Glencore Made More Money Trading Commodities in Six Months Than It Expected All Year
LONDON—Commodities giant
Glencore
GLNCY -1.05%
PLC said Friday it made more money trading oil, metals and other commodities in six months than it had expected to make all year, citing unprecedented volatility in markets in the wake of the global recovery from the pandemic and the invasion of Ukraine.
Glencore said its trading division expects to post half-year earnings before interest and taxes of more than $3.2 billion, at the top end of the company’s full-year guidance. In the whole of 2021, the division generated earnings of $3.7 billion. Shares were up nearly 4% in early London morning trading.
“Our marketing segment’s financial performance has continued to be supported by periods of heightened to extreme levels of market volatility, supply disruption and tight physical market conditions, particularly relating to global energy markets,” Glencore said in a statement.
Glencore said it expected market conditions and its earnings to return to normal.
The bumper results catapult Glencore into a group of companies that have been early winners from the market and economic volatility that has whipsawed many other companies and governments. Last week, fellow trading house Trafigura Group posted record profit of $2.7 billion for its first six months of its fiscal year, amid sharp moves in commodity markets. Profit was 29% higher than in the same period a year earlier.
The recovery from the global pandemic and Russia’s invasion of Ukraine has sent global oil prices soaring, with Brent crude prices hitting a 14-year high of about $139 a barrel in March. Diesel and gasoline prices keep rocketing to record highs, while coal prices are also rallying as demand soars. Sanctions on Russian businesses have kept some buyers away, even though many commodities from the country aren’t sanctioned outright. That is leading to the sorts of price differentials that traders like Glencore can capitalize on.
Glencore, which is also a global miner, is one of the few large players in the industry that kept hold of its coal assets. Coal is expected to give an overall $6.7 billion boost to Glencore earnings, according to Citibank.
In an age of inflationary pressure, Glencore also said costs will increase, with higher taxes and input costs for diesel, explosives, logistics and electricity.
Royal Bank of Canada
said that higher costs will continue to weigh on the company, though it added that the London-listed group was better positioned than peers to navigate through an expected economic downturn.
Apart from its financials, Glencore has had a tumultuous first half of the year. Last month, the company said it would pay at least $1.2 billion and that two business units would plead guilty to bribery in the U.K. and to conspiracy to violate U.S. anticorruption laws over a range of misdeeds including market manipulation and bribery.
Write to Alistair MacDonald at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
LONDON—Commodities giant
Glencore
GLNCY -1.05%
PLC said Friday it made more money trading oil, metals and other commodities in six months than it had expected to make all year, citing unprecedented volatility in markets in the wake of the global recovery from the pandemic and the invasion of Ukraine.
Glencore said its trading division expects to post half-year earnings before interest and taxes of more than $3.2 billion, at the top end of the company’s full-year guidance. In the whole of 2021, the division generated earnings of $3.7 billion. Shares were up nearly 4% in early London morning trading.
“Our marketing segment’s financial performance has continued to be supported by periods of heightened to extreme levels of market volatility, supply disruption and tight physical market conditions, particularly relating to global energy markets,” Glencore said in a statement.
Glencore said it expected market conditions and its earnings to return to normal.
The bumper results catapult Glencore into a group of companies that have been early winners from the market and economic volatility that has whipsawed many other companies and governments. Last week, fellow trading house Trafigura Group posted record profit of $2.7 billion for its first six months of its fiscal year, amid sharp moves in commodity markets. Profit was 29% higher than in the same period a year earlier.
The recovery from the global pandemic and Russia’s invasion of Ukraine has sent global oil prices soaring, with Brent crude prices hitting a 14-year high of about $139 a barrel in March. Diesel and gasoline prices keep rocketing to record highs, while coal prices are also rallying as demand soars. Sanctions on Russian businesses have kept some buyers away, even though many commodities from the country aren’t sanctioned outright. That is leading to the sorts of price differentials that traders like Glencore can capitalize on.
Glencore, which is also a global miner, is one of the few large players in the industry that kept hold of its coal assets. Coal is expected to give an overall $6.7 billion boost to Glencore earnings, according to Citibank.
In an age of inflationary pressure, Glencore also said costs will increase, with higher taxes and input costs for diesel, explosives, logistics and electricity.
Royal Bank of Canada
said that higher costs will continue to weigh on the company, though it added that the London-listed group was better positioned than peers to navigate through an expected economic downturn.
Apart from its financials, Glencore has had a tumultuous first half of the year. Last month, the company said it would pay at least $1.2 billion and that two business units would plead guilty to bribery in the U.K. and to conspiracy to violate U.S. anticorruption laws over a range of misdeeds including market manipulation and bribery.
Write to Alistair MacDonald at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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