Glencore slashes 2015 capex budget as annual profits slip 2%
Commodities trader and mining group Glencore managed to meet City expectations with a small decline in operating profits in 2014 as strong earnings growth in its marketing division was outweighed by falling prices dragging on its industrial business.
FTSE 100
8,213.49
16:59 03/05/24
FTSE 350
4,515.50
16:54 03/05/24
FTSE All-Share
4,469.09
17:14 03/05/24
Glencore
455.00p
16:50 03/05/24
Mining
10,084.30
16:54 03/05/24
The results came as the company slashed its investment budget for this year.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2% last year to $12.76bn, more or less in line with the $12.77bn pencilled in at Credit Suisse.
Marketing adjusted EBITDA increased 15% to $3.0bn, helped by significant growth in agriculture on the back of strong results from its Viterra grain division.
However, industrial adjusted EBITDA dropped 7% to $9.8bn as higher production, cost savings and weaker producer currencies were overshadowed by lower prices.
Glencore said that in response other volatile backdrop for commodities markets, the capital expenditure budget for 2015 has been cut to $6.5bn-6.8bn from previous guidance of $7.9bn.
In particular, the group has decided to curtail coal production at Optimum in South Africa and a number of coal operations in Australia “to better align volumes and qualities with current market demand”.
Nevertheless, it said: “While there remains the potential for future economic setbacks and no shortage of bearishness towards commodities in financial markets, physical demand for our raw materials remains healthy. We anticipate tightening supply conditions to materialise in our key commodities in response to lower prices, production / investment cutbacks and falling grades.”