London - Trader Glencore stuck to its guns on a $30bn bid
for miner Xstrata as it reported a smaller than expected drop in first-half
profit on Tuesday, with the impact of weaker prices tempered by resilience in
metals and agricultural trading.
Glencore, the world’s largest diversified commodities
trader, said net profit fell to $1.81bn, down from $2.44bn a year ago and
marginally above analysts’ expectations of $1.6bn.
Its operating profit fell 24% to almost $2.51bn, again
topping forecasts, as the trader and miner warned of tough conditions
continuing for the sector.
“Looking forward, we neither anticipate nor assume any
material improvement in overall market or economic conditions in the near
term,” Chief Executive Ivan Glasenberg said.
Operating profit for Glencore’s marketing businesses fell
11%, dented by tough comparisons with a strong first-half for energy trading
last year, while its industrial businesses saw operating profit fall 32%.
Miners have had a torrid earnings period, reporting their first
profit falls since 2009, as margins become squeezed by stubbornly high costs
and weaker prices for key commodities.
Xstrata’s core profit fell by almost a third as the miner,
one of the world’s largest producers of thermal coal and copper, was hit along
with its peers by falling commodity markets against a backdrop of stubbornly
high wages and inflation. It was partly shielded from tumbling thermal coal
prices by higher-priced contracts.
Glencore, already the single largest shareholder in Xstrata
with a 34% stake, announced in February it would bid for the stock it does not
already own, offering 2.8 new shares for every Xstrata share held. It has met
with resistance, however, from Qatar Holding, Xstrata’s second-largest
investor, which in June demanded a ratio of 3.25.
It gave no update on the merger or talks with Qatar in
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