Switzerland-based mining conglomerate Glencore has announced that it lost a massive $5 billion as the company struggled to remain afloat in 2015, marking one of the worst years in the company's history since it offered itself to the public. Despite the loss, however, Glencore is optimistic about its future.
Indeed, with the mining industry in its current state, even an industry giant such as Glencore has suffered to the point when its shares are practically worth half as much as they were worth last year. Despite this, however, the company's sheer resilience and quick response to market headwinds might have won the hearts of investors.
This year so far, the Glencore's shares have rallied 43 percent as the company impressed shareholders by working very hard at shoring up its balance sheet. Though the company's $4.96 billion loss in 2015 is indeed significant compared to the mining giant's $2.3 billion profit for the year, the fact that it was able to drive its net debt down to $25.9 billion from $30.5 billion in 2015 is also something that is equally significant.
With the company seemingly hitting its stride once more, Chief Executive Officer Ivan Glasenberg has stated that he believes commodity prices have bottomed and that the company's sales in China are "pretty good."
Glencore Chief Financial Officer Steve Kalmin further stated that considering where the company currently stands, it would not be a surprise if a return to dividends would be possible next year.
Despite Glencore's rather optimistic point of view, the mining industry has continually been battered down, with prices of copper, nickel, zinc and iron ore falling rapidly amid weak demand in a slowing Chinese economy. Regardless of the general market's state, however, Glencore is still aiming to further reduce its debt to as low as $17 billion.
The company plans to accomplish its goal by scrapping its dividend, cutting costs and selling a number of its assets and new shares. By doing so, Glencore would be able to keep afloat.
Ben Davis, a mining analyst at Liberum Capital in London, believes that Glencore's decisions have been right so far.
"All on eyes on the second quarter for asset sales. It puts Anglo-American to shame at the rate Glencore gets the important work done," he said.
