ZURICH – Commodities giant Glencore, the former owner of Eskom coal supplier Optimum, reported massive 2015 losses of nearly $5-billion on Tuesday, following two years of plummeting prices for metals and oil.
The company announced more planned asset sales to cut debt.
Glencore sold its bankrupt Optimum coal mine in Mpumalanga to Tegeta Exploration and Resources, which is owned by the Gupta family, late last year.
The Switzerland-based Glencore has for months been involved in aggressive cost-cutting as it tries to stabilise its books in hopes of weathering one of the toughest commodities markets since the financial crash of 2008.
Glencore posted a loss of $4.96-billion last year, compared with 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 the Optimum coal mine, the company said it had raked in a net profit of $1.3-billion in 2015.
But even this adjusted profit was 69 percent lower than in 2014.
Glencore’s commodities marketing activities slid 11 percent to $2.7-billion, but a “robust performance from oil marketing” helped slightly offset the downward trend.
Glencore, in recent months, announced drastic moves to trim its then towering $30-billion debt, including scrapping its dividend, suspending production at a number of mines, and selling off assets.
The company said on Tuesday that by the end of 2015 its debt had shrunk to $25.9-billion, with plans for further aggressive cuts by the end of the year.
Company CEO Ivan Glasenberg said Glencore’s focus on curbing debt had already proved beneficial.
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 to $5 billion in assets in 2016.
Possible further asset sales this year include a minority stake in its agricultural products business, which could go on the block in the second quarter.
It might also bring in bids for the potential disposal of its Cobar and/or Lomas Bayas mines by the end of the second quarter.
“Glencore has made progress in its debt reduction plan,” said Ute Haibach, an analyst at J Safra Sarasin, in a market commentary, noting that its debt remained high and that the impact of future asset sales would be “decisive.”
Ben Davis, a mining analyst at Liberum Capital Ltd, agreed, telling Bloomberg news agency that Glencore deserved credit for moving aggressively once it realised the urgent need to shed debt.
Glencore’s moves put mining rival Anglo American “to shame”, Davis said.