Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Glencore    GLEN   JE00B4T3BW64

GLENCORE (GLEN)
Mes dernières consult.
Most popular
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets

Trading cushions Glencore's 2012 profit drop

share with twitter share with LinkedIn share with facebook
share via e-mail
0
03/05/2013 | 08:54pm CEST
Combination photo shows the logos of Glencore and Xstrata at their headquarters in Zug

A rise in profits from trading helped Glencore offset lower prices in 2012, with net income down by a quarter as the commodities group prepares to seal a $34 billion (22.4 billion pounds) takeover of miner Xstrata.

The headline drop, modest relative to a bruised sector, was a vindication for former trader and Glencore boss Ivan Glasenberg, who has long extolled the marketing arm's ability to grow in tough conditions. Trading growth, though, came largely from agricultural products, rather than mainstays coal and oil.

Glasenberg's pronouncements on the strategy of the combined trading and mining giant have been keenly awaited and he said on Tuesday that he was optimistic the group would soon receive an approval from Chinese regulators, the last remaining hurdle.

Glencore said China's Ministry of Commerce was probing areas including the supply of copper concentrate, the raw material for copper smelters, among other markets.

But Glasenberg gave away few specifics on his plans for the merged group, sticking with what he said was a focus on investor returns and an intention to grow the proportion of profit coming from marketing, a slice which will shrink to roughly 30 percent immediately after the deal completes.

"(Incoming Rio Tinto Chief Executive) Sam Walsh said at the Rio presentation that they are now going to act like owners. We don't need to act like owners, we are owners," he told analysts.

That means, Glasenberg said, an opportunistic approach to deals, from a marketing agreement and share purchase in unlisted Brazilian iron ore producer Ferrous last week, to a bumper oil funding deal with Russia's Rosneft.

It also means taking advantage of the travails of large diversified players, who are under scrutiny from shareholders as boom-time acquisitions sour, placing more assets on the block.

"Those opportunities will be there, that is something new in the industry," Glasenberg said. "Competition will be less fierce than before. A lot of the mining companies are reassessing their portfolios, they are hanging back, there are new CEOs and, like all of us, they are under pressure from investors."

Glasenberg said he expects to review the combined portfolio of projects. "Greenfield" projects, or those built from scratch, unlikely to find favour as the Glencore team proclaimed itself "afraid" of potential delays and excessive spending.

Glencore has been expected to mothball or jettison many of Xstrata's greenfield growth assets, including some in tough jurisdictions such as Argentina. More advanced greenfield projects like copper mine Las Bambas in Peru and nickel mine Koniambo in New Caledonia could remain.

Glasenberg's review has already caused friction between the two management teams, long-time rivals and soon-to-be partners.

Glencore's boss, however, was sanguine on the potential effects, saying his focus was on the managers at the mines, not middle managers. The comments are likely to fuel speculation over the departure of Xstrata divisional bosses, including its head of copper, Charlie Sartain. Glasenberg declined to comment.

"Immediately after the merger, you will see a structure in place, ideally the way Glencore would like it," he said.

He said big deals were not off the agenda for the group, which snapped up both Xstrata and grain handler Viterra in 2012, though regulatory clearances could be expected to take longer.

This could include iron ore, where Glasenberg said he would review operations put up for sale by Rio.

WRITEDOWNS, DIVIDENDS UP

Glencore and Xstrata shares rose on Tuesday, as both met or exceeded market forecasts, dividends ticked higher and the sector recouped losses. Glencore closed up 5.7 percent and Xstrata up 6.8 percent, outperforming a 3.5 percent rise in the broader UK mining sector.

Neither, though, was immune to the impact of falling commodity prices last year.

Glencore's 2012 net income fell to $3.06 billion, in line with expectations. That excluded the impact of an impairment relating to a reclassification of its holding in Russian aluminium producer RUSAL after losses.

Its adjusted operating profit, or earnings before interest and tax (EBIT), dropped 17 percent, with a 27 percent drop in Glencore's industrial division accounting for the bulk of the weakness. Its trading division saw profit rise 11 percent, helped by a jump in earnings from oilseeds and grain.

Xstrata, reporting separately from Glencore for what should be the last time before the two merge, beat expectations but wrote down the value of nickel, zinc and platinum assets which dragged its net profit almost 80 percent lower.

The writedowns included a $978 million hit as Xstrata wrote down assets including its Australian nickel operations and platinum, and also $840 million on its investment in troubled South African platinum miner Lonmin.

Excluding the writedown, its profit dropped 37 percent.

Glencore expects to complete the Xstrata merger by April 16.

(Editing by Jason Neely and Grant McCool)

By Clara Ferreira-Marques

Stocks treated in this article : Glencore International Plc, Xstrata AG
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on GLENCORE
10/17 GLENCORE : CFMEU Lawlessness Continues - What More Evidence Do We Need for a Pub..
10/16DJGlencore, QIA to Proceed with EUR7.78 Billion Sale of Rosneft Stake
10/16 Miners provide foundation for FTSE while ConvaTec plummets
10/16 GLENCORE : Stake in Rosneft held by Glencore-QIA Consortium
10/14 GLENCORE PLC : 18.1% Potential Upside Indicated by Deutsche Bank
10/14DJGlencore Must Bide Its Time in Overtures to Bunge -- WSJ
10/13DJGlencore Strikes a Standstill Agreement with Bunge
10/11 GLENCORE : sees record oil trading volumes as margins shrink
10/09 GLENCORE : Refinery transfer Mining giant Glencore
10/07 GLENCORE : buys Chevron stakes in Botswana, SA
More news
News from SeekingAlpha
10/16 Glencore, Qatar finalize ?7.8B Rosneft deal
10/16 Copper surges above $7K to fresh three-year high as rally gathers steam
10/13 WSJ : Glencore strikes standstill agreement with Bunge
10/13 Iron ore rallies as China's clean air push hurts local supply
10/11 BLOOMBERG : South African fund manager may back bid for Chevron unit
Financials ($)
Sales 2017 203 B
EBIT 2017 8 117 M
Net income 2017 5 138 M
Debt 2017 21 289 M
Yield 2017 2,35%
P/E ratio 2017 14,37
P/E ratio 2018 14,57
EV / Sales 2017 0,47x
EV / Sales 2018 0,44x
Capitalization 73 122 M
Chart GLENCORE
Duration : Period :
Glencore Technical Analysis Chart | GLEN | JE00B4T3BW64 | 4-Traders
Technical analysis trends GLENCORE
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 5,14 $
Spread / Average Target 1,4%
EPS Revisions
Managers
NameTitle
Ivan Glasenberg Chief Executive Officer & Executive Director
Anthony Bryan Hayward Independent Non-Executive Chairman
Steven F. Kalmin Chief Financial Officer
Peter Roland Coates Non-Executive Director
Leonhard Heinrich Fischer Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
GLENCORE35.79%73 122
CHINA SHENHUA ENERGY COMPANY LIMITED25.22%59 489
COAL INDIA LTD-4.93%27 807
SHAANXI COAL INDUSTRY CO LTD69.90%12 498
CHINA COAL ENERGY COMPANY LIMITED7.40%10 633
YANZHOU COAL MINING CO LTD15.84%7 616