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Australian company profits surged in second quarter

Monday 1st September 2008

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Australian company profits surged more than expected in the second quarter, as mining companies benefited from surging demand and prices in China.

Company gross operating profits rose 14.3% in the three months ended June 30, from the first quarter, the Australian Bureau of Statistics said. Economists had expected growth of just 2.8%.

Rio Tinto Group last month reported first-half profit about doubled to US$6.9 billion on record iron ore prices and more sales of aluminium, while BHP Billiton, the world's largest mining company, posted record annual net income. Mining shipments are helping to make up for waning domestic economic growth that may spur the central bank to cut interest rates as soon as tomorrow.

Profits at mining companies rose 41%, seasonally adjusted, from the first quarter, the government statistician said. Construction company profits rose 20.4%, rebounding from a 16% drop in the previous three months.

Retailers' profits rose 7.8%. Among decliners, earnings at property and business services companies fell 4% last quarter.

The Reserve Bank of Australia will cut its benchmark interest rate a quarter point to 7% tomorrow, according to 22 of 23 economists surveyed by Bloomberg News.

Gross operating profit measures earnings before tax, interest, depreciation and amortization.

By Jonathan Underhill

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