Glencore's earnings rise as net debt narrows more than expected

Anglo-Swiss miner Glencore slashed its losses and net debt as it successfully firmed up its balance sheet following the downturn in commodities a year ago.

Net debt for 2016 fell more than expected by 40% to $15.52bn, compared to the previous year. Glencore previously said that it was targeting net debt at the end of year to be between $16.5bn to $17.5bn.

Since last summer, when its net debt was around $30bn the FTSE 100 company has sought to reduce its debt by selling $5bn worth of assets, it suspended its dividend and embarked on precious metals streaming deals totalling $1.4bn.

The ratio of net debt to adjusted earnings before interest depreciation and amortisation (EBITDA) nearly halved to 1.51 times from 2.98 times, further helped as adjusted EBITDA grew 18% to £10.26bn and adjusted EBIT surged 81% to $3.9bn.

Consensus was for revenues of $156.36bn, EBITDA of $9.82bn, and operating profit of US$3.28bn.

Capital expenditure declined 41% to $3.5bn and net funding reduced by $14.7bn over the past 18 months to $32.6bn.

Net income pre-significant items increased 48% to $2bn.

Chief executive Ivan Glasenberg said that Glencore was “well positioned” following its “swift and decisive actions to re-position and optimise our capital structure and industrial asset portfolio”.

He added: "As we look forward, increasingly favourable fundamentals provide the potential to create significant long-term value for Glencore shareholders via our leading portfolio of well capitalised tier one assets and resilient marketing business, combined with significant low-cost copper and zinc growth options and disciplined approach to supply."