Glencore annual net profit plunges to USD3.4B

ZURICH (AFP) – Glencore said yesterday its net profits tumbled 41 per cent in 2018, although the mining and commodity trading giant said operating profits rose to a record level and it announced a new USD2 billion plan to buy back shares.

Net profit fell to USD3.4 billion (three billion euros), but the Switzerland-based firm said its measure of operating profit – adjusted earnings before interest, tax, depreciation and amortisation costs – rose by eight per cent to a record USD15.8 billion.

The firm’s commodity trading business saw its operating earnings fall by 17 per cent to USD2.4 billion, but mining rose 15 per cent to USD13.3 billion.

CEO Ivan Glasenberg said in the earnings statement that “we achieved these results in a challenging operating environment” and that Glencore’s strong cash generation would allow it to pay out roughly USD2.8 billion in dividends to shareholders.

He announced a new programme to buy back USD2 billion in shares this year, which he said could be increased depending on market conditions and progress on sales of non-core assets.

The earnings statement also showed that Glencore’s net debt rose by some USD3.5 billion to USD14.7 billion.

Glencore launched a massive cost-cutting drive in 2015 when its debt ballooned to almost USD30 billion in 2015 while commodity prices had tanked.

It scrapped dividends, closed operations and sold assets in an aggressive savings effort that stabilised the company’s finances.

A rebound in commodity prices helped Glencore post bumper profits in 2017 and pay out a healthy dividend to shareholders.