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The newly-merged mining-giant, Glencore Xstrata, have written down Xstrata’s assets by $7.7bn. Announced alongside to a decline in half-year revenues, the results highlight difficulties for the company that may take years to resolve though senior management remain positive for the future.
Commenting on the results Ivan Glasenberg, Glencore Xstrata’s CEO, said that they “again demonstrate the benefits of diversification, with strong outperformance in some divisions offsetting weaker market conditions elsewhere. The strong performance of our marketing division is particularly pleasing in what has been a difficult period for commodities. We remain positive on the market outlook and continue to see solid end-use demand growth in our major commodities”
“Merger integration tracking ahead of expectations, with synergies and other cash savings expected to materially exceed previous guidance” said Mr Galsenberg before finishing his remarks saying “Highly attractive positions envisaged on the industry cost curves once current development programme nears completion within the next 12-18 months”.
Alongside “Solid results overall with particularly pleasing performance in Marketing, up 6%”, in a statement the mining giants announced:
•Adjusted EBITDA down 9% to $6.0bn due to lower contribution from Industrial activities
•Adjusted EBIT down 28% to $3.2bn
•Strong cash flow generation, with FFO of $4.3bn and rolling 12 months’ FFO/Net debt of 28.2%
•Net debt increase lower than expected due to substantial working capital release
•Over $13.6bn of committed available liquidity
•Interim dividend of $5.4c/share, in line with 2012
•Viterra acquisition progressing to plan within wider lacklustre grain market
•Board reconstruction process commenced with appointment of Peter Coates, Peter Grauerand John Mack
•Merger integration tracking ahead of expectations, with synergies and other cash savings expected to materially exceed previous guidance of $500m p.a.
•Investor Day on 10 September to provide a comprehensive update on expected synergies, capexand portfolio review
•Highly attractive positions envisaged on the industry cost curves once current development programme nears completion within the next 12-18 months
