Glencore Posts Profit In H1 On Higher Prices; Lifts FY Earnings View; Stock Dips

Glencore plc (GLCNF.PK,GLNCY.PK,GLEN.L), a producer and marketer of commodities, reported Thursday a significant profit in its first half, compared to last year’s loss, driven by higher commodity prices. Further, the company lifted its fiscal 2017 earnings forecast for marketing segment. In London, Glencore shares were trading around 2 percent lower.

The company has increased the full year 2017 marketing adjusted EBIT guidance range by $100 million to $2.4 billion to $2.7 billion, citing the solid year-to-date marketing performance.

The company said the potential large-scale roll out of electric vehicles and energy storage systems looks set to unlock material new sources of demand for enabling underlying commodities, including copper, cobalt, zinc and nickel.

Glencore said its portfolio of Tier 1 enabling commodities underpins its ambition to create significant long-term value for Glencore shareholders.

For the first half of 2017, Glencore’s income before income taxes was $2.87 billion, compared to loss of $698 million in the prior-year period. Net income attributable to equity holders of the parent was $2.45 billion or $0.17 per share, compared to net loss of $369 million or $0.03 per share last year.

The company attributed the improved results to higher prices for most commodities, resulting in margin expansion across the company’s key industrial assets and its highly cash generative marketing business.

Adjusted EBIT surged 334 percent from last year to $3.80 billion, and adjusted EBITDA rose 68 percent to $6.74 billion.

The company noted that market sentiment and commodity prices during the prior year’s first half, compared to this year, were in stark contrast, as cyclical lows were reached in key
markets in first quarter last year.

Marketing Adjusted EBIT was $1.4 billion, up 13 percent, while the increase was 22 percent with Agriculture on a like-for-like basis.

In the first half, funds from operations or FFO grew 88 percent to $5.20 billion from $2.76 billion last year.

Revenue for the period grew to $100.29 billion from $69.43 billion in the previous year.

Thermal coal realisations were up between 50 percent and 70 percent over the period, while copper grew 22 percent, cobalt climbed 115 percent, and zinc grew 49 percent.

Meanwhile, production of Copper declined 9 percent, Lead fell 4 percent and Nickel declined 10 percent, while Zinc production grew 13 percent in the first half.

The company’s net debt fell a further $1.6 billion to $13.9 billion from end of…

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