Bloomberg News

Glencore First-Quarter Profit Advances 47% on Price Gains

June 14, 2011

(Updates with CEO comment in fourth paragraph.)

June 14 (Bloomberg) -- Glencore International Plc, the world’s largest listed commodities trader, said first-quarter profit rose 47 percent on higher prices for raw materials and stronger global demand.

Net income adjusted for items increased to $1.3 billion, from $886 million a year earlier, the Baar, Switzerland-based company said today in a statement. Sales climbed 39 percent to $44.2 billion, it said.

Glencore completed a $10 billion initial public offering last month, selling stock in London and Hong Kong in the world’s biggest IPO this year. Commodity trading conditions have been “very favorable” this half and Glencore’s earnings potential is “underappreciated” by the market, Deutsche Bank AG said in a June 6 report in which the bank recommended buying the stock.

“Our first-quarter results show that Glencore continues to deliver a strong return on equity, emphasizing the unique benefits of having large-scale marketing and industrial asset activities spread across a diversified commodity base,” Chief Executive Officer Ivan Glasenberg said in the statement.

Glencore, which owns plants and mines as well as trading operations, advanced 2.7 percent to 523.4 pence in London yesterday, giving it a market value of 36.2 billion pounds ($59 billion). The stock has dropped 1.2 percent since debuting at 530 pence apiece on May 19.

IPO Ends Partnership

The company, which changed its name from Marc Rich & Co. after management bought out former fugitive U.S. financier Marc Rich in 1994, has ended more than three decades of operating as a closely held partnership.

The Standard & Poor’s GSCI Spot Index of 24 commodities rose 15 percent in the first quarter and averaged 30 percent higher than a year earlier. Glencore’s net income in the fourth quarter was $1.26 billion, similar to the average quarterly result posted in the record year of 2007, it said in March.

“Glencore remains well positioned for 2011,” the company said in today’s 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.”

Eurasian Natural Resources Corp., a producer of metals in Kazakhstan, advanced the most in seven months in London trading yesterday after the Sunday Times said Glencore was studying a takeover offer. Glasenberg said today that the company is “not actively considering” a bid, speaking on a conference call.

Glencore said in April it planned to allocate about $5 billion from funds raised in the IPO to capital spending over the next three years.

Glasenberg said today that Glencore had signed a memorandum of understanding to acquire a Peruvian copper project belonging to Hong Kong-based CST Mining Group Ltd. CST said earlier that Glencore had signed an initial agreement for 70 percent of the Mina Justa copper project for $475 million.

--Editors: Amanda Jordan, John Viljoen

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net.

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net.


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