Mining titan Rio Tinto (RIO) posted a record first half profit as it benefited from higher commodity prices, buoyed by government stimulus spending during the pandemic.
However the shares were a touch lower, reflecting the fact that many investors had already factored in the impact of buoyant metals markets.
In the last 12 months the stock is up by a quarter.
Net earnings for the six months through June jumped to $12.31 billion, up from $3.32 billion year-on-year.
Underlying earnings more than doubled to $12.17 billion, up from $4.75 billion year-on-year.
Rio Tinto declared an interim dividend of 376p per share, more than twice the 155p paid a year earlier.
The miner also declared a special dividend of 185p per share.
‘Government stimulus in response to ongoing Covid-19 pressures has driven strong demand for our products at a time of constrained supply resulting in a significant spike in most prices,’ chief executive Jakob Stausholm said.
FROM AUSTERITY TO GROWTH
Jefferies analyst Christopher LaFemina commented: ‘Rio appears to be shifting from austerity and capital returns to more of a focus on growth as it has committed to its $2.4bn Jadar lithium-borates project (first production expected in '26 rising to full capacity of 58kt of battery-grade lithium carbonate and 160kt of boric acid by 2029).
'The company is also progressing with its Winu greenfield copper project and has longer term projects in Simandou (iron ore in Guinea) and Resolution (copper in the US).’
He added: ‘While iron ore prices likely move lower from here, we expect continued strong cash flow and capital returns to be supportive of these shares, although risk in the near term may be to the downside as the capital return catalyst is over for now.’