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Fragile economies could constrain Rio Tinto growth

Fragile economies could constrain Rio Tinto growth

Mining giant Rio Tinto (ASX:RIO) has reported a record US$14.3 billion ($14.5 billion) net profit for calendar 2010, but warned its short-term growth could be constrained by the continuing fragility of global financial systems.

The company reported gross revenue of US$60.3 million, from US$44 million the year before. Operating profit more than doubled to US19.6 million.

Ebitda meanwhile grew 82% to a record US$26 billion, while cash flows were also at historical highs of US$23.5 billion.

Rio Tinto said it had managed to reduce its net debt, but it still stood at a hefty $4.3 billion.

In a letter to shareholders, Rio Tinto chairman Jan du Plessis said the company was projecting increasing demand for metals and minerals going forward.

But he warned of downside risks in the short term, due to the delicate state of economies particularly in OECD nations.

“The increase in sovereign debt and government action to tackle fiscal imbalances are likely to temper short term growth,” he said, adding that the company plans to concentrate on organic growth for 2011.

Rio Tinto is forecasting an increase in 2011 capex to $13 billion as a result of its organic growth ambitions.

RIO shares had grown 2.35% to $79.230 at around 4pm on Wednesday on the strength of the results.

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Tags financial resultsrio tintoGuidanceASX:RIO

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