Rio Tinto says H1 profit down by 71%

MELBOURNE -- Mining giant Rio Tinto on Thursday announced that its profit for the first half of 2013 stood at A$1.92 billion ($1.72 billion), a 71 percent drop compared with the same period of the previous year.

As many local analysts anticipated, the results showed that Rio 's underlying earnings slipped by 18 percent on an annual basis to A$4.72 billion ($4.23 billion).

While blaming the drop to weak market prices and a higher effective tax rate, the leading mining group also expressed a certain degree of optimism in archiving stated goals.

"I believe that we are well on track to build a stronger Rio Tinto. We are making good progress against our clear commitments and remain focused on the pursuit of greater value for our shareholders," Rio Tinto Chief Executive Sam Walsh stated in a media release.

The results also showed that a tax rate increase from 27 percent to 38 percent had trimmed A$394.15 million ($353 million) from Rio's earnings, while a downside impact of weaker commodity prices costs another A$1.45 billion ($1.3 billion).

Since iron ore still dominated Rio Tinto's performance by delivering earnings of A$5.25 billion($4.7 billion), as the main buyer of this product, China is still under the spotlight.

"Chinese economic growth has decelerated so far this year and is unlikely to recover significantly in the second half, but we do not expect a hard landing," Walsh said.

Sam Walsh, who took the steer of the global miner in January this year, has adopted a prudent strategy by cutting costs, chipping away non-core assets to better handle the post boom mining market due to a slowing down of China's economy.

Walsh said that Rio has witnessed a reduction in total cost reduction in the first half, which has driven strong operating cash flows, on a par with the first half of 2012, despite weaker prices for most of its products.