Glencore Proves Resilient In A Tough Market

Glencore, hit or miss? According to VSA, Glencore’s latest set of results missed consensus as revenues dropped by five per cent to US$221.1 billion and earnings before interest, tax, depreciation and amortisation fell 2.3 per cent to US$12.77 billion.

Of course, a lot depends on what exactly your idea of consensus is.

VSA argued that net income of US$2.3 billion was 43 per cent lower than what the consensus estimate had been going for.

But Investec called the Glencore prelims “a slight beat”, on the basis that the US$12.77 billion in EBITDA that Glencore delivered was bang in line with consensus, while “attributable income” of US$4.29 billion beat the consensus of US$4.08 billion and earnings per share of US$0.33 was well ahead of the consensus US$0.308.

Canaccord’s commentary followed the same line as Investec’s, and highlighted the relative strength in the company’s marketing division (trading) as against its industrial division (mining). EBITDA from the industrial side dropped seven per cent, but rose by a chunky 15 per cent on the marketing side, supporting Glencore’s long-held claim that tough markets need not affect margin in commodity trading as long as the traders are sharp.

Sanlam talked of “a strong set of results”, noting that operational cashflows were a healthy US$11 billion and that net cashflow as US$10.2 billion. Debt has fallen too, down 15 per cent to US$30.5 billion, helped in part by the sale of the giant Las Bambas copper mine. What’s more, the dividend is up, giving Glencore a yield of around four per cent.

Over at RFC Ambrian though, they ignore Glencore altogether. In the world of RFC Ambrian, phosphate company GB Minerals is more significant, and perhaps rightly so as RFC is at least likely to be able to make a serious impact on the future course that GB Minerals takes. Glencore, as everybody knows, ploughs its own furrow.

On the day, Glencore’s shares gave a little ground, but at the current 295p they are a long way from the 240p lows hit at the beginning of the year.