Rio Tinto reported a surge in profits due to strong demand in Asia and higher metals prices on Thursday but shares in the company spiked lower in New York, opening down more than 7% and wiping more than $10 billion off the value of the globe’s second largest miner.
Net earnings for the first half year were $7.6bn, up 30% on the $5.8bn the firm made a year earlier. Commenting on the results chairman Jan du Plessis said the economic environment remains volatile but expected the Australia-based company continue to experience higher than average growth for the rest of the year.
The company said it was experiencing high cost inflation in some “mining hotspots” and cautioned that the strong Australian and Canadian dollar were impacting its profitability.
The Australian dollar hit 30-year highs against its US counterpart last week and the Loonie is expected to test highs above 1.06 to the USD set in 2007.
The miner said it would increase its share buyback programme by $2bn to $7bn, to be completed by the end of March next year, but the news did little to help the stock of which year to date losses mounted to 12%.
In late afternoon trade in London Rio Tinto PLC had lost 5.2% and an hour into the day’s trade in New York, the company’s American Depositary Receipts had lost 6.7% at $62.60 giving the firm a market value of $121 billion.
The company also pointed out risks to the stability of commodity markets from sovereign debt problems in Europe and the US and poor US growth prospects.
Just a hint. We hope you have some interests in GOLD MINING. Soon the U.S. Dollar will be backed by GOLD again.
We need not tell you the consequences of not being prepared for such a monumental move.
We will be following your strategic Corporate moves in this regard and will likely invest in your company should you adhere to the hand writing on the wall.