Glencore's profits surge on energy market volatility

Switzerland-based trading and mining firm Glencore's trading profit more than doubled on the year in January-June, as market disruptions caused by Russia's invasion of Ukraine supported commodity prices and elevated volatility.

The company's marketing division's adjusted earnings before interest and tax (Ebit) surged to $3.7bn in the first half of this year, up from $1.8bn a year earlier and equal to full-year Ebit in 2021. "Marketing - notably in oil and gas - performed exceptionally well, amid the complex and elevated market risk backdrop, which exhibited extreme levels of market volatility during the period," the firm said.

Glencore said its oil and gas department capitalised on exceptional price movements and dislocations across crude, LNG, oil products and logistics infrastructure, which boosted its trading Ebit. "Energy products [performed] exceptionally well amid the complex, volatile and elevated market risk backdrop, characterised by extreme dislocations and price movements," Glencore said.

Energy products - including oil, gas and coal - contributed just under $3bn to the overall marketing Ebit, compared with $672mn in January-June 2021, with higher prices offsetting a decline in the amount of crude and oil products traded in the period. Glencore traded 1.7mn b/d of crude and 1.5mn b/d of oil products in January-June, compared with 2.09mn b/d of crude and 1.94mn b/d of products in the same period last year. The firm said it expects more normal marketing conditions in the second half of this year.

Glencore reported an overall profit of $12.08bn in the first half of this year, over nine times higher than a year earlier, with rising coal prices making a big contribution to the growth. It expects coal and LNG prices to remain high in the second half of the year "with few short-term solutions to rebalance global energy markets", but tightening financial conditions and a deteriorating macroeconomic environment could bring some uncertainty, the firm said.

Glencore has had to write down its shareholdings in Russian oil giant Rosneft and Russian private-sector aluminium producer En+ to zero, reiterating that "there is no realistic way to exit these stakes in the current environment". The company has a 10.5pc stake in En+ and a 0.57pc share in Rosneft through a partnership with Qatari sovereign wealth fund QIA.

By Caroline Varin