Trading cushions Glencore’s profits drop

Its trading division helping to cushion the impact of lower prices. That drop was smaller than most of Glencore’s diversified mining peers, which have recorded some of the sharpest falls in profit in a decade.

Including an impairment related to a reclassification of its holding in Russian aluminium producer RUSAL after losses in 2012, Glencore’s net income fell 75 per cent.

Xstrata, reporting separately from Glencore for what should be the last time before the two complete the tie-up, wrote down the value of nickel, zinc and platinum assets, dragging its net profit almost 80 per cent lower. Excluding the writedown, its profit recorded a smaller-than-expected 37 per cent drop.

Investors had hoped that Glencore, the world’s largest diversified commodities trader, would use the results announcement to give details of its post-takeover strategy - from target assets to additional synergies.

But the company, still awaiting Chinese regulatory approval for the long-planned deal, left investors guessing for now.

Chief Executive Ivan Glasenberg signalled there could be news soon after the merger completes next month, when the company will announce its divisional heads and further indications of progress on its review of the combined portfolio.

Mr Glasenberg said opportunistic acquisitions were not off the agenda, adding Glencore could stand to benefit as a new generation of bosses at major mining houses sold non-core assets.

“Those opportunities will be there - that is something new in the industry,” Mr Glasenberg said.

Glencore posted a 25 per cent drop in net income excluding significant items to $3.06bn (£2.02bn), in line with a consensus forecast of $3bn.

Its adjusted operating profit, or earnings before interest and tax (EBIT), dropped 17 per cent.

A 27 per cent drop in the industrial division accounted for the bulk of the weakness as lower production added to industry-wide issues.

Its trading division saw operating profit rise 11 per cent, despite weaker activity in its energy division, given low volatility across oil and coal markets.

Glencore also announced a new deadline for the completion of the merger with Xstrata of April 16.