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Market Update

Rio Tinto Declares Loss on $14 B Writedown, Wesfarmers Net Rises 9%

Author: Marcus Jacob
Last Update: 8:52 AM ET February 14 2013

6:30 PM Sydney Australian stocks traded higher and the dollar held firm. Wesfarmers earnings rose on the strong performance at its retail unit Coles. Rio Tinto reported a loss after taking $14.4 billion write down against its failed Canadian and Mozambique acquisitions.

Australian stocks traded higher and retained the positive momentum in the week and the benchmark index gained after positive earnings increase at Wesfarmers and Rio Tinto.

The benchmark ASX 200 index increased above 5,000, first in three years and resource and bank sector stocks led the advance.

The ASX 200 index advanced 33.20 or 0.7% to 5,036.90 and the broader All Ordinaries increased 32.68 to 5,057.22.

The Australian dollar declined to $1.032.

Wesfarmers Earnings Rise 9.3%

Wesfarmers, Perth based coal and retailing conglomerate, reported profit in the first-half to December increased 9.3% to $1.285 billion and sales increased 3.2% to $30.6 billion.

The company also increased interim dividend to 77 cents a share from 70 cents in the period a year ago.

Coles, the supermarket division generated pre-tax earnings of $755 million, an increase of 15.1% and return on capital for the division inched up 100 basis points to 9.2%.

Earnings in its coal division plunged 62.8% to $93 million on lower prices and stronger Australian dollar.

Earnings at insurance division increased to $104 million and industrial safety division declined 9.3% to $88 million.

Woolworths closed unchanged at $32.88. Kathmandu added 3 cents to $1.88 and Wesfarmers advanced 46 cents to $38.88.

Rio Tinto Declares Higher Dividend

Rio Tinto reported after the market closed a loss of US$2.99 billion in the year 2012 compared to a net income of US$15.5 billion. Underlying earnings in the year increased to US$9.3 billion.

Rio also increased its full-year dividend 15% to US$1.67 a share.

Earnings from its iron ore division declined to US$9.2 billion from US$13.3 billion a year ago. Copper division reported net income of US$1.1 billion and energy division earned US$283 million. The troubled acquisition of Canada based Alcan included in the aluminium division earned measly $3 million.

Rio was forced to take a write down of US$14.4 billion that included US$11 billion goodwill impairment against its aluminium unit and US$2.9 billion for its Mozambique based coal assets and US$460 million for it Argyle diamond operations.

Stocks in Review

Rio Tinto jumped $1.61 to $72.07 and BHP advanced 97 cents to $38.89. Lend Lease gained 10 cents to $10.50.

Whitehaven Coal increased 6 cents to $3.26 and Newcrest Mining slid 4 cents to $23.36.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc