Shares in Glencore have partially recovered since they hit a post-listing low at the end of June. And considering the general decline in commodity prices, the group turned in a reasonable half-year performance. However, it's conceivable that it will be forced to improve the terms of its offer for Xstrata, which surely acts as a deterrent for anyone thinking of buying into the Swiss commodities giant.
Glencore said that its range of commodities had been subject to comparable price falls ranging between 14 and 28 per cent over the period. The effect was particularly noticeable for industrial activities at the group's metals and minerals division, where profits were down by 58 per cent in June 2011. Overall, excluding mark to market movements and one-off items, the group recorded a 26 per cent fall in net profits to $1.8bn (£1.14bn).
The contribution to group profits from Glencore's marketing activities increased from 38 per cent to 44 per cent from last year, and broker Jefferies points out that the "marketing segment can be strong, even during periods of weak market conditions". However, the unpredictability of the segment was also brought home by a 37 per cent comparable fall in energy products marketing that was blamed on "fewer arbitrage opportunities".
Prior to these figures, Jefferies anticipated 2012 EPS of 49¢ (from 72¢ in 2011).
| GLENCORE INTERNATIONAL (GLEN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 352p | MARKET VALUE: | £24.3bn | |
| TOUCH: | 351-352p | 12-MONTH HIGH: | 484p | LOW: 289p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 446¢ | NET DEBT: | 42% | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 92.1 | 2.47 | 57.0 | 5.0 |
| 2012 | 108 | 2.20 | 33.0 | 5.4 |
| % change | +17 | -11 | -42 | +8 |
Ex-div: 29 Aug Payment: 13 Sep £1 = $1.58 | ||||
