SHARE
COPY LINK

BUSINESS

Glencore announces loss of $5 billion in 2015

Debt-laden mining and commodities giant Glencore on Monday reported results deep in the red for 2015 due to plunging prices for metals and oil.

Glencore announces loss of $5 billion in 2015
The logo at the company's headquarters. Photo: Fabrice Coffrini/AFP

Debt-laden mining and commodities giant Glencore on Tuesday reported results deep in the red for 2015 due to plunging prices for metals and oil.

The Switzerland-based company posted a loss of $4.96 billion (4.5 billion euros) last year, compared to a net profit of $2.3 billion just a year earlier.

Not counting $6.3 billion in so-called significant items, including losses linked to bankruptcy proceedings at its optimum coal mine in South Africa, the company said it had raked in a net profit of $1.3 billion last year. But even this adjusted profit ticked in 69 percent lower than in 2014.

Glencore saw its commodities marketing activities slide 11 percent to $2.7 billion, hit by a slumping metals market as well as by a strong base-line comparison on agricultural products in 2014. But a “robust performance from oil marketing” helped slightly offset the downward trend.

The company's production activities plunged 38 percent to $6.0 billion, “reflecting lower prices in all key commodities.”

Glencore had in September announced drastic moves to trim its then towering $30-billion debt, including suspending production at a number of mines andselling off assets.

The company said on Tuesday that by the end of 2015, its debt had shrunk to $25.9 billion. “Our rigorous focus on debt reduction, supply discipline and cost efficiencies enabled Glencore to record a robust performance in difficult market conditions,” company chief executive Ivan Glasenberg said in the earnings statement.

He insisted that the company's “diversified portfolio … (and) highly resilient marketing business, underpins our ability to continue to be comfortably cash generative at current and even lower commodity prices.”

Glencore said it was “confident” it would shed $4.0 to $5.0 billion in assets in 2016.

It is among other things expecting to sell off a minority stake in its agriculture products business and bring in bids for the potential disposal of its Cobar and/or Lomas Bayas mines by the end of the second quarter.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

ECONOMY

Switzerland ‘an island of bliss’ compared to US, chief economist says

Switzerland does not expect to dip into recession this year despite the threat of an energy supply squeeze and when it comes to inflation levels the country was "an island of bliss" compared to the United States, the government's chief economist has said.

Switzerland 'an island of bliss' compared to US, chief economist says

The Swiss economy is “doing well” despite the impact of the war in Ukraine on energy prices, Eric Scheidegger told the SonntagsZeitung newspaper.

He said it was down to companies to steel themselves for the possibility of power shortages in the winter months.

“We may have to revise our economic forecast downwards for next year. The revised forecast will be published on September 20th.

However, we do not expect a recession for this year,” Scheidegger said.

“We run the risk of an energy supply bottleneck in winter. If there are persistent production interruptions in the EU and we ourselves have a gas shortage, it becomes problematic.

“In our negative scenario, we expect zero growth for 2023 instead of growth of almost two percent.”

Despite the threat of power shortages and the effects of the war in Ukraine, Scheidegger does not see a serious economic crisis heading towards Switzerland.

“At present, the economy is still doing well. Current indicators show that the economy in this country also developed well in the second quarter — after the outbreak of the war in Ukraine,” he said.

“Economic support measures such as general perks or tax relief are currently therefore neither necessary nor helpful,” he added.

‘Foreseeable events’

Scheidegger said the Swiss economy was less susceptible to high energy prices than other European countries as gas accounted for only five percent of its total energy consumption.

He said the government would discuss possible measures to curb high energy prices in the coming weeks, which could involve reducing health insurance premiums for low-income households.

The State Secretariat for Economic Affairs official said the help for businesses during the Covid-19 pandemic could not become the norm during economic downturns.

“It’s been known since spring that there can be a power shortage in winter. Companies have time to prepare for this,” he said.

“Companies can, and must, take this operational risk into account… it is up to companies to prepare for foreseeable events.”

As for inflation, he said Switzerland was “an island of bliss” compared to the United States, and inflation was likely to fall before the end of the year.

“At 3.4 percent, inflation is much lower here than in other countries.  Core inflation — inflation excluding fresh food, energy and fuel — is at two percent,” he said.

SHOW COMMENTS