Restructuring, earnings slump drive Glencore to $7bn loss

Anglo-Swiss commodity and mining multinational Glencore has announced a US$4.96bn (AU$6.91bn) net loss in 2015, as it underwent an aggressive asset shedding process in an effort to manage its significant debt pile in a downturned market.

The company announced on Tuesday its earnings before interest and tax, depreciation and amortisation (EBITDA) had fallen 32% to US$8.69bn in 2015.

Taking depreciation and amortisation into account, Glencore’s EBIT slumped 68% to US$2.17bn. Net income dropped 69% to US$1.34bn.

From there, significant impairments, restructuring costs and net losses on disposals of operations dragged the company down to the net loss of US$4.96bn.

Glencore’s restructuring drive saw it reduce its net debt in 2015 from US$30.53bn to US$25.89bn, an improvement of 15%. Its total asset value dropped 16% in that same time, to $128.49bn.

The company’s result capped off a dreadful 2015 for the world’s five biggest independent miners – Glencore, BHP Billiton, Rio Tinto, Vale and Anglo American – who, according to the Wall Street Journal, suffered combined losses of US$32bn in the calendar year.

Despite the tough figures, Glencore’s share price has actually gone up so far in 2016, as commodity prices have stabilised slightly following months of decline, which were driven primarily by a sharper-than-expected slowdown in China’s economic growth.

Glencore’s London Stock Exchange price of 134.76 pence per share on Wednesday morning was down 56.3% from the start of 2015, but up 44.2% from the start of 2016.

And the company’s colourful chief executive, Ivan Glasenberg, seems to be confident the share rebound is justified.

“Have we bottomed? I think so,” Glasenberg told reporters on Tuesday, according to the WSJ.

The CEO was also relatively upbeat in his official statement to the market, saying: “Our rigorous focus on debt reduction, supply discipline and cost efficiencies enabled Glencore to record a robust performance in difficult market conditions.

“Our diversified portfolio, based around a core of Tier 1 assets, combined with our highly resilient marketing business, underpins our ability to continue to be comfortably cash generative at current and even lower commodity prices.”