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Thursday, December 9, 2021

Glencore’s half-year earnings fall, sees lower capex next year

JOHANNESBURG (Reuters) – Miner and commodities trader Glencore (GLEN.L) posted a 29 percent fall in first-half earnings on Wednesday on sliding metal and oil prices and said capital spending next year was expected to be lower than this year.

Glencore, whose trading division has until recently provided some insulation from the global commodities rout hammering other miners, said adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was $ 4.6 billion.

The company said last week it would trim capital spending for 2015 to $ 6 billion from the $ 6.5 billion to $ 6.8 billion range announced in February. It said on Wednesday that capital spending next year was expected to be no more than $ 5 billion.

Glencore, based in Switzerland and listed in London, said this month it would take a $ 790 million charge on oil assets in Chad due to a steep fall in oil prices.

Oil prices are down because of a supply glut and both Brent and U.S. crude have lost more than half their value from a year ago.

Glencore makes about a quarter of its earnings from commodities trading, which had previously allowed it to withstand the steep fall in oil and metal prices slightly better than pure play miners.

Earnings from its marketing division fell 27 percent to $ 1.2 billion, due to tough metals’ trading conditions.

The price of copper, Glencore’s largest earner, is at six-year lows weighed down by a slowdown in China, which is one of the world’s biggest consumers of metals and other raw materials.

Coal prices, another major commodity for Glencore, have also been weak and show no sign of reversing as a supply glut, combined with expectations of shrinking demand from China, paint a bleak outlook.

As commodity prices fall, Glencore’s share price tumbled to record lows of 168.80 pence this week, less than a third of its debut price of 530 pence in 2011.

The shares are down about 40 percent so far this year, underperforming other global miners such as Rio Tinto (RIO.L) and BHP Billiton (BLT.L), and compared to a 26 percent fall in the FTSE 350 mining index.

(Reporting by Olivia Kumwenda-Mtambo; editing by David Clarke)

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