GLNCY Glencore Plc (PK)

By Scott Patterson and Alex MacDonald 

LONDON -- A rebound in commodity prices and big cost reductions weren't enough to pull Glencore PLC out of the red in the first half of the year.

On Wednesday, the world's No. 3 diversified miner by market value reported a $369 million net loss for the six months through June, compared with a $676 million net loss a year earlier.

In Glencore's first half-year report since it embarked on a sweeping effort to repair its balance sheet, the company said it was on track to continue reducing debt through a combination of asset sales, cost cuts and a bounce in commodity prices.

"We have made considerable progress toward achieving our goals," Glencore Chief Executive Ivan Glasenberg said Wednesday.

Glencore launched the effort last year when investors were worried about its then nearly $30 billion in net debt.

The company's shares fell sharply at the time, dropping almost 30% in a single day. The stock has since rebounded, more than doubling so far this year, driven by a rally in commodity prices and its progress in slashing debt. On Wednesday, the shares fell 3.1% in London trading.

The company is on track to reinstate its dividend, which it suspended last year as part of its debt-cutting plan, some time in 2017, Mr. Glasenberg said.

Mr. Glasenberg, once one of the mining industry's most voracious deal makers, said the company doesn't have plans to acquire new assets soon keep cutting debt . "There is nothing we're really looking at right now, " he said.

Some investors have said they want the company to keep cutting debt and reinstate the dividend before snapping up new mines.

Mr. Glasenberg remained confident that the market for the commodities his company mines and sells will keep improving, helped by demand in China and elsewhere. Zinc and coal prices are up 43% and roughly a third, respectively, this year, driven by production cuts and Beijing's moves stimulate China's economy.

"We see demand looking not bad around the world," Mr. Glasenberg said on a conference call with reporters. "Demand in China is still pretty good."

Glencore's latest results were hurt by a $395 million loss related to coal trades that suffered as prices rebounded. The company said it was trying to lock in prices in the second quarter of 2016 to pay down debt ahead of potential coal-price declines later in the year. Instead, coal prices kept rising.

If that continues, the trades will continue to bleed, said Jefferies analyst Chris LaFemina in a note. These "poorly timed coal hedges have ironically limited Glencore's leverage to the ongoing recovery in coal prices," he wrote.

Mr. Glasenberg said one disappointment this year has been a relatively flat price for copper, one of the company's biggest earnings drivers. He said the market is unnecessarily worried about a "big wall of supply" expected to come into the market in the coming years.

"We don't see it," he said. "Inventory levels aren't indicating that copper should be at these levels."

Glencore's first-half revenue fell 6% to $69.4 billion, largely because of lower commodity prices in addition to lower copper, zinc, coal and oil production in the first half compared with the same period a year before. The company had cut production at some of its coal, zinc and copper mines in response to low prices and an oversupply of the commodities.

Glencore said it has largely achieved a major plank of its debt-reduction plan, agreeing to $3.9 billion in asset sales so far this year. It has a target of between $4 billion and $5 billion in such sales.

In the latest move, Glencore said late Tuesday it struck a deal to sell a stream of future gold production and other metals from an Australian mine to Evolution Mining Ltd. for $670 million. The deal comes on top of a pair of other so-called streaming deals for gold and silver for a combined $1.4 billion.

The proceeds will be used to pay down net debt, which is now on track to fall to a revised $16.5 billion to $17.5 billion by year-end, down from a previous target of between $17 billion to $18 billion.

Net debt was $23.6 billion as of June end, down from $25.9 billion at the end of December.

Write to Scott Patterson at scott.patterson@wsj.com and Alex MacDonald at alex.macdonald@wsj.com

(END) Dow Jones Newswires

August 25, 2016 02:48 ET (06:48 GMT)

Glencore (PK) (USOTC:GLNCY)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024

Glencore (PK) (USOTC:GLNCY)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024