Glencore set to report maiden Q1, eyes on trading
LONDON (Reuters) - Commodities trader Glencore <GLEN.L> will report its first quarterly results on Tuesday, with investors hoping market volatility boosted trading profit and helped offset the impact of bad weather on output.
Glencore is releasing full first-quarter earnings for the first time since it listed in London and Hong Kong last month, when it sold shares at 530 pence. The stock has since remained stuck below that level.
The world's largest diversified commodities trader, Glencore said in its listing prospectus that its marketing operations had begun 2011 strongly and were in line with management expectations for the first three months, with oil in particular reporting "substantially improved results," thanks to volatility and tight supply.
Analysts at Deutsche Bank have forecast an adjusted operating profit (EBIT) of $1.94 billion for the first quarter, with a 45 percent contribution from the metals and minerals division. They expect marketing activities to contribute around 40 percent of adjusted EBIT.
Most of the top diversified mining companies have reported a tough start to 2011, as floods and heavy rains hampered output in Australia, South Africa, Zambia and Columbia.
"We expect Glencore to be no different, with high rainfall in Colombia and South Africa, monsoon conditions in Zambia/(Democratic Republic of Congo) and cold weather in Kazakhstan," Deutsche Bank said in the note.
Glencore's chief executive, Ivan Glasenberg, is likely to face questions on his outlook for the year after what has been a period of record volatility, but he is also set to be grilled on his acquisition strategy, after a report this weekend that the group could make a move for embattled rival ENRC <ENRC.L>, hit by a boardroom row.
Analysts have said an all-cash bid for ENRC is highly unlikely and a share deal would be virtually impossible in the near term, as Glencore cannot issue new shares for six months.
(Reporting by Clara Ferreira-Marques)