Home > Financial reports > Upbeat Glencore sees net income touch $1.1bn

Upbeat Glencore sees net income touch $1.1bn

May 19, 2010

“Glencore yesteday gave a fairly bullish outlook on global growth, saying the ‘economy continued to exhibit signs of underlying improvement’ as it revealed a 75 per cent jump in net income in the first quarter.

The world’s top commodities trader, which is taking its first steps towards becoming a public company, said net income, excluding exceptional items, was $886m between January and March, up from $504m in the same period of last year.”

Source: Financial Times, May 19 2010

Observations:

  • Glencore, like other commodity traders, was not hit hard by the global crisis. Margins on trade went up rather than down due to increased volatility of prices. Key area of margin increase is coal trade, once again having China pay for the profit of the resources companies.
  • Early in the crisis the investors were worried about the financial health of the company. Insurance for company loans soared temporarily.

Implications:

  • Glencore needs to show the investor world a positive picture, as this will increase the capital it can attract with the IPO it is planning.
  • Glencore owns a significant part of Xstrata and of Russian iron ore producers and thus controls part of the iron ore market. If the company merges with Xstrata, it is likely to use part of the capital attracted by going public to strenghten its position in the coal mining sector, thus being able to profit more from the Asian steel surge.
Advertisements