Glencore (LON: GLEN) set to deliver record profits: Should you hold stock?

By - Abhishek Sharma


  • The world's biggest miner Glencore has said it is on track to deliver record profits in the first half of the year.
  • It cashed in on extreme market volatility caused by the Russia-Ukraine war.

The Russia-Ukraine fallout has led to economic turbulence not just in these two countries but across the world. Disruptions in supply chains have pushed up prices of almost everything to record highs, driving several businesses into losses. However, there are some who have benefitted from the current situation. Their revenues are boosted due to the soaring prices, leading to high profits.

One such company is multinational commodity trader and miner Glencore (LON: GLEN), which is among the biggest gainers from the global energy crisis that resulted from the Russia-Ukraine conflict.

The firm on Friday said that the gains from its trading division would touch the top-end of its yearly outlook. In its update, Glencore forecasted an adjusted operating profit of more than $3.2 billion from the division in the first six months of the year. With one year's worth of earnings in just half a year, the company has shown that it can play extremely well with the market volatility.

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What caused Glencore’s profits to soar?

The soaring profits are a result of 'extreme levels' of volatility and supply disruptions, Glencore said. Tight physical market conditions, particularly related to global energy markets, also contributed to it, the miner added.

However, the company also warned that this performance may not continue in the next six months. Even as the prices of commodities that Glencore mines have been touching new highs, it expects more normal conditions to return in the second half of this fiscal.

The world's biggest miner, listed on the London Stock Exchange, also raised its forecast for thermal coal benchmarks in the first half, saying that it is expected to stay between $82 and $86 per tonne. In February this year, the company had predicted the full-year rate to be around $32.8 per tonne.

Notably, coal prices have seen a jump in the recent months due to the Russia-Ukraine conflict and subsequent sanctions by countries, including a ban on imports from Russia. In late May, the prices reached as high as $430.

Share price performance of Glencore

The FTSE 100 constituent is in the business of production, processing, and marketing of metals and minerals, including copper, cobalt, lead, zinc, aluminium, tin, nickel and iron ore. It also works in oil exploration, coal and crude oil products, and natural gas.

Shares of Glencore rallied 3.6% in early trading after it posted the latest update on 17 June 2022. As of 1:29 pm GMT+1 on Friday, the shares were up 1.86% at GBX 472.65, with a market cap of £60,926.67 million. The share value has almost risen by 50%. The year-to-date returns currently stand at 26.12%.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.