Glencore Plc slumped to a record in London after reporting a 56 percent drop in first-half profit on the China-led rout in commodity prices.
Glencore, the worst performer on the U.K.’s benchmark stock index this year, slid as much as 9.4 percent. The company cut its full-year earnings forecast for its trading division. It also outlined further spending reductions as billionaire Chief Executive Officer Ivan Glasenberg pares debt in an effort to maintain dividends while preserving an investment-grade credit rating.
“We’ve got a worsening situation right now,” John Meyer, a mining analyst at SP Angel Corporate Finance LLP, said in an interview with Bloomberg Television. “Glencore I think should’ve performed a little bit better through the first half. This is going to disappoint many. The metals trading didn’t do so well. China really slowed down, it totally hit a wall.”
The world’s biggest natural resources companies have seen copper and oil prices fall to six-year lows as China’s economy expands at the slowest pace in a quarter of a century. Glasenberg said in an interview that nobody can read the Chinese economy right now.
“Markets are weak,” Glasenberg said. “China in the first half was a lot weaker than anyone had expected.”
Glencore was down 7.8 percent at 162.3 pence by 10:17 a.m. in London. The shares earlier dropped the most since January to the lowest since the firm’s initial public offering four years ago. This year’s slump of 45 percent is the most in the U.K.’s benchmark FTSE 100 Index.
Adjusted net income declined to $882 million from $2.01 billion a year ago, the Baar, Switzerland-based company said on Wednesday. That beat the $711 million average of seven analyst estimates compiled by Bloomberg. The company will pay an interim dividend of 6 cents a share.
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