Glencore Falls after reporting lower underlying profit
August 24, 2016 10:08 amVideo
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Mining giant Glencore (GLEN.L) was under pressure this morning falling more than 5% on the back of news in its half year report that underlying profit has fallen for the period and it is to continue cutting back on debt. The company report an EBITDA of $4 Billion, down 13% on the previous period.
Glencore announced earlier in the year that it aims to cut its net debt to below $18 Billion before the end of 2016 and the latest statement confirms it is on track to complete this target. The company also plans to complete more asset sales to achieve its target of $5 Billion in disposals.
Glencore’s Chief Executive Officer, Ivan Glasenberg, commented: “Since we announced our measures to reduce debt levels last September, we have made considerable progress towards achieving our goals. Supporting these targets, our industrial assets are demonstrating industry-leading cost and cashflow performances, while the resilience of our Marketing business has again been demonstrated, with a 14% increase in its first half Adjusted EBIT to $1.2 billion.
“We have already largely achieved our asset disposals target of $4-5 billion with a diverse and material pool of asset sales’ processes also on-going. Our divestment strategy remains one of maximising value for shareholders through identifying assets where overall Glencore franchise positioning, optionality and value is substantially preserved or even enhanced. The Glencore Agri stake sale, for example, positions it for the industry’s inevitable consolidation in the years to come. We remain confident and focussed on achieving even lower than previously indicated net funding and net debt levels by the end of this year.
“After a difficult start to the year, the more constructive tone of markets in recent months has helped support the pricing of many of our key commodities. While we are highly cash generative at current spot prices, we remain mindful that underlying markets continue to be volatile. We are alert to and have a high degree of proven flexibility in adapting to changing market conditions.”
Read the full half year report here: http://www.glencore.com/assets/investors/doc/reports_and_results/2016/GLEN-Half-Year-Report-2016-.pdf
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