RIO TINTO POSTS 9 PCT FALL IN INTERIM NET PROFIT TO US$641 MLN.

MELBOURNE, Aug 1 Asia Pulse - Rio Tinto Ltd (ASX:RIO) disappointed the market yesterday with a nine per cent drop in first half earnings, the group blaming flat demand and a weaker US dollar for dragging down the bottom line.

The Anglo-Australian miner's net profit fell to US$641 million (A$985 million) for the first half of calendar 2003, down from US$702 million (A$1.08 billion) in the previous corresponding period.

The result was below the market's consensus expectation of US$698 million (A$1.08 billion).

Rio Tinto chief executive Leigh Clifford said movements in exchange rates, principally the weakening of the US dollar against the Australian dollar, Canadian dollar and South African rand, reduced profits by US$152 million (A$233.49 million).

Elsewhere, earnings from the group's energy division were halved and analysts expressed disappointment at higher than expected shipping and demurrage costs brought on by running the coal and iron ore operations at full capacity.

Rio Tinto chairman Sir Robert Wilson said the exchange rate movements had been unprecedented and had unexpected financial consequences for the group's operations, particularly its Australian coal division.

"The Australian dollar appreciated against the US by 18 per cent between the end of 2002 and the end of June this year," Sir Robert said.