Glencore, the huge commodities trader and producer, has announced significant increases in revenues and earnings as it attempts to finalise its merger with fellow FTSE 100 miner, Xstrata.
Glencore listed on the London and Hong Kong stock exchanges in May of last year, making several of its directors overnight billionaires.
Revenue during its first year as a listed company was $186bn; a 28% increase compared to 2010. The increase was primarily due to higher average prices in crude oil (Brent crude up 39%), copper (+17%), wheat (+22%) and gold (+28%).
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Net income after significant items was up 7% at $4.3bn.
The company has two main divisions: Marketing, which is a commodities trading business; and Industrial Activities, which produces commodities.
Adjusted earnings before interest and tax (EBIT) at the Marketing unit fell 18% to $1,911m in 2011, primarily due to an under-performance in the agricultural products division which Glencore is blaming on "unprecedented volatility in the cotton market".
Industrial Activities EBIT was up by 18% to $3,487m in 2011, benefiting from generally stronger commodity prices and increased production. Glencore announced with its results significant increases in the mineral reserves at the deposits operated by its majority owned subsidiary in Kazakhstan, Kazzinc, with gold up 50%, copper up 136% and zinc up 67%.
Total adjusted EBIT for the group was up 2% at $5.4bn, with a final dividend award of 10 cents per share bringing the total dividend for the year to 15 cents per share.
Glencore saw a 19% reduction in selling and administrative expenses to $857m as employee compensation came in noticeably lower than 2010.
Ivan Glasenberg, Glencore's Chief Executive, clearly believes the the dynamics of the developing world play right into Glencore's hands, commenting: "Emerging market urbanisation will continue to increase commodity intensity per capita as the demand for goods and products that industrialised societies take for granted increases."
Nevertheless, Glasenberg and his friend, Mick Davis, the Chief Executive of Xstrata, still face opposition from shareholders over their proposed $90bn merger, but the pair are sticking to their guns, with Glasenberg claiming the deal "is the logical next step for two complementary businesses to create a new powerhouse in the global commodities industry".
Glencore shares have dropped 21% since its flotation in May.
BS
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