Glencore hit for $8bn but boss takes $59m dividend

 

The newly forged iron ore-to-copper empire Glencore Xstrata was forced to slash the value of its assets by $8.5bn (£5.4bn) in the first set of results since the merger that created it.

The bulk of the writedown - $7.7bn - was a direct result of cutting the valuation of Xstrata's assets, seemingly undermining the rationale behind the deal. Mining production and trading companies have been badly hit by the volatile nature of the global commodities markets, which have been particularly ravaged in recent months by a slowdown in China. Metal prices fell by an average of 15 per cent in the first-half of 2013, hurting the combined group's figures yesterday.

Despite that, chief executive Ivan Glasenberg is thought to have pocketed around $59m from these first results, as he owns an 8.3 per cent stake in the company and the board paid out a dividend of 5.4 cents a share.

Xstrata was spun-out of Glencore as a collection of coal assets more than a decade ago, but proved so successful that the Glencore chief executive Ivan Glasenberg, was determined to bring it back into the fold.

The $7.7bn Xstrata assets writedown is believed to have included the Koniambo nickel operation in New Caledonia. Glencore did reduce the value of some of its own assets, including the Murrin Murrin nickel mine in Australia

However Mr Glasenberg and Steven Kalmin, the finance director, moved to down play the significance of the writedown, pointing out that it was the result of the share price on the "arbitrary" day that the long-mooted deal finally completed. Had the transaction finalised a month later, when the respective share prices were trading at different levels, Glencore would have only been paying a $2bn premium, they argued.

"Do I believe that we will get [the value of the Xstrata writedown] back over time? Yes, I do believe that and that's why we did the transaction and why I still feel comfortable with the deal," Mr Glasenberg said.

The South African billionaire added that his team had taken a "conservative approach" to valuing Xstrata's assets.Citigroup suggested Mr Glasenberg had performed a "clearing of the decks", meaning that any potential problems found within its assets were reflected in their revaluations straight away.

Analysts were also scanning for clues over who will snatch the role of Glencore Xstrata's first permanent chairman. Tony Hayward, who was in charge of BP at the time of the Gulf of Mexico disaster three years ago, currently holds the role on an interim basis. Mr Glasenberg surprisingly conceded that Mr Hayward was "of course" a candidate to take the role on a permanent basis.

Investors did find some cheer in better than expected figures for its key profit measure, which excluded the writedowns and other one-offs. Underlying profit was $6bn.

Mr Glasenberg was also upbeat about the cost savings that will come about as a result of the Xstrata deal, which had been put at $500m a year. He said that the actual savings would be "materially in excess" of that number, believed by many sector insiders to be more than $1bn.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test