London 24/08/2016 - Glencore adjusted EBIT and adjusted EBITDA for the first half of 2016 fell 38 percent and 13 percent respectively compared to 2015, driven primarily by lower commodity prices.
In this six month period adjusted EBIT was $875 million and adjusted EBITDA was $4,020 million, its financial results showed on Wednesday.
Many metal prices fell to 2009 lows during the first half of 2016 and key metal prices averaged around 20 percent lower than on the same period the previous year.
The poor environment resulted in Glencore announcing in the fourth quarter of 2015 that it would cut 500,000 tonnes of zinc and 455,000 tonnes of copper in order to preserve the value of its reserves.
“In meaningfully cutting our own production in coal, copper and zinc, we have contributed to the restoration of balance in the supply fundamentals for these, our core, upstream commodities,” CEO Ivan Glasenberg said.
Indeed, while copper is stuck below 5,000 per tonne, zinc has benefited from the cuts and is trading around $2,300 - close to one year highs.
“After a difficult start to the year, the more constructive tone of markets in recent months has helped support the pricing of many of our key commodities. While we are highly cash generative at current spot prices, we remain mindful that underlying markets continue to be volatile. We are alert to and have a high degree of proven flexibility in adapting to changing market conditions,” Glasenberg said.
On Tuesday the company announced that it has agreed to sell a 30 percent stake and all of the gold and part of the copper output from its Ernest Henry copper-gold mine in Australia to Evolution Mining for A$880 million ($670 million) as part of its plans to reduce debt.
The miner said it was on track to cut debt through asset sales and set a new target to cut net debt to between $16.5 billion and $17.5 billion this year
“We have already largely achieved our asset disposals target of $4-5 billion with a diverse and material pool of asset sales’ processes also on-going. Our divestment strategy remains one of maximising value for shareholders through identifying assets where overall Glencore franchise positioning, optionality and value is substantially preserved or even enhanced,” he said.