Glencore Tumbles to Loss, Promises Accelerated Debt Reduction
March 01 2016 - 4:00AM
Dow Jones News
LONDON—Glencore PLC swung to a net loss of nearly $5 billion
last year on tumbling raw-material prices and promised to sell more
assets than originally planned this year to further shore up the
mining and commodity-trading group's finances.
The Swiss-based company, which reported a net loss of $4.96
billion compared with net profit of $2.3 billion in 2014, said on
Tuesday that net debt dropped 15% to $25.9 billion at the
end-December compared with a year earlier.
Management is now aiming to sell $4 billion to $5 billion in
assets this year, up from a previous target of $3 billion to $4
billion, the company said.
This includes plans to sell a minority stake in its
agricultural-products business in the second quarter and
expectations it will receive final bids for at least one of two
copper mines, Cobar in Australia and Lomas Bayas in Chile.
Glencore said it has set itself a new target for reducing net
debt, aiming for $17 billion to $18 billion this year compared with
its previous debt goal of $18 billion to $19 billion by the end of
2016.
The world's third-largest diversified miner by market value had
announced an accelerated debt-reduction plan as recently as
December. Glencore's net debt stood at $29.6 billion at June
30.
The company's shares have rallied 47% since this year's start
after raising proceeds from further asset disposals, cutting costs
and refinancing a chunk of debt. Glencore's emergency action has
reflected similar drastic measures by the world's other big mining
groups, including the likes of BHP Billiton PLC, Freeport McMoRan
Inc., Rio Tinto PLC, and Vale SA. They have reduced or suspended
dividends, scaled back capital spending, and sought buyers for
noncore assets as metals and oil prices have collapsed.
Glencore's shares however have more than halved over the past
year due to the continued commodities price rout and concerns that
the company would struggle to pay down debt.
The company's bottom line took a beating last year from
exceptional charges of $6.31 billion, including impairments of
$1.42 billion on its New Calendonia Koniambo nickel operations,
$1.03 billion on its oil assets in Chad, and a $1.03 billion loss
on South Africa's Optimum Coal operations. The business was sold
after filing for bankruptcy protection last year.
Excluding the exceptional items, Glencore's underlying net
profit fell 69% to $1.34 billion last year, beating analysts'
expectations of $743 million according to a FactSet poll of 19
analysts.
Revenue fell 23% to $170 billion on lower commodities prices and
cutbacks in the group's copper, nickel and coal output.
Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
March 01, 2016 03:45 ET (08:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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