Trading profits boost Glencore

Commodities trading and mining giant Glencore impressed the markets with its first full-year results.

Commodities trading and mining giant Glencore impressed the markets with its first full-year results since its $66bn takeover of Xstrata in May 2013.

It posted a 7% drop in income to $4.3bn, excluding one-off charges, with a 23% drop in earnings from the mining division offset by an 18% jump at the trading arm. The group mines and markets 93 commodities.

What the commentators said

The trading arm is worth 42% of group earnings, and it covers a wide range of raw materials: the trading profits stemmed completely from Glencore's agriculture sub-segment. Profits at the grain and oilseed business quadrupled, offsetting a decline in earnings from trading mined commodities and energy.

The burning question now, said Elizabeth Knight in the Sydney Morning Herald, is whether Glencore still wants to take over Rio Tinto, leapfrogging BHP Billiton to create the world's biggest miner. Last year's tilt was rejected by Rio's board, but "few believe Glencore has gone away". The firm merely appears to have "moved into the background to regroup" now that the price of iron ore, Rio's main product, has further declined.

But rather than go shopping, Glencore may have to concentrate on keeping investors and ratings agencies "comfortable with its debt pile", reckoned Helen Thomas in The Wall Street Journal.

Its net debt, at three times the earnings of its mining segment, is far higher than sector peers, and its shares have already priced in a recovery in metals prices. Throw in the threat of a downgrade by Standard & Poor's if it pursues mergers or hands out too much cash to shareholders, and the industry's "ultimate dealmaker" appears to have "limited room for manoeuvre".

Recommended

Tech has dominated the economy – but the real world is about to strike back
Industrial metals

Tech has dominated the economy – but the real world is about to strike back

The digital economy has driven tech stocks to incredible valuations. But it is all dependent on the real-world economy. And particularly on metals and…
7 Apr 2021
Make money from the metals mining boom in Latin America
Industrial metals

Make money from the metals mining boom in Latin America

Covid-19 has hit Latin America harder than any other. But the continent's highly competitive mining sector looks poised to profit handsomely over the …
23 Oct 2020
The charts that matter: the dollar extends its fall
Global Economy

The charts that matter: the dollar extends its fall

The US dollar took quite the tumble this week. Here’s how the charts that matter most to the global economy reacted.
17 Apr 2021
The charts that matter: gold up; dollar down
Global Economy

The charts that matter: gold up; dollar down

Gold rallied a little this week, while the US dollar drifted. Here’s how the charts that matter most to the global economy reacted.
10 Apr 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
What does the Coinbase listing mean for bitcoin and other cryptocurrencies?
Bitcoin

What does the Coinbase listing mean for bitcoin and other cryptocurrencies?

As the bitcoin price hit new highs, the world's biggest cryptocurrency exchange, Coinbase, listed on the stockmarket. John Stepek looks at what that m…
15 Apr 2021
Properties for sale for around £400,000
Houses for sale

Properties for sale for around £400,000

From a converted church in Banffshire with views towards the Cairngorms National Park, to a period property in the Georgian market town of Beverley, e…
2 Apr 2021