Glencore on track to deliver record FY trading profit amid 'unprecedented dislocation'

Natural resources company Glencore said on Friday that its annual portfolio mix adjustment guidance was expected to increase dramatically as a result of "unprecedented dislocation" in energy markets, putting it on track for a record full-year performance.

Glencore stated that its February full-year commodities trading guidance of $32.8 per tonne was expected to increase to a range of roughly $82-86 per tonne for the first half of 2022 as the commodity trading industry enjoys its most profitable period in history amid Russia's invasion of Ukraine.

Government royalties also increased "significantly" when compared to the FTSE 100-listed group's prior cost expectations, which together with higher input costs, were now expected to result in an increase in its reported average FOB thermal unit cost to approximately $75-$78 per tonne, compared to earlier guidance of $59.3 per tonne.

On the other hand, Glencore said its marketing business had "successfully navigated" the extraordinary global challenges faced during the period and was "a source of continuous and reliable commodity supply".

"Against this challenging and elevated risk backdrop, our marketing segment's financial performance has continued to be supported by periods of heightened to extreme levels of market volatility, supply disruption, and tight physical market conditions, particularly relating to global energy markets," said Glencore.

"Tracking YTD performance, we expect our marketing segment's half-year adjusted EBIT to exceed $3.2bn (the top end of our long-term, through the cycle, adjusted EBIT annual guidance range of $2.2-3.2bn). We currently expect more normal market conditions to prevail in the second half of the year."

Reporting by Iain Gilbert at Sharecast.com