Rio Tinto Plc’ share price up, posts a 21% H1 profit increase

Shares of Rio Tinto Plc, the second-biggest mining company in the world, climbed as much as 3% after the company posted H1 earnings today, to reveal its profit increased by 21%. Rio Tinto also kept its plan to reduce its capital expenditure to as little as $8 billion by 2015.

According to the statement of Rio Tinto Plc, the companys underlying profit rose to $5.1bn over the six months through June, beating estimates of $4.5bn profit. The company also increased its dividend by 15% to $0.96 per share.

“It’s a very, very strong headline number and well above the company’s own guidance,” Evan Lucas, market strategist at IG ltd said for Bloomberg. “The iron-ore performance is strong and the copper performance looks very good indeed.”

The company was facing weak commodity prices and was forced to cut its expenses on major new projects.

CEO Sam Walsh has been pushing on with the companys policy of reducing costs and capital spending. Under his lead, Rio Tinto Plc has managed to cut its costs by more than $3bn after a tough period, marked by a series of failed acquisitions, asset writedowns and lower metal prices.

“The solid foundation for growth that we’ve created will consistently deliver materially increased cash returns to our shareholders,” CEO Sam Walsh said. “We are focused on increasing shareholder returns.”

In July 2014 Chief Executive Officer Walsh shared that the companys shareholders have started to become more focused on Rio Tintos growth and expansions, which was a preferred option in comparison to returns. Jefferies LLC revealed in February this year that the company may announce a share buyback that amounts to between 3 and 5 billion dollars.

Rio Tinto Plc added 1.64% to trade at 3 446 pence per share by 11:35 GMT, marking a one year change of +16.68%. At current price, the company is valued at £63.86bn (about $107.60bn).