Glencore profits plunge

Multinational miner and commodities group Glencore on Wednesday reported a net loss of $676 million (620 million euros) in the six months ended June, as weak commodities prices and the suspension of its oil drilling operations in Chad weighed down the company's bottom line.

In comparison, the firm posted profits of $1.72 billion in the first half of 2014.

"The first half of 2015 was another challenging one for commodities," Glencore said in a statement. "Commodity prices are now at levels not seen since the financial crisis of 2008/2009."

All eyes on the Red Dragon

Low oil and metal prices have made life tough for the commodities giant. Copper stands at six-year lows, depressed by weak demand from one of the world's biggest consumers of metal and other raw materials, China, which is living through a prolonged economic slump.

"It's hard to predict what China is doing, as an industry we should not be increasing production in anticipation of China demand," CEO Ivan Glasenberg told news agency Reuters.

"We will pull back our own production if necessary," he added. "Keep it in the ground, you can dig it out anytime."

Lowering expectations

Glencore said first-half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 29 percent to $4.6 billion, while earnings from its trading division fell 27 percent to $1.2 billion.

Commodities expert Sebastien Marlier called the firm's dependence on copper a "weakness."

The Economist Intelligence Unit analyst also described the revised full-year EBITDA expectations of the company's trading arm as proof of "the limits of [Glencore's] business model in this low-price environment." Whereas CEO Ivan Glasenberg had previously said he predicted the division would earn up to $3.7 billion this year, that projection was lowered to $2.5-$2.6 billion on Wednesday.

Diversifying its portfolio

In an effort to limit its exposure to industry volatility, Glencore has in recent years sought to diversify its portfolio. In 2013, it went from exclusively trading commodities to merging with mining company Xstrata. And last year, it bought Caracal Energy - an oil and gas company in the central African nation of Chad - for $1.35 billion. Today, Glencore is the second-largest independent oil trader worldwide.

However, with most of its businesses impaired by market gluts, the Baar, Switzerland-based commodities giant has seen its stock shrink by more than 40 percent so far this year. Reacting to the downtrend, Glencore last week cut spending plans for 2015 for a second time this year, to $6 billion from a $6.5-$6.8 billion range in February.

Takeover talk

In an interview with business daily The Wall Street Journal on Wednesday, CEO Glasenberg indicated he was open to potential merger offers or takeover bids.

"We are opportunistic," the Chief Executive said in the interview. "We have always said that we are a company that looks at opportunities. Good opportunities come that make economic sense, we will look at [them]." He stressed, however, that he wasn't "entertaining any," at the moment, the paper wrote. "I haven't seen anyone making a takeover of Glencore yet."

pad/uhe (AFP, Reuters)