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Glencore issues trading statement

Keith Bowman | 30 September 2015 | A A A
Glencore issues trading statement

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Glencore plc Ord USD0.01

Sell: 475.35 | Buy: 475.50 | Change 4.65 (0.99%)
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Following analyst concerns recently expressed in relation to lower commodity prices and the potential impact on the company's balance sheet, Glencore today (30Sept2015) issued a statement.

Management noted that "Glencore has taken proactive steps to position our company to withstand current commodity market conditions. Our business remains operationally and financially robust - we have positive cash flow, good liquidity and absolutely no solvency issues. We are getting on and delivering a suite of measures to reduce our debt levels by up to US$10.2 billion. Glencore has no debt covenants and continues to retain strong lines of credit and secure access to funding ? thanks to long term relationships we have with the banks. We remain focused on running efficient, low cost and safe operations and are confident the medium and long-term fundamentals of the commodities we produce and market remain strong into the future."

Measures previously announced by Glencore to reduce the group's debt to the low US$20s billion by the end of 2016.from around $30 billion and adapt the business to the current commodity landscape included:

  • An equity issuance of up to US$2.5 billion to reduce indebtedness and increase financial strength.
  • The suspension of the 2015 final dividend and 2016 interim dividends saving an approximate $2.4 billion.
  • Approximately US$1.5 billion to be generated from further reduction in working capital.
  • Around US$2 billion to be raised from the sale of assets.
  • US$500 million to US$800 million to be generated from a reduction in long-term loans and advances made by Glencore (c.US$4 billion at 30 June 2015).
  • US$500 million to $1.0 billion to be saved from an additional reduction in industrial capital expenditure to the end of 2016.

Standard & Poor's previously reduced its outlook on Glencore's BBB level to negative. Moody's Investors Service earlier this month cut its outlook to negative on Glencore and affirmed the company's Baa2 debt rating.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.

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