Coal and Allied half year 200

RNS Number : 0918A

Rio Tinto PLC

29 July 2008

 



Coal and Allied 2008 half year results - Coal & Allied benefits from stronger coal prices

29 July 2008

• Revenue was $937.3 million, up 43 per cent compared with $656.8 million for the same period last year.

• Net profit after tax was $195.1 million compared with $70.0 million for the same period last year. 

• A fully franked interim dividend of 160 cents will be paid on each ordinary share (nil in 2007).

Commenting on the company's performance, Coal & Allied's Managing Director, 

Mr Hubie van Dalsen said, 'Coal & Allied's net profit after tax of $195.1 million reflects the very strong demand and pricing for thermal and semi-soft coking coal. 

'Coal & Allied has increased its production of semi soft coking coal to take advantage of these stronger prices. At 30 June, approximately 1.37 million tonnes of semi-soft coal sales had been provisionally priced within a range of US$200 - US$220 per tonne. 

'Coal & Allied has achieved good operational performance in the first half of 2008, despite the continued coal chain infrastructure constraints. Shipping queues off Newcastle have reduced from the high levels encountered last year, which has lowered demurrage rates and production has been in line with our port allocation.

Mr van Dalsen said total production for the first half of 2008 was 10.4 per cent higher (12.7 million tonnes versus 11.5 million tonnes) than the first half of 2007. Coal & Allied's share of total production in the first half of 2008 was up 10.5 per cent compared to the same time last year. 

'In the year to date our production has exceeded sales as we have been rebuilding inventories following the weather-related impacts in 2007,' Mr van Dalsen said.

'However, infrastructure issues continued to restrict Coal & Allied's production and financial performance. 

'We await the outcome of the review by former New South Wales Premier Nick Greiner, established by the state government earlier this year, to facilitate agreement with industry on how to allocate the limited coal chain capacity. Coal & Allied has been an active participant in this process and has made a submission for the introduction of a long term commercial framework to improve coal chain performance and provide greater certainty for industry and customers.'

Infrastructure

Port Waratah Coal Services is on schedule with its current $458 million expansion, which includes installing an additional coal-stacking stream, installing a new coal reclaimer and conveyer belt, and is due for completion in the third quarter of 2009.  This expansion will bring the terminal's capacity to 113 million tonnes per annum. In addition, the replacement of two reclaimers and two stackers due to machine integrity issues is also on schedule for mid 2010. 

Summary of financial performance

Coal & Allied's results for the first half of 2008 compared with the same period of 2007:

	Half-year ended 30 June
	2008	2007
Revenue ($ millions)	937.3	656.8
Net profit after tax ($ millions)	195.1	70.0
Operating cash flow ($ millions)	349.1	1.7
Dividends (cents per share)	160	-
Coal & Allied equity share of coal production (million tonnes)	9.5	8.6
Coal & Allied equity share of coal shipments (million tonnes)1	9.2	9.3

1 Shipments exclude purchased coal.

Sales revenue

Revenue for the six months ended 30 June 2008 was $280.5 million higher than the June 2007 half, due to the strong prices being paid for thermal and semi-soft coking coal. There were also no severe weather impacts in the Hunter Valley like those sustained in the same period last year. 

Net profit after tax

Coal & Allied's net profit after tax reflects the very strong demand and pricing for thermal and semi-soft coking coal. Demurrage costs were also $25 million lower in the six months ended 30 June 2008 compared with the June 2007 half, due to reduced ship queues.

Cash flow

Operating cash flow was $349 million for the first half of 2008 (June 2007: $1.7 million) because of higher profits as a result of increased realised coal prices.

Dividends

The directors declared an interim dividend of 160 cents per ordinary share fully franked at 30%. The directors have declared an interim dividend of 1.75 cents per preference share fully franked at 30%. 

Debt 

Net debt of $30 million at 30 June 2008 was $282 million lower than at 31 December 2007 primarily as a result of significantly stronger cash flow from operations. Net debt to net debt plus equity decreased to 3.2 per cent at 30 June 2008 from 28.0 per cent at 31 December 2007.

Capital expenditure

Net capital expenditure for the first half of 2008 was $67 million (June 2007: $56 million) which was primarily for replacement of heavy mobile equipment and a planned dragline shutdown.

All financial information contained in this release has been prepared on the basis of the Australian Equivalents to International Financial Reporting Standards and Interpretations.

About Rio Tinto 

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore. Activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa.

Forward-Looking Statements

This announcement includes 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Rio Tinto's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to Rio Tinto's products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rio Tinto, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 

Such forward-looking statements are based on numerous assumptions regarding 
Rio Tinto's present and future business strategies and the environment in which Rio Tinto will operate in the future. Among the important factors that could cause Rio Tinto's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation and such other risk factors identified in Rio Tinto's most recent Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (the 'SEC') or Form 6-Ks furnished to the SEC. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement. Rio Tinto expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the 'Takeover Code'), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority and the Listing Rules of the Australian Securities Exchange) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Rio Tinto's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

For further information, please contact:

Media Relations, Australia  Amanda Buckley Office: [phone] Mobile: [phone] Ian Head Office: [phone] Mobile: [phone]	Media Relations, London  Christina Mills Office: [phone] Mobile: [phone] Nick Cobban Office: [phone] Mobile: [phone]
Media Relations, Americas  Nancy Ives Mobile: [phone]
Investor Relations, Australia Dave Skinner Office: [phone] Mobile: [phone] Simon Ellinor Office: [phone] Mobile: [phone]	Investor Relations, London Nigel Jones Office: [phone]  Mobile: [phone] David Ovington Office: [phone] Mobile: [phone]
Investor Relations, North America Jason Combes Office: [phone] Mobile: [phone]

Email: [e-mail]

Website: www.riotinto.com

High resolution photographs available at: www.newscast.co.uk

 

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