Glencore Xstrata profit plunges 39%
Exporter of power station coal hit with $7.7 billion asset writedown
A VZug logo sits on the company’s offices, top, beyond the white headquarters of Glencore Xstrata in Baar, Switzerland. Photo: Bloomberg
Glencore Xstrata’s first-half profit slid 39 per cent and the world’s biggest exporter of power station coal wrote down the value of assets by $7.7 billion.
Adjusted net income fell to $2.04 billion from $3.36 billion a year earlier, Glencore said today in a statement.
Switzerland-based Glencore reported a writedown on the value of assets acquired in the takeover of Xstrata three months ago.
The $29 billion purchase of Xstrata created the world’s fourth-biggest miner with a market value of about $63 billion.
BHP Billiton, Rio Tinto Group and Glencore are among producers cutting costs, selling assets and reducing spending to counter lower prices and weaker profits.
“We remain focused on the disciplined allocation of capital as well as robustly scrutinizing all preexisting capital plans of the enlarged entity,” chief executive officer Ivan Glasenberg said in the statement.
The Xstrata deal that added coal, nickel, zinc and copper mines to Glencore’s global commodity trading empire is expected to generate annual cost savings “well above” the stated $500 million plan, Mr Glasenberg said in May.
The combined group has interests in about 35 coal mines in Colombia, Africa and Australia, accounting for about 10 per cent of global seaborne supplies of the fuel.
It’s the fourth-biggest producer of mined copper and third-largest in nickel.
It employs about 190,000 people in more than 50 countries across its industrial and trading divisions.
Glencore fell 2.1 per cent to close at 301.95 pence in London trading yesterday where it has dropped 12 per cent this year.
The company, 25 per cent owned by management, reported a dividend of 5.4 cents a share.