The market had been looking for an interim profit of just over $US8 billion for the six months to June from Rio Tinto.
In any event the mining giant told stock exchanges yesterday afternoon that it had fallen a bit short of expectations.
Rio is the world’s third-biggest miner after BHP Billiton, which reports its 2011 full year figures later this month (August 24) and Vale of Brazil, which reported its interim figures last week (see below).
Rio revealed yesterday that it had raised its planned share buyback by $US2 billion to $US7 billion as its latest earnings rose 30% to $US7.59 billion ($A7.1 billion), short of the $US8.36 billion expected by analysts, according to Bloomberg.
Reuters said analysts they had surveyed had been looking for earnings around $US8.03 billion.
In any event, the actual result was around $US400 million to $US1 billion short of market expectations.
Rio said its profit result was $US8.078 million, but $US491 million of that was attributable to non-controlling interests, with $US7.587 million attributable to its shareholders.
Most of the higher profit came from increased prices for commodities like iron ore, coal, copper, gold and other minerals.
The company posted record first-half underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $US14.3 billion, 27% above the 2010 first-half result.
Revenue rose 19% to more than $31.7 billion from the $26.24 billion in the first half of 2010.
Higher prices were the major driver for the result as Rio said yesterday: "The effect of price movements on all major commodities in 2011 first half was to increase underlying earnings by $4,997 million compared with 2010 first half.
"Prices improved for nearly all of Rio Tinto’s major commodities: copper prices were up 31 per cent, molybdenum prices were up 13 per cent, gold prices were up 26 per cent and aluminium prices were 20 per cent higher than 2010 first half.
"Demand and prices for diamonds and minerals improved significantly, reflecting strength in Asian markets."
The company though said it would increase its planned share buyback to $US7 billion from an earlier announced $US5 billion target.
Around $3 billion of the original buyback has been completed, so the increase is a bit of a sop to big investors who would have been unhappy with the lower than expected result.
The results came out after the Australian share market closed yesterday.
Rio shares ended the day down $A1.02, or 1.3%, to $A76.58, a drop in line with the overall market’s fall.
Rio reported that underlying earnings for the six months to June 30, 2011 were up 35% to $US7.78 billion. Cashflow increased 31% to $US12.88 billion.
The company said it would pay an interim dividend in line with expectations of 54 USc a share, up 20%.
Rio Chairman Jan du Plessis said in the statement, "Market conditions have remained favourable over the past six months due to strong Asian demand, although the volatile economic environment that we highlighted eighteen months ago continues to exist, driven by significant macro economic imbalances.
“We continue to believe that the creation of shareholder value over the long term requires a balanced approach to investing in high quality growth and returning excess cash to our shareholders.
"In February, we announced a $5 billion capital return to be completed by the end of 2012. We have already completed $3 billion of this. Our continued strong financial performance means we are able to maintain this pace and we have therefore increased our share buy-back by $2 billion to $7 billion, subject to market conditions.
"This still allows us to be flexible and to take advantage of any new opportunities.”
Chief executive Tom Albanese said in the statement, “Rio Tinto’s consistently high-performing operations are reflected in these latest results.
"We largely recovered from the severe weather conditions in the first quarter and, although volumes were lower than 2010 first half, we were able to take advantage of higher prices for our products.
"This performance translated into record first half underlying earnings of $7.8 billion, a 35 per cent increase on the first half of 2011.
“In a period of rapid investment across the industry we are experiencing high cost inflation in certain mining hotspots.
"Coupled with the increasing strength of the Australian and Canadian dollars, this has put pressure on our cost base.
“Nevertheless, through our industry-leading investment in technology and innovation and our track record of superior operational performance, we expect to mitigate some of these cost increases.
“We have some of the best quality growth projects in iron ore, copper and coking coal.
"These projects are on track and, as we finalise our studies for the expansion of our industry-leading Pilbara iron ore operations to 333 Mt/a, we have accelerated the timeline by six months to the first half of 2015.
"We have secured further growth options in new territories, notably the successful Riversdale acquisition which delivers both thermal and coking coal opportunities in Mozambique, one the world’s premier coal basins.
"We also reached an agreement wi
