1st Mar 2016 12:30
LONDON (Alliance News) - Glencore PLC on Tuesday reported a pretax loss in excess of USD8.00 billion in 2015, prompting the FTSE 100 company to accelerate its debt reduction and restructuring plans yet again as it looks to offload more of its assets.
Glencore shares were trading down 2.0% to 130.60 pence per share on Tuesday following the announcement.
The multi-commodity giant joined peers Anglo American PLC and Rio Tinto PLC in booking a pretax loss for 2015, as the commodity price rout continues to strangle the mining industry's financial results, but Glencore's hefty loss was far larger than that of its peers.
The company reported a USD8.01 billion pretax loss in 2015, swinging from a USD4.25 billion profit in 2014, after a considerable fall in revenue and a large amount of impairments forced Glencore into the red.
Revenue in 2015 dropped 23% to USD170.49 billion from USD221.07 billion as every single one of Glencore's commodities experienced lower prices in the year, exacerbated by production falls within many commodity segments, whilst exceptional net costs and impairments in the year rose to USD6.30 billion compared to only USD1.97 billion in 2014.
To put Glencore's loss into context, Rio Tinto was loss-making in 2015 after reporting a USD726.0 million pretax loss in 2015 after swinging from a USD9.55 billion profit in 2014, whereas Anglo American PLC stayed in the red by widening its pretax loss to USD5.45 billion in 2015 from the USD259.0 million loss the year before.
BHP Billiton PLC's financial year is not set to end until June, but the fellow miner reported an almost equally heavy pretax loss in the first half to the end of 2015, amounting to USD7.45 billion, swinging from a USD7.69 billion profit a year earlier.
By other measures, Glencore's results for 2015 broadly met expectations, and it accelerated its debt reduction and restructuring programme once again, presumably in light of the colossal loss revealed Tuesday.
Glencore reported net income before exceptional items of USD1.34 billion in 2015, a 69% drop from USD4.28 billion in 2014, but slightly higher than analysts expectations of only USD1.16 billion.
Adjusted earnings before interest, tax, depreciation and amortisation was bang on analyst expectations at USD8.69 billion, but that is still a 32% fall from USD12.76 billion in 2014. Adjusted Ebit was down 68% year-on-year to USD2.17 billion from USD6.70 billion.
Glencore's marketing arm, which trades commodities, reported adjusted Ebit of USD2.70 billion in 2015, down 11% from the year before but slightly higher than the USD2.48 billion expected by analysts and the USD2.50 billion guided by Glencore in December.
That led Glencore to swing to an ultimate net loss after items of USD4.96 billion in 2015 from the USD2.30 billion profit reported last year.
Net debt at the end of 2015 stood at USD25.88 billion, down 15% from USD30.53 billion at the end of 2014. Glencore almost met its goal of net debt at the end of the year of USD25.00 billion.
Glencore accelerated its net debt target again on Tuesday, and said it hopes to have net debt down to between USD17.00 and USD18.00 billion by the end of 2016, compared to its previous target of USD18.00 to USD19.00 billion.
Glencore said it has made asset sales worth USD1.60 billion to date, and said it expects to reach an agreement to sell a minority stake in its agricultural business in the second quarter of 2016. It has also received bids for the two copper mines it is looking to sell and said it is considering "further monetisation" of its remaining precious metals production base, alongside other infrastructure and logistic assets.
Overall, Glencore is confident of making asset sales totalling USD4.00 billion to USD5.00 billion in 2016, higher than its previous USD3.00 billion to USD4.00 billion target.
In the longer term, that will lead net debt to be below USD15.00 billion by the end of 2017, the company said.
Glencore's balance sheet remains strong, it said, with USD15.20 billion of available liquidity at the end of 2015.
By Joshua Warner; [email protected]; @JoshAlliance
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