Glencore forecasts more than $3.2 billion in interim trading division profit

LONDON (Reuters) -Miner and trader Glencore on Friday forecast its trading division’s half-year adjusted operating profit would exceed $3.2 billion, the top end of its long-term annual outlook range, boosted by soaring prices amid supply disruptions.

Prices for much of what Glencore mines, including thermal coal used to generate electricity, have reached record highs, reflecting volatile commodity markets and shortages during protracted COVID-related lockdowns and the war in Ukraine.

The London-listed company, which achieved a record profit of $3.7 billion in its trading division for the whole of 2021, said it expects more normal market conditions to prevail in the second half of the fiscal year.

Glencore hiked its forecast for thermal coal benchmarks in the first half to between $82 and $86 per tonne from a February forecast of $32.8 per tonne for the whole year.

With costs increasing due to the broad inflationary pressure coming from rocketing diesel and electricity prices, the company expects its average FOB (freight on board) thermal unit cost for the first half to be $75-$78 per tonne, compared to an earlier guidance of $59.3 for 2022.

RBC Capital Markets expects Glencore’s coal earnings to reach $7.9 billion in the first half and reckons consensus EBITDA for the full year will rise heading into results.

“We continue to expect that higher costs could weigh (as they will through the whole sector) leaving us below consensus at $17.2 billion,” it added.

Glencore said last year it planned to hit net-zero carbon emissions by 2050 and responsibly run down its mines producing thermal coal, the most polluting fossil fuel, by the mid-2040s.

But about 24% of investors voted against the miner and trader’s climate progress report at the annual general meeting in April, after some cited slow progress in scaling back coal production.

(Reporting by Clara Denina and Aby Jose Koilparambil; editing by Jason Neely, Elaine Hardcastle)