GLNCY Glencore Plc (PK)

By Alex MacDonald and Scott Patterson 

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 goal of $3 billion to $4 billion, targeting a reduction in net debt to $17 billion to $18 billion this year compared with its previous debt goal of $18 billion to $19 billion by the end of 2016. Glencore's net debt stood at $29.6 billion at June 30.

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 Chief Executive Ivan Glasenberg said he is relatively bullish about the outlook for commodity prices after their steep recent declines considering how Glencore and other large mining groups have cut back output.

"Have we bottomed? I think so," Mr. Glasenberg said.

Reduced capital spending "is going to tighten up supply and you're not going to get new excess supply coming on the market," he said on a conference call.

Orders remain good, Mr. Glasenberg said, highlighting China, where slack raw-material demand has contributed largely to the commodities slump. "We continue to see good orders into China."

Glencore's debt-reduction plans includes the possible sale of 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.

The world's third-largest diversified miner by market value had announced an accelerated debt-reduction plan as recently as December.

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.

Still, Glencore's shares have more than halved over the past year as raw material prices have fallen and amid 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 and Scott Patterson at scott.patterson@wsj.com

(END) Dow Jones Newswires

March 01, 2016 03:44 ET (08:44 GMT)

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