Higher Prices Lift Glencore -- WSJ

By Scott PattersonFeaturesDow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 11, 2017).

Swiss mining and trading giant Glencore PLC reported strong first-half results on Thursday, benefiting from rising commodity prices as it continues to recover from a downturn that sparked widespread worries about its financial health and caused an investor revolt.

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Glencore, one of the world's largest coal, copper and zinc producers, reported a $2.5 billion net gain for the first six months through June, compared with a $369 million net loss in the same period a year earlier. It posted a net gain of $1.4 billion for all of 2016.

"Rising commodity prices have naturally had a very strong favorable effect on our performance," Chief Executive Ivan Glasenberg said Thursday.

Glencore shares fell 2% in early trading in London.

The earnings update closely follows other strong reports from global diversified miners. Rio Tinto PLC reported a net profit of $3.3 billion in the first half, up from $1.7 billion a year earlier, fueled by a 25% gain in revenues. Anglo American PLC reported first-half net income of $1.4 billion, compared with a net loss of $813 million last year.

Glencore expects commodity markets to remain strong in the second half of the year, saying it anticipates that its trading division will report earnings before interest and taxes for 2017 in the range of $2.4 billion to $2.7 billion, a $100 million increase from its previous guidance.

"The second half has started well," said Chief Financial Officer Steven Kalmin.

Mr. Glasenberg highlighted the rise of electric vehicles as a growing trend that is driving demand for several of the firm's most important commodities. "The potential large-scale roll out of electric vehicles and energy storage systems looks set to unlock material new sources of demand for enabling commodities, including copper, cobalt, zinc and nickel," he said.

The company is the world's biggest producer of cobalt, a key commodity in the lithium-ion batteries that power electric vehicles and mobile phones. Cobalt prices were up 109% in the first half from the same period last year, it said.

Glencore's first-half revenue rose 44% to $100 billion compared with the same period a year ago, helped by rising and resilient copper, coal and zinc prices. The firm's trading division posted earnings before interest and taxes of $1.4 billion in the first half of the year, a 13% gain from a year ago.

Net debt was $13.9 billion, down from $15.5 billion at the end of 2016.

Corrections & Amplifications Steven Kalmin is Glencore's chief financial officer. An earlier version of this article incorrectly spelt Mr. Kalmin's name. (Aug. 10, 2017)

Write to Scott Patterson at scott.patterson@wsj.com

(END) Dow Jones Newswires

August 11, 2017 02:47 ET (06:47 GMT)