Australian Stocks Ease; Rio Tinto Writes Down Alcan Acquistion

Marcus Jacob
09 Feb, 2012
New York City

Australian stocks eased after China reported a surge in inflation in January. After the close, Rio Tinto said its annual earnings dropped 59% to $5.8 billion after it wrote down its Alcan Aluminum business by $8.9 billion. Tabcorp and News Corp gained on earnings.

[R]8:00 PM Sydney – Australian stocks eased after China reported a surge in inflation in January. After the close, Rio Tinto said its annual earnings dropped 59% to $5.8 billion after it wrote down its Alcan Aluminum business by $8.9 billion. Tabcorp and News Corp gained on earnings.[/R]

Stocks in Sydney trading eased after Rio Tinto reported weaker earnings and consumer price inflation in China shot up at the fastest pace in January since last July.

Stocks gyrated in trading after earnings from News Corp, Tabcorp, Telstra and Rio Tinto dominated headlines.

The ASX 200 index decreased 8.2 or 0.2% to 4,282.5 and All Ordinaries index fell 7 or 0.2% to 4,356.7.

In trading, turnover decreased to 2.11 billion shares worth $4.97 billion compared to 2.22 billion shares worth $5.1 billion on Monday. Of the shares changing hands, 506 shares increased 487 decreased and 392 closed unchanged.

Consumer prices in China increased 4.5% in January, the fastest pace of increase since June of last year when prices surged at 6%. The food price increased 10% in the month as demand picked up during the Chinese New Year holiday period.

Stock Movers

BHP Billiton Ltd fell 59 cents to $37.16 and Rio Tinto Ltd closed down 16 cents to $71.60 and after the close the miner reported 59% drop in earnings on a write down of its aluminum business. Underlying profit fell 11%.

After the close, Rio Tinto reported annual net income of US$5.8 billion compared to net income of US$14.32 billion a year ago. The iron ore mining giant took a write down of US$8.9 billion in the latest earnings in the aluminum business Alcan Aluminum it acquired for $38 billion in 2007.

Before the write down, the company earnings were US$15.5 billion on the strength in its iron ore prices. The company increased its full year dividend by 24% to $1.45 or US$1.29 and did not increase its US$7 billion in stock buyback.

In the second half, net income from iron ore division increased 14% to $6.9 billion and its aluminum division earned $63 million.

Yesterday, BHP profit in the first six months declined 6% to US$9.94 billion from $10.52 billion a year ago period on lower commodities prices and higher labor costs.

Fortescue Metals Group decreased 4 cents to $5.39, Lynas Corporation Limited closed lower 4 cents to $1.41 and Iluka Resources decreased 13 cents to $18.07. Newcrest Mining rose 6 cents to $33.44.

Tabcorp increased 5 cents to $2.91 after the gambling and wagering company said first half profit increased 14.1% and set similar expectations for the second half.

Telstra decreased 7 cents to $3.37 after it reported lower than expected half year net profit.

News Corp increased 17 cents to $18.91 after global media operator reported stronger earnings on the rise in its movie and Cable TV business. The company is still facing several inquiries related to illegal hacking at its UK print operations.

Oil Search Limited increased 1 cent to $6.53, Santos Limited rose 6 cents at $14.06 and Woodside Petroleum added 36 cents to $35.58.

Commonwealth Bank of Australia increased 9 cents to $50.41 and ANZ added 1 cent to $21.62 and Westpac inched higher 18 cents to $21.09. National Australia Bank added 7 cents to $23.00.

David Jones Limited was flat at $2.54 and Harvey Norman Holdings closed up 1 cent to $2.08. Wesfarmers Limited rose 2 cents to $29.75.

Qantas Airways Ltd was unchanged at $1.62, Virgin Australia was unchanged at 35.5 cents and Flight Centre increased 52 cents to $20.45.

QR National closed up 2 cents to $3.78.