Glencore-Xstrata records $8.9-B net loss in first half

Agence France-Presse
The newly merged mining firm says net loss was due to merger write-downs which reflect the poor outlook for the mining industry

DOWNSIZING IN PHILIPPINES. After stiff opposition from host local government, Church and tribes, including rebel attacks, the operator of one of the world's biggest copper and gold deposits cut its Philippine mining operations. Photo shows a visualization of the Tampakan mining site by Parsons Brinckerhoff for Swiss miner Xstrata

ZURICH, Switzerland — Newly merged mining giant Glencore-Xstrata reported a switch into a first-half net loss of $8.9 billion on Tuesday, August 20, owing to merger write-downs, but signalled it would pay an interim dividend.

At the same time last year and on a comparable asset base, the business made a net profit of $2.2 billion (1.65 billion euros).

The expected dividend was a sign of confidence in the future, the group said, forecasting bigger-than-expected economies of scale.

Publishing its first results since the merger, the new group took a charge of $7.6 billion to write down goodwill, meaning intangible assets which have a lower book value than the market value when they changed hands.

The group, based in Switzerland, said that the write-down reflected the poor outlook for the mining industry and increased risks for big expansion projects and for the development of new sites.

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But sales rose on a comparable basis by 4% to $112 billion (84 billion euros).

However, on a pro forma or nominal basis, sales fell by 2% to $121 billion.

Managing director Ivan Glasenberg said that the first half of the year had been a period of transformation for the group which had made excellent progress in integrating the activities of the two component parts.

And he said that the benefits and economies of the merger would be much greater than the initial forecast of $500 million per year.

The group said that it expected to pay an interim dividend of $0.054 per share.

It said that this was a sign of its confidence in its prospects and in the strength and flexibility of its balance sheet. – Rappler.com