Glencore profits halve on back of falling coal prices

NICHOLAS EARL

GLENCORE suffered a sharp drop in pre-tax profits in the first six months of trading this year as the boom in commodity prices finally eased.

The FTSE 100 company yesterday posted a more than 50 per cent decline in earnings year-on-year, down from $18.9bn (£14.8bn) to $9.4bn, while revenues dropped 20 per cent from $134.4bn to $107.4bn in the first six months of the year.

The Swiss mining giant attributed the downturn to the normalisation of wholesale costs, after bumper trading following Russia’s invasion of Ukraine which saw energy prices climb to record highs.

In particular, lower coal pricing combined with inflationary impacts on production have eaten into the company’s profits.

Energy buyers turned to coal when gas prices soared in a bid for cheaper supplies, a shift which highly benefit- ted Glencore.

To appease shareholders, Glencore’s chief executive Gary Nagle yesterday confirmed further shareholder buybacks, with “top-up” returns of $2.2bn, meaning investors have now pocketed $9.3bn this year.

“The strength of our diversified business model across industrial and marketing, focusing on metals and energy, has again proved itself adept in a range of market conditions,” Nagle said.

Meanwhile, the company’s net debts soared from $75m to $1.5bn, following a hefty $2.5bn in capital expenditure and a total tax bill of $2.7bn to Australia and Colombia. This outlay was chiefly spent on purchasing the balance of the Mara copper project in Argentina for $1.25bn and acquiring a minority stake in Alunorte, a massive alumina refinery in Brazil.

Shares in the miner dropped to close down almost three per cent yesterday, though Jefferies maintained its ‘buy’ stance on the firm’s stock.