Glencore 1st-Half Net Drops 25% on 2007 One-Time Item

Aug. 28 (Bloomberg) -- Glencore International AG, the world's biggest commodity-trading company, said first-half profit fell 25 percent after one-time gains from the sale of its alumina and aluminum assets a year ago weren't repeated. Net income dropped to $2.6 billion from $3.5 billion a year earlier, according to an earnings report obtained by Bloomberg today. Sales gained 29 percent to $86.2 billion. Marc Ocskay, a spokesman for the closely held company, declined to comment. ``The earnings are quite solid as they managed to match last year's performance,'' excluding the one-time item, said Felix Freund, a fund manager at Union Investment Gmbh in Frankfurt who holds Glencore's debt. Glencore, led by Chief Executive Officer Ivan Glasenberg and owned by employees, trades crude oil, oil products, coal and coke, all of which reached records this year. The company is also the largest shareholder of Zug, Switzerland-based Xstrata Plc, the biggest exporter of coal used to make power. Baar, Switzerland-based Glencore recorded a gain of $859 million in the first half of 2007 from asset sales to United Co. Rusal in exchange for a 12 percent stake in the Russian company. The company had its credit rating raised one level to BBB in April by Standard & Poor's Corp. after posting a record profit last year on gains from metals and agricultural products. Credit Outlook Glencore's net debt rose 13 percent to $11.8 billion in the first half, the company said. ``We're still looking at a company with a solid credit profile,'' said Henri Alexaline, a credit analyst at BNP Paribas SA in London. ``We're comfortable with our credit rating of BBB Flat for the rest of the year.'' A slump in nickel and zinc prices hurt sales in the first half. Operating income from metals and minerals fell 28 percent to $2.3 billion as average nickel prices sank 39 percent in the first half and zinc tumbled 36 percent, the company said. ``Given the boom we've seen in commodities in the past few years, we're not concerned about a 20 percent-30 percent drop in some metals,'' Freund said. Glencore supplied 2 million metric tons of zinc concentrate in 2007, and 170,000 tons of nickel and related products, according to a company prospectus published this month. The company didn't provide figures for the latest half year. Operating income from energy rose 75 percent in the first half to $1.54 billion because of ``favorable market conditions'' and higher coal sales, Glencore said.