ii view: Glencore profit slips lower

First-half results to 30 June

• Revenue flat at $117.4 billion
• Adjusted profit (EBITDA) down 14% to $5.43 billion
• Net loss of $655 million, increased from $233 million in H1 2024
• Net debt up 30% to $14.5 billion from 31 December 2024

Chief executive Gary Nagle said: “Over the first half, we have continued to make significant progress in optimising the business and positioning for further value-accretive growth.

“While there is much uncertainty around the impacts of geopolitics and trade in the shorter term, we remain of the view that, in certain commodities, the scale and pace of required resource development will struggle to meet the demand projections for such materials into the future. We are well placed to participate in bridging this gap, through the flexibility embedded in both our Marketing and Industrial businesses to respond to global needs.”

• Invest with ii: What is a Managed ISA? | Open a Managed ISA | Transfer an ISA

ii round-up:

Miner and commodity trader Glencore (LSE:GLEN) today detailed lower profits broadly matching City forecasts but with net debt climbing more than expected. 

First-half adjusted profits (EBITDA) fell 14% to $5.43 billion (£4 billion), pushed lower by weaker coal prices and reduced copper production. A new $1 billion cost-saving programme is to be enacted. Group net debt climbed 30% from late December to $14.5 billion. Analysts had forecast an outcome of $12.9 billion.

Shares for the FTSE 100 company fell 4% in UK trading having come into these latest results down by 15% so far in 2025. The FTSE 100 index is up 12%. Shares for iron ore-focused Rio Tinto Ordinary Shares (LSE:RIO) are down 5% year-to-date. 

Glencore has sizeable operations in over 30 countries and is both a producer and trader of more than 60 different commodities. According to news sources, Glencore has now abandoned potential plans to move its core stock market listing to New York from London. 

Core mining or industrial adjusted profits fell 17% year-over-year to $3.8 billion. Trading-related or Marketing-adjusted profits declined 8% from a year ago. 

Glencore reiterated recently detailed full-year 2025 forecasts for a reduced top-end copper output but with an increased bottom-end forecast for cobalt and a narrowed output range for zinc.

Net debt of $14.5 billion leaves the ratio of net debt to adjusted profits (EBITDA) at 1.08 times, up from 0.78 times as of 31 December. However, Glencore expects that to reduce to a ratio of 1.0 times following the arrival of proceeds from its July sale of grain handler Viterra. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results. A third production update is scheduled for 29 October. 

ii view:

Headquartered in Baar, Switzerland, Glencore employs over 150,000 staff and contractors globally. Group customers range from car makers to steel, power generation and battery manufacturing companies. Geographically, China and Singapore provided around 12% of 2024 sales. The US and UK followed close behind at around 11%. Other Asian countries generated a further 23% of sales, with Europe 17% and Africa 5%.  

For investors, pressure on rest-of-the-year copper production has increased following a disappointing first half – copper generates around a quarter of group adjusted profits. US trade tariffs now raise global economic outlook uncertainty and therefore demand for metals. Glencore’s involvement in coal production may deter some new investors given coal’s part in climate change, while exposure to political instability in countries of operation such as Democratic Republic of the Congo and Kazakhstan also warrants consideration. 

• Should you invest when markets are at all-time highs?
• Where to invest in Q3 2025? Four experts have their say
• eyeQ: time to fill up on BP?

More favourably, 2024 copper production was second-half weighted. The trading or Marketing business provides diversity not seen at other miners with Glencore recently raising its long-term through-the-cycle profit estimates by 16% and potentially buoyed by US trade tariff uncertainty. An arguable backtracking on global climate change aspirations may leave its involvement in coal looking more sensible, while exposure to energy transition metals such as copper, cobalt and zinc, used in batteries, is not to be forgotten.  

On balance, and while risks remain, Glencore’s diversity of operations and a consensus analyst estimate of fair value sat at over 375p per share appear to offer grounds for longer-term optimism.  

Positives: 

• Diversity of commodities and operations
• Estimated forward dividend yield of 2.7%

Negatives:

• Uncertain economic outlook
• The weather can hinder production

The average rating of stock market analysts:

Buy