Glencore profits up 45 per cent
Newly-listed commodities group Glencore has posted a 45 per cent leap in its operating profit in the first quarter of its financial year in its maiden interim management statement.
Revenues rose 39 per cent to $2bn in the quarter compared with the same period in 2010, while adjusted operating profit – earnings before interest and tax – was $1.8bn.
The growth was largely attributed to hefty volatility in commodity prices that boosted its trading and marketing businesses.
Net income and cash generated by its operations also both rose by 47 per cent.
The biggest gainers among its business segments were agricultural commodities, where operating profit almost doubled to $94m in the quarter from $49m in 2010; and energy, which almost doubled to $434m from $239m the previous year.
These gains offset a lower contribution from its metals and minerals divisions.
“Glencore’s marketing operations in many commodities benefitted from healthy global demand and trade flows, as well as the additional arbitrage opportunities brought on by increased market volatility and tighter supply conditions. In particular, the oil division reported substantially improved results,” it said in a statement.
“Despite the recent commodity price volatility, the directors believe that underlying fundamentals across many of our key commodities are supportive and that economic activity and demand for commodities remains healthy,” it said.
Glencore’s share price currently trades below its 530p per share listing price but remains supported by its adviser banks. On Friday that support will end and a truer market value for the stock should emerge.