Glencore’s H1 adjusted EBITDA was down 29% from H1 2014, to US$4.6 billion, leading to net income of US$882 million, a fall of 56% from the previous year. On a per share basis, net income was US$0.07 against US$0.15 previously.
The decrease in profitability was largely down to the performance of the company’s Industrial sectors, where EBITDA declined to US$3.4 billion, owing to significantly weaker commodity prices (oil, coal, copper and nickel, down 46%, 15-20% range, 14% and 17% respectively). The impact of lower prices was cushioned somewhat by weaker producer currency exchange rates and various production increases, including zinc (12%), ferrochrome (16%) and oil (68%).
Glencore’s income was also affected by one-off ‘significant’ items that included a loss on disposal of investments in Lonmin (US$256 million), an income tax expense of US$377 million, loss from a metal leak at the Koniambo mine (US$235 million) and impairments to oil assets in Chad (US$792 million).
In H1 2015, copper production was down 3% to 730.9 kt, reflecting anticipated grade changes at Alumbrera and Antamina and planned maintenance activities at Collahuasi. Zinc production was up 12% to 730.3 kt, mainly due to the ramp-up of expansion projects in Australia, and coal production was down 4% to 68.7 Mt, primarily due to the market driven decision to cut production.
The company’s production guidance a for the whole of 2015 is 1,500-1,550 kt of copper, 1,520-1,70 kt of zinc, 335-360 kt of lead, 98-108 kt of nickel and 135-139 Mt of coal.
Last week the company completed the sale of its interest in the Tampakan copper project, the Falcondo nickel operations and the Sipilou nickel project, for total proceeds of approximately US$290 million.
Lower commodity prices hit Glencore’s earnings: GLEN