Glencore announces loss of $5 billion in 2015

Debt-laden mining and commodities giant Glencore on Monday reported results deep in the red for 2015 due to plunging prices for metals and oil.

Glencore announces loss of $5 billion in 2015
The logo at the company's headquarters. Photo: Fabrice Coffrini/AFP

Debt-laden mining and commodities giant Glencore on Tuesday reported results deep in the red for 2015 due to plunging prices for metals and oil.

The Switzerland-based company posted a loss of $4.96 billion (4.5 billion euros) last year, compared to a net profit of $2.3 billion just a year earlier.

Not counting $6.3 billion in so-called significant items, including losses linked to bankruptcy proceedings at its optimum coal mine in South Africa, the company said it had raked in a net profit of $1.3 billion last year. But even this adjusted profit ticked in 69 percent lower than in 2014.

Glencore saw its commodities marketing activities slide 11 percent to $2.7 billion, hit by a slumping metals market as well as by a strong base-line comparison on agricultural products in 2014. But a “robust performance from oil marketing” helped slightly offset the downward trend.

The company's production activities plunged 38 percent to $6.0 billion, “reflecting lower prices in all key commodities.”

Glencore had in September announced drastic moves to trim its then towering $30-billion debt, including suspending production at a number of mines andselling off assets.

The company said on Tuesday that by the end of 2015, its debt had shrunk to $25.9 billion. “Our rigorous focus on debt reduction, supply discipline and cost efficiencies enabled Glencore to record a robust performance in difficult market conditions,” company chief executive Ivan Glasenberg said in the earnings statement.

He insisted that the company's “diversified portfolio … (and) highly resilient marketing business, underpins our ability to continue to be comfortably cash generative at current and even lower commodity prices.”

Glencore said it was “confident” it would shed $4.0 to $5.0 billion in assets in 2016.

It is among other things expecting to sell off a minority stake in its agriculture products business and bring in bids for the potential disposal of its Cobar and/or Lomas Bayas mines by the end of the second quarter.

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Swiss interest rates remain the same, but who are the winners and losers?

After five consecutive increases since it had lifted rates out of negative territory in June 2022, Swiss National Bank (SNB) will keep the current rate of 1.75 percent for the time being. What effect will this have on the public?

Swiss interest rates remain the same, but who are the winners and losers?

“We have decided to leave the SNB policy rate unchanged,” the bank said in a press release on Thursday.

It added, however, that further rate hikes can’t be ruled out in the future.

“A further tightening of monetary policy may become necessary to ensure price stability over the medium term,” the central bank said.

The fact that SNB’s rates remain the same is good news for some, and not so good for others.

Who benefits from this situation?

The clear ‘winners’ are homeowners whose mortgages are not ‘fixed.’

Most specifically, it concerns those who have taken out the so-called ‘SARON’ mortgage

With SARON, which is an acronym for Swiss Average Rate Overnight, the rate can change daily, so it becomes more expensive when rates go up, but not when they go down or remain the same — the latter being the case now.

READ ALSO: What is Switzerland’s ‘SARON’ mortgage? 

While people who have taken out SARON mortgages are not gaining anything when interest rates remain stable, they are not losing either, because not having to pay higher interest is a victory in itself.

The same is true for other homeowners who don’t have a fixed-rate mortgage: they got a reprieve from having to pay higher interest.

However, this ‘lull’ may very well be temporary: as the SNB pointed out, further rate hikes can’t be ruled out in the future.

What about rent prices?

The news is not as good for tenants.

Even though the current 1.75-percent rate has not budged upward, their rent will increase nevertheless.

On June 1st, 2023, the benchmark interest rate went up for the first time in 15 years, which means that many households will see their rents increase by an average of 3 percent from October 1st.

READ ALSO: Why rents in some parts of Switzerland are now set to increase sharply

Even if the reference rate is maintained at the same level, mortgage rates are currently significantly higher than two years ago.

Experts therefore expect a further increase in the benchmark interest rate on December 1st. “This upward trend is likely to continue for a long time,” according to Fredy Hasenmaile, chief economist at Raiffeisen bank.

What impact will the pause in interest rates have on household budgets?

Basically, the situation will remain as is now, with the exception of higher rents for some tenans, as mentioned above.

However, for people who tend to see the glass half-full instead of half-empty (in other words, optimists), the news is rather good.

The Swiss Trade Union said the decision not to increase interest rates is “judicious,” because it maintains the status quo rather than deteriorate the current situation.