Glencore reports first-half underlying profit down 13 percent at $4 billion. But, as David Pollard reports, it says it is on track to sell assets and lowers its net debt target to between $16.5 billion and $17.5 billion this year.
The days of conveyor belt profits for big miners may be over for now, but Glencore's share price has nearly doubled in less than two years as it seeks to shape up to a difficult environment. A huge debt burden is down and asset disposals are on track to a four to five billion dollar target, according to Glencore's CEO. The latest: the sale of a stake in its Ernest Henry copper mine in Australia for 670 million dollars. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "If you look at the end of last year, Glencore's debt was in the region of about 30 billion dollars. They're on course to almost halve that by the end of the year. Yes, profits were slightly disappointing, but certainly no more disappointing than I expected them to be. And I think in terms of cutting capex and disposing assets, the stock market and investors think that actually Mr Glasenberg is doing the right thing." But shares did take a knock on its new figures. Analysts not liking news of a 400 million dollar hit from a coal hedge that went wrong. There's also the bigger question of the global demand for commodities - a recent rebound from a protracted slump seen peaking by some. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "Are countries like China, are countries like India going to be consuming at the same rate as the previous ten years? That for me is the big question and that then brings us to whether or not the current rebound has got legs. Unfortunately, I think the jury is out on that." Overall, earnings before tax were down 13 per cent to just under four billion dollars. Its debt target this year lowered to around 17 billion dollars - despite what Glasenberg himself says are still volatile markets.