Tuesday preview: Glencore Xstrata reports half-way figures

19th Aug 2013 16:00

Glencore Xstrata is expected to announce that it will write down the value of assets inherited from Xstrata by as much as 7.0bn dollars on Tuesday when it reports results. The miner will unveil its first set of results since Glencore's take-over of Xstrata in May.Glencore's management has been reviewing Xstrata's assets over the past three months, according to Reuters which said the writedown is likely to amount to $5.0bn to $7.0bn.The writedown will be mostly the value of former Xstrata assets. Nickel assets are likely to take the biggest hit as nickel prices decline and supply continues to exceed demand.The value of other assets including copper projects could also be cut back even though it accounted for a large slice of Xstrata's pipeline of future mines and expansions.The company expects half-year core profit, or earnings before interest, tax, depreciation and amortisation (EBITDA), to come to $5.88bn, and attributable profit to reach $1.7bn.Glencore, which has published first-half output in line with forecasts, has not provided pro forma year-ago numbers.Jefferies International predicts EBITDA of $5.6bn and segmental EBITDA of $5.8bn. The broker anticipates income of $1.65bn, or $0.12 per share, slightly below consensus of $1.7bn."We expect these results to include various one-off 'kitchen sink' items relating to the merger, which closed in May," the analyst said."We expect Glencore management to provide new guidance on synergies related to the Xstrata acquisition (likely to approach $1.5bn per year) and an update on the potential sale of the Las Bambas copper project at the Septemer 10th Investor Day. Glencore Xstrata shares should outperform within the sector between now and then, although the sector may be volatile following the recent strong performance."Jefferies also thinks the firm is likely to use free cash flow growth to reward shareholders with a growing dividend over time. Tuesday August 20thINTERIMSCairn Energy, CRH, Glencore Xstrata, JSC Acron GDR (Reg S), Menzies(John), NMC Health, Wood Group (John)QUARTERLY PAYMENT DATECaterpillar Inc.INTERNATIONAL ECONOMIC ANNOUNCEMENTSProducer Price Index (GER) (07:00)ANNUAL REPORTFalkland Islands Holdings, Immofinanz AGAGMSFalkland Islands Holdings, Meikles Ltd., World Trust FundRD