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The Guardian: Corporate profits

Corporate profits
The Guardian – United Kingdom; May 10, 2006

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Governments have had to share the windfall gains from rising commodity prices with giant oil exploration and mining companies. Much of the price rise has been absorbed by higher profits, as the recent performance of BP and Shell testifies. The mining company Rio Tinto saw its underlying profits rise 118% to $5bn (pounds 2.7bn) in 2005, with the chairman, Paul Skinner, expecting the outlook to remain good. “We believe economic growth will continue the positive trend of 2005 even if rates of growth slow somewhat,” he said at the company's annual meeting last week. “This, in turn, should result in a continuation of strong markets for our products and prices above the long-term trend.”

Mr Skinner tempered his optimism with a warning. “We recognise that the current strong markets will not continue indefinitely. At some point the supply position will become more balanced and we will see a downturn in the cycle.”

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