LONDON, March 4 (Reuters) – Commodities trader and mining group Glencore Xstrata Plc has raised its estimate of the savings it expects following last year’s Xstrata acquisition, as it focuses on cost-cutting and targets higher returns for shareholders.
After being hammered by billion of dollars in writedowns as falling metal prices dented their assets’ value, miners have worked to trim costs and tidy their balance sheets.
The group, which completed the record-breaking acquisition of Xstrata in May, was also victim of souring sentiment in the mining sector and in August announced a $7.5 billion impairment on the assets it inherited from the miner.
But the company, whose interests range from a 44 percent stake in the Collahuasi mine in Chile, one of the world’s largest copper mines, to a trading hub in its hometown of Baar, Switzerland, has identified cost and efficiency savings from the acquisition of more than $2.4 billion. That compares with guidance of $2 billion given late last year.
The full benefit of the savings will be realised this year, the company said as it posted a forecast-beating core profit in the first set of annual results since the creation of the enlarged group in May 2013.
“That’s a figure that we will continue to work on,” Chief Executive Ivan Glasenberg said. “We believe there are more cost savings and synergies to be obtained.”
The extra savings are related mainly to reduced costs of financing, procurement and a further headcount cull.
Glencore said its annual adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $13.1 billion, above a company-provided analyst consensus of $12.3 billion.
The beat was driven by a solid performance by its trading arm, offsetting a slight decline at its mining division due to weaker commodity prices.
Copper was the group’s best performing commodity, with higher volumes and lower costs offseting a 7 percent price fall.
The red metal accounted for 42 percent of Glencore’s earnings before interest and tax (EBIT) in 2013, up from 30 percent in the first half of the year.
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