Mining Giant Glencore has reported a drop in earnings to £6.24bn from £9.18bn in 2014, after writing down assets by just over £4.1 bn. The continued weakness in commodities has had a strong adverse effect on many mining companies and Glencore has been one of the worst hit.
The FTSE100-listed company also said it was aiming for $4-5 bn of asset disposals in 2016, plus a further $400 m in savings as additional cost cutting measures are rolled out. One of the reasons why the company headquartered in Switzerland has been worse hit than many of its peers, due to the $30 bn of debt, which it accumulated through its ambitious takeover of Xstrata in 2013. This deal added dozens of mines in numerous countries to the commodity trader’s business leaving it as one of the world’s biggest miners and traders of the products of those mines and also roughly coincided with the top of the bull market for many of its products.
Despite popping higher on the open, possibly due to these results being not as bad as were feared, Glencore now trades down by more than 2% on the day.