramatic turnaround in 2013, which saw Rio return to annual profit after it suffered a plunge into the red in 2012, claiming the scalp of Walsh's predecessor Tom Albanese.
Last month, Rio closed the chapter on its disastrous Mozambique venture when it sold its coal mine and linked projects in the African nation for US$50 million, after writing down their value by US$3 billion last year.
"The profit results in the deliverables are matched by the impressiveness of the structural reforms that has been undertaken at the board level since Sam Walsh has taken over," Lucas said.
In Rio's other divisions, aluminium reported a 74 percent increase in underlying earnings to US$373 million on the back of the cost-cutting drive, weaker Canadian and Australian currencies and a further rise in market and product premiums.
Underlying earnings for copper reached US$594 million, up 71 percent, amid increased output from its Kennecott Utah Copper mine in the United States and its Oyu Tolgoi site in Mongolia.
The diamonds and minerals division reported a 17 percent loss in underlying earnings to US$160 million, hit by tax settlements from previous years, while the energy section -- composed mostly of coal -- narrowed its losses to US$19 million from US$52 million.
Walsh said Rio remained "confident of the long-term fundamentals of demand" for its products as he acknowledged the "changing nature" of China's economic development, which has seen the country shift towards a focus on consumption over investment.
"Global GDP growth in 2014 is expected to exceed three percent which will support commodity demand," he said.
Walsh added on China, Rio's key iron-ore market: "The Chinese government is dealing effectively with the rebalancing of its economy, with its desired GDP growth of 7.5 percent in 2014 on target."