Glencore posts $2.6-billion loss, suspends dividend

Mining and commodities trading giant Glencore posted on Thursday, August 6, a net loss of $2.6 billion for the 1st half of the year and suspended dividend payments to shareholders as it took massive coronavirus-related charges.

While the Swiss-based firm remained profitable on an operating basis – $1.5 billion in adjusted earnings before interest and taxes – it booked impairment charges of $3.2 billion.

Companies must reevaluate the value of their assets regularly in light of developments, and many firms have posted huge impairment charges as a result of lockdowns imposed to stem the spread of the coronavirus.

Glencore said it booked the charge as "a result of lower commodity prices related to the economic uncertainty arising from the COVID-19 pandemic."

It said the crisis pushed down the value of the thermal coal, oil, and zinc it produces as well as expectations concerning their long-term operations.

During the 1st half of last year, Glencore posted a net profit of $226 million.

"The outlook remains uncertain in the short term," chief executive Ivan Glasenberg said in a statement.

Despite Glencore's positive cash flow and ample liquidity, he said "the board has concluded that it would be inappropriate to make a distribution to shareholders in 2020" and the company would instead pay down its debt, which climbed during the 1st half the year.

Like many banks whose trading units profited from the volatility in the markets, Glencore's commodity trading operations did well, more than doubling adjusted earnings before interest and tax changes to a record $2 billion.

But adjusted operating earnings before charges tumbled by 42% to $2.6 billion in the mining and energy unit because of both the lower commodity prices and operations being halted at some of its mines.

Glencore said however that its diversified commodity portfolio "positions us well to play a key role in the next upward economic cycle." –