Rio Tinto chief executive Tom Albanese yesterday reported the company’s businesses were continuing to run smoothly despite the difficult market conditions.
In its end of 2009 financial year results, the company revealed a 38% drop in cash flow from operations to $5.5 billion and a 65% fall in net earnings to $2.5 billion.
According to Rio Tinto chairman Jan du Plessis, the company took swift and decisive action in response to the global economic crisis and sharp falls in metals and minerals prices.
“As a result of our successful rights issues on 3 July, we have reduced net debt of $39.1 billion by $14.8 billion,” he said.
“There is more work to do, but we are better positioned with renewed financial strength and a leaner cost base.”
Rio Tinto also reported underlying earnings of $2.6 billion, which was 54% down on the first half of 2008.
However, the company achieved operating cost savings of $0.8 billion in first half of 2009 and said it was on track to achieve $2.5 billion worth of savings in 2010.
Rio Tinto announced a non-binding agreement with BHP Billiton to establish a production joint venture of both companies’ Pilbara iron ore assets on 5 June.
“We are on track to meet the commitments we made in December last year to reduce operating expenditure and the capital expenditure estimate has been revised in line with market conditions,” Albanese said.
“Our Pilbara iron ore operations set a new quarterly record in the second quarter of this year, consistently operating at a run rate exceeding 200 mtpa.
“The iron ore production joint venture with BHP Billiton will create an unrivalled iron ore operation with world class assets and infrastructure.
“It will be able to serve growing markets with unparalleled efficiency.”