Continued strong operational performance delivers record Half Year earnings

Thursday, 03 August 2006

• First half underlying earnings* of $3,751 million were a record, and 80 per cent above the corresponding period in 2005.
• First half net earnings* were $3,796 million, up 75 per cent on the 2005 level of $2,165 million.
• Cashflow from operations was a record at $5,202 million, 52 per cent higher than that of the first half of 2005.
• Increased volumes from investment in additional capacity, particularly in copper and iron ore, contributed $129 million to earnings. Many operations achieved record production in the period. Rising prices and strong demand for most products increased underlying earnings by $1,804 million.
• Recognition of additional tax assets contributed $211 million to the increase in underlying earnings compared with the first half of 2005.
• Industry wide cost pressures impacted the business in the first half, reducing underlying earnings by $513 million, adjusted for inflation. Adverse weather conditions reduced volumes and increased costs in Australian businesses early in the year.
• Continuing investment in the growth of the business was reflected in record capital expenditure of $1,758 million in the first half. The major infrastructure and mine expansions of the Group’s iron ore operations in Western Australia are on track, and construction commenced on the development of the Hope Downs deposit.
• Other significant development projects were progressed, including the titanium dioxide project in Madagascar, the Cortez Hills gold deposit in the US and the Argyle underground diamond mine in Australia.
• HIsmelt made its first shipment to customers in the US.
• As part of the Group’s 2006/07 capital management programme, a special dividend of $1,500 million was paid to shareholders in April, and $1,023 million of shares were bought back on the London market since February.

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