Results give hint of synergies
THE MANAGEMENT of Glencore and Xstrata yesterday released results for 2011 and calculated their potential combined firepower as they moved to convince shareholders to back a merger.
Xstrata, the smaller of the two firms, generated revenues of $33.9bn (£21bn) for the full year to 31 December. Its net profit before exceptional items was up 12 per cent on the previous year to $5.78bn.
The company – which employs 70,000 people in 20 countries – said it had made cost savings of $391m throughout the year, mainly in its coal operations. However, it expanded its copper resources during the period.
Meanwhile Glencore saw revenues of $186.2bn during the year it went public in London. It said its net profit rose to $4.06bn, up seven per cent on the previous year.
The company revealed that stronger metal prices had helped offset weaknesses in its agricultural commodities business. Glencore chief executive Ivan Glasenberg branded the results “solid”, adding that 2012 had started “strongly”.
The combined Glencore-Xstrata group would have reported revenues of £131.7bn, with profits of £10.2bn in 2011, according to figures jointly released by the companies.
It is estimated that £500m in efficiency savings could be achieved by the merger, mainly on the marketing front.
Both companies said in a statement: “Glencore and Xstrata management teams will be deployed according to their key strengths.
“Operating assets will be integrated into the existing Xstrata business units, while marketing will be managed by the existing Glencore management teams.”