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Glencore posts $4.9bn net loss

1st March 2016

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – Diversified mining and marketing company Glencore on Tuesday reported a net loss to equity holders of $4.9-billion for 2015, a year of focus on debt reduction, supply discipline and cost efficiencies.

The company recorded net exceptional charges to equity holders of $5.8-billion, related primarily to impairments, restructuring costs and net losses on disposals.

These were linked mainly to the company's oil operations, its Koniambo nickel project in New Caledonia and the recognition of a loss on the cessation of control of Optimum Coal in South Africa.

The company reported 32%-lower adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $8.7-billion on substantially weaker commodity prices that were partially offset by cost efficiencies and favourable producer country currencies.

Marketing Ebitda fell 11% to $2.7-billion, with challenging first-half metals marketing conditions being offset by a robust performance from oil marketing.

Industrial Ebitda fell 38% to $6-billion on lower prices in all key commodities and action to reduce supply, associated capital expenditures (capex) and operating costs within the company’s coal, zinc, copper and oil assets, aimed at preserving resource value for the longer term.

Glencore's underlying profit of $1.34-billion was up on analyst underlying profit consensus of $1.17-billion.

This year’s industrial capex has been cut by a further $300-million to $3.5-billion and a further $400-million of savings is being targeted this year.

Capital preservation and debt reduction measures in the period included asset sales of $1.6-billion, including $1.4-billion from precious metals streaming transactions.

The company, headed by CEO Ivan Glasenberg, said that remaining asset sales processes are proceeding well, with agreement on the sale of a minority stake in the agricultural products business expected in the second quarter, when bids for the potential disposals of Cobar and/or Lomas Bayas are also expected to be finalised.

The company expressed confidence of achieving $4-5-billion of asset disposals during the remainder of this year.

Net funding at year-end decreased by $8.5-billion to $41.2-billion, while net debt declined to $25.9-billion.

Net funding and net debt targets for the end of 2016 are now $32-billion to $33-billion and $17-billion to $18-billion.

“Our balance sheet remains strong and flexible, supported by record committed available liquidity of $15.2-billion at year-end,” the company said.

Glencore reported financial results for the full year 2015 this morning, which were reassuring overall.

Mining analyst Bernstein described Glencore revenue as being broadly in line with expectations with Ebitda slightly below the company's estimates but in line with consensus.

Bernstein added that the results showed that the marketing unit was significantly less sensitive to commodity prices than the industrial business.

Edited by Creamer Media Reporter

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