Rio Tinto Group, fighting a $142 billion hostile offer from BHP Billiton Ltd, posted first-half profit that beat analyst estimates on increased aluminum sales and record iron ore prices.

    Net income rose to $6.91 billion, from $3.25 billion a year earlier, London-based Rio said yesterday in a statement. Underlying earnings climbed to $5.47 billion, exceeding the $5.15 billion median estimate of six analysts surveyed by Bloomberg News. The interim dividend was increased 31 percent to 68 cents a share.

    Chief Executive Officer Tom Albanese, who in February rejected BHP's sweetened bid as too low, says Rio is better able to expand its output of commodities independently.

    BHP, based in Melbourne, last week posted a 30 percent gain in fiscal second-half profit after producing record quantities of crude oil, iron ore and coal.

    "It might appear that Rio, with its results slightly ahead of market estimates, has done better than BHP," Rob Craigie, a senior analyst at FW Holst & Co in Melbourne, said by phone yesterday.

    "That position could easily change in the December half," he said.

    Rio dropped 139 pence, or 2.7 percent, to 5,040 pence as of 9:39 am on the London Stock Exchange.

    BHP fell 3.4 percent and other miners declined as stocks slid in Europe on concern the economic slowdown and credit-market losses will stifle profit growth.

    Rio was trading 12.5 percent below the value of BHP's offer of 3.4 of its shares for each Rio share.

    Record outputAlbanese, 51, plans to spend $6 billion this year to boost output of commodities. BHP made its initial proposal in November, the same month Rio paid $38.1 billion for Canada's Alcan Inc. That deal made Rio the second-largest aluminum producer, boosting its second-quarter output of the lightweight metal almost fivefold.

    Rio is also the world's second-largest iron ore producer, and it said last month that second-quarter output of the steelmaking raw material rose 13 percent to a record 41.9 million metric tons.

    "Although we have seen some moderation in growth rates in developed countries, the impact on our markets has been modest due to continued strong growth in developing countries," Rio Chairman Paul Skinner said yesterday on a conference call from London.

    "Prices for our products remain high by historic standards."Both Rio and BHP agreed to contract-price increases for iron ore of as much as 97 percent from April 1. Prices have risen fivefold since 2001, driven by expanding demand in China and other emerging economies.

    Iron ore accounted for 30 percent of Rio's sales last year, the biggest portion, followed by aluminum with 24 percent. Coal has surged to records this year.

    Aluminum for immediate delivery on the London Metal Exchange averaged 2.3 percent higher in the first half compared with a year earlier. Copper was 20 percent higher.

    Russia's United Co Rusal is the largest aluminum producer and Brazil's Cia Vale do Rio Doce is the biggest iron ore company.

    Rio's sales climbed to $27.2 billion from $12.1 billion.

    Underlying earnings exclude items such as asset divestments and impairments.