Concurrent with the release of its first full-year results as a publicly-listed entity, Swiss commodities trader
The offer aside, it's been a mixed year for Glencore. A strong contribution from the Energy segment was completely undermined by marketing activities at its relatively small Agricultural businesses, which moved into loss after recording adjusted profits of $659m (£414m) in the previous year. In all, adjusted group profits crept up by 2 per cent to $5.4bn but this marginal improvement is attributable to $143m in additional income from Glencore's associates - primarily, of course, from Xstrata.
Within the key Metals & Minerals segment, strong copper and gold prices, combined with rising production, increased industrial profits by 17 per cent. But overall profitability was held back by a corresponding 11 per cent year-on-year reversal in marketing.
Some argue that the proposed Xstrata acquisition would help transform Glencore's business model into a more conventional resource model, and the fact that increased volatility in world cotton markets is cited as a reason for this year's flat profits underlines the complexity of its existing structure.
Looking ahead, group revenues should continue to benefit from high energy prices, particularly if coal demand picks up on the back of lower Asian inventories.
Prior to these figures, JPMorgan Cazenove was expecting adjusted 2012 EPS of 89.28¢ (78.83¢ in 2011)
|GLENCORE INTERNATIONAL (GLEN)|
|ORD PRICE:||420p||MARKET VALUE:||£29bn|
|TOUCH:||420-420.4p||12-MONTH HIGH:||550p||LOW: 341p|
|DIVIDEND YIELD:||2%||PE RATIO:||9|
|NET ASSET VALUE||423¢||NET DEBT:||40%|
|Year to 31 Dec||Turnover ($bn)||Pre-tax profit ($bn)||Earnings per share (¢)||Dividend per share (¢)|
Ex-div: 16 May
Payment: 1 Jun
At 380p, Glencore trades on a slim forward multiple of 7.5, which is cheaper than, say, Xstrata - but the unpredictability of its opaque marketing activities precludes a definitive call. Hold.
Last IC view: Fairly priced, 389p, 26 Aug 2011