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FTSE falters as Glencore leads mining shares lower

Discussion in 'Market News' started by Lily, Aug 24, 2016.

  1. Lily

    Lily Forum Member

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    Commodities group reports a fall in profits but set to reduce debt further

    Mining shares are leading the market lower, with Glencore under pressure after a sharp drop in first half profits.

    The company reported a 13% drop in underlying profits to $4bn, but said its disposal programme was on track. Like other commodity companies, Glencore has suffered from a upheaval in the market amid concerns about global growth, not least in China, a key customer for mining groups.

    We have already largely achieved our asset disposals target of $4bn-$5bn with a diverse and material pool of asset sales’ processes also ongoing. [But we are] mindful that underlying markets continue to be volatile.

    Despite the 66% drop in net profit, Glencore’s results - including the potential resumption of dividends next year, alongside a more aggressive debt reduction target, are a step in the right direction. However, with Glencore’s share price having more than doubled year to date, after slumping 70% last year, we are seeing some profit taking in early trade.

    At first pass a reasonable result, although concensus numbers suggest that some of the market will have expected better.

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