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FTSE 100 miner Glencore on track to deliver record profits

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The FTSE 100 miner is on track to record profits for 2022. Photo: Per-Anders Pettersson/Getty
The FTSE 100 miner is on track to record profits for 2022. Photo: Per-Anders Pettersson/Getty

Shares in miner Glencore (GLEN.L) rose on Thursday after announcing its on course to deliver record profits from trading commodities as it cashes in on soaring prices and volatility.

The FTSE 100 (^FTSE) commodity giant is set to unveil a bigger first half profits than it normally makes in an entire year, putting it on course for a record 2022.

The resource firm has been one of the biggest winners from the global energy crunch and from the surge in prices driven by Russia’s invasion of Ukraine, which exacerbates the commodities market.

It expects trading profit in the first half to surpass $3.2bn. That compares to record profit of $3.7bn it delivered in the whole of 2021.

The forecast puts it well ahead of its long-term annual guidance range of $2.2bn to $3.2bn.

Read more: UK firms feel strain from rocketing inflation and staff shortages

"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," it said.

However, trading conditions will be closer to normal in the second half of the year, Glencore said in a statement Friday.

Company shares gained 3.6% in early trade in London.

Despite the upbeat announcement, the update warned its average coal sale price showed a bigger discount to the benchmark due to the volatility across markets.

It added costs rose sharply in the period as royalties and energy costs surged. It now anticipates the cost per ton to reach $78, compared to a previous forecast of $59.3 a ton.

Coal prices have been elevated recently, rallying to as high as $430 in late May amid a tightening market as the Ukraine war and economic sanctions, including the EU's ban on oil and coal imports from Russia, have thrown the global energy market into chaos.

Rising costs have also hit the entire industry, as the biggest miners grapple with inflationary pressure, especially on labor and power costs.

The world's biggest miners have been grappling with inflationary pressure as rising costs hit the entire industry. Miners including FTSE 100 rival Anglo American (AAL.L) have previously forecast steep cost rises for the year.

Recent analysis from the Office for National Statistics found more than a quarter of UK firms are concerned about rising costs of goods and services and staff shortages.

Watch: Why are gas prices rising?

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