Agriculture giant Glencore reassures market on share price fall
© Tim Scrivener Agriculture, mining and energy giant Glencore has sought to reassure markets, following a fall of almost 30% in its share value on Monday (28 September) to 68.62p.
Steps had been taken to position the company to withstand current commodity market conditions, said Glencore in a statement on Tuesday (29 September).
“Our business remains operationally and financially robust,” it said.
See also: Use your pension to build a new grain store
“We have positive cashflow, 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$10.2bn (£6.8bn).”
The company’s share value recovered by midweek to more than 90p, compared with 344.35p on 7 October last year.
Agriculture accounts for about a quarter of the group’s global business.
In early September the company said that it was looking to sell a stake in its agriculture division, which includes storage, handling and transport as well as trading interests.
In the UK, Glencore is thought to handle between 1.5m and 2m tonnes of combinable crops annually, with 65% to 75% of this bought as ex-farm grain through Glencore Grain based at Thame, Oxfordshire.
Half-year accounts for the global business to the end of June showed earnings before interest, taxes, depreciation and amortisation (Ebitda) down 29% at US$4.61bn (£3.07bn).
Reasons for the drop included weaker commodity prices and exchange rate effects, said notes to the accounts.
Metal trading conditions had been tough, it said, with aluminium and nickel affected by a collapse in physical premiums and subdued levels of global stainless steel production.
The company expected better second half contributions from metals and agriculture
Glencore is an Anglo–Swiss company which produces and markets more than 90 commodities.
It operates in more than 50 countries and employs about 181,000 people.