Rio Tinto posts 29% drop in H1 profit

LONDON: Rio Tinto reported a 29 per cent drop in first-half profit and more than halved its dividend on Wednesday, as weaker iron ore prices due to cooling demand from top consumer China, higher costs and labour shortages hurt the global miner.

It is still the company’s second-highest interim payout ever, following on from the record payout dispensed last year when Rio’s profits benefited from a surge in commodity prices.

Since then, iron ore prices have come under pressure due to persistent demand worries from top steel producer China, with the country’s ZEROCOVID policy curtailing economic activity and weighing on ferrous markets.

Mining companies around the world have also been struggling due to a pandemic-related shortage of skilled workers and surging inflation, at a time when iron ore prices have come off their 2021 highs and are expected to remain subdued.

“While the pricing environment is becoming more challenging, the demand outlook remains positive,” CEO Jakob Stausholm told a media briefing ater the results.

“I always said it will take time to build a stronger Rio Tinto. It does,” he added.

Rio, one of the world’s top iron ore producers, posted an underlying profit of $8.63 billion for the six months ended June 30, compared with a record $12.17 billion a year earlier and analysts’ mean forecast compiled by the company for $8.37 billion.

The company more than halved its interim dividend to $2.67 per share from $5.61 per share a year earlier. The dividend for the first half equates to $4.3 billion and was still Rio’s second-highest interim payout ever.