Rio Tinto posts 23% decline in half-year profit, Shares flat: Economy Roundup

Mining giant Rio Tinto has recorded a massive 23% decline in half-year profit due to a fall in iron ore price, but also said its long-term outlook is good riding on demand from China and India.

The company posted full-year net profit of $5.57 billion, representing a 33% increase. However, earnings before one-offs fell in the six months to December 31 to $4.201 billion.

The company also said it had made good progress in reducing its $45.02 billion debt to just $21.27 billion. Chairman Jan Du Plessis said in a statement the results represented good progress.

“We have witnessed a substantial recovery in the pricing of most of our key commodities over the past 12 months, driven largely by government measures in response to the global financial crisis.”

“Looking forward, we believe that the factors that drove price recovery in 2009 will continue through 2010… We expect that China will grow at over 9% and the emergence of the OECD from recession will provide further support.”

Meanwhile, construction firm Leighton Holdings has lifted its full-year guidance with the expectation of recording a net profit of over $600 million.

Revenue grew by 7% to $7.03 billion, with a net profit after tax of $288.9 million, representing an increase from $110.1 million during the previous year.

“The Group’s longer term outlook remains solid based on a record level of work in hand, a strong competitive position and a forecast rebound in the Group’s core markets from the recent uncertainty of the global financial crisis,” Leighton said in a statement to the ASX.

“While the timing of recovery in the various markets will vary, the outlook is positive and the group is well positioned to take advantage of the opportunities that are being presented.”

Shares flat after Wall Street rally

The Australian sharemarket has opened flat today due to improved performances on Wall Street and higher results in commodity markets.

The benchmark S&P/ASX200 index was up 4 points or 0.09% to 4558.6 at 12.00 AEST, while the Australian dollar also increased to US89c.

Commonwealth Bank shares increased 0.2% to $53.12, while NAB shares declined 0.6% to $24.52. Westpac lost 0.9% to $22.76, as ANZ also fell 0.7% to $20.60.

As reported in the Australian Financial Review, workers at Alcoa’s alumina operations in Western Australia will stage a two-hour strike today, with the Australian Workers Union looking for improved pay and conditions.

A spokesman told the publication the company will negotiate through the process, and will attempt to minimise the impact of the strikes on other businesses.

“We want to reach agreement, but clearly we haven’t and that’s why we will be taking industrial action,” the spokesman said.

Also in the mining sector, Newcrest Mining has recorded a 14.4% rise in first half net profit to $176.2 million, compared to $154 million in the corresponding period a year earlier.

“The increased underlying profit is largely due to higher profit margins off lower sales revenue,” Newcrest said in a statement to the ASX.

“Newcrest’s financial position remains very strong. Gearing ended the year at 3% and would have been lower if finished inventories had been sold.”

However, the company also said sales revenue fell by 8.2% to $1.19 billion, with the company’s shares rising 2.03% to $33.27.

Charter Hall buys Macquarie Group real estate platform

Property development group Charter Hall has now purchased Macquarie Group’s real estate management platform, and has also announced an equity raising of $220 million.

“(The acquisition) will create one of Australia’s largest specialist real estate fund managers,” the company said in a statement to the ASX.

“The platform complements Charter Hall’s existing operations, enhancing the current vertically integrated business, resourced by an additional 155 property executives increasing total Charter Hall staff to 220 personnel.”

Overseas, the number of workers in the US filing claims for unemployment dropped more than expected last week, relieving political pressure on president Barack Obama.

The Labour Department reported that applications for state unemployment benefits fell by 43,000 to a seasonally adjusted 440,000 last week.

The response on Wall Street was a positive one, with the Dow Jones Industrial Average gaining 105.81 points or 1.05% to 10,144.19.