The company generates most of its profits from mining and trading copper, the price of which fell to a six-year low of about $5,000 a tonne yesterday as the Chinese economy slows and housebuilding slumps. It held the interim dividend at 6 cents a share, which it said was a sign of confidence in the company’s prospects amid nervous markets.
Advertisement
Glencore, which has lost 42 percent this year as commodities slumped to a 13-year low, gained for the first time in six days on Tuesday, rising as much as 2 percent to 173.5 pence in London trading.
CEO Glasenberg said in the statement.
Glasenberg, an accountant turned coal trader, is steering the company through the strongest headwinds since the Swiss commodity trader’s $10 billion initial public offering four years ago. “Commodity prices are now at levels not seen since the financial crisis of 2008/2009 and various markets appear increasingly driven by perceptions and technical factors rather than reality or fundamentals”.
China uses about 40% of the world’s copper supply and half its aluminum. Falling prices for both materials have helped cut earnings for metals traders.
Glencore, whose trading division has until recently provided some insulation from the global commodities rout hammering other miners, said adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $4.6 billion. That compares with the $1.28 billion average estimate of nine analysts surveyed by Bloomberg News.
The company’s industrial operations, which include mining and energy, saw a 29 percent decrease in adjusted earnings to $3.4 billion.
In the same period last year, the company made a net profit of $1.72 billion.
But the sharp decline in oil prices over the past year has also played a part, with the value of a barrel of Brent crude at $48.81, down more than 50% from $101.60 a barrel 12 months ago. Citigroup and Barclays analysts said before Wednesday’s results that the firm may announce additional measures to shore up its balance sheet to help protect its credit rating. It impaired the value of its oil and gas assets in Chad by $792 million after paying about $1.35 billion last year for them.
Advertisement
Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.
