Glencore announces 50% rise in profits despite market turbulence

25th August 2011

It has told investors that it believes commodity prices can hold up against the lower economic growth environment for the remainder of 2011, reports Citywire. This is its first set of results as a public company.

Glencore uniquely mines and trades commodities under one roof. However, it conceded that the rise was largely due to the high oil price. Revenues at the firm have risen some 32% on the back of this.

However, the robust outlook has comforted investors, who sent the stock up as much as 6% in early trade, adds the Guardian.

The Financial Times (paywall) reports that the Swiss-based, London listed company, which sold nearly $10bn in stock last May in a landmark initial public offering, earned $2.45bn in the first half of the year.

The results were at the top end of analysts' estimates, although they signal a quarter-on-quarter drop.

Chief executive Ivan Glasenberg on Thursday said: "We still see robust demand in commodities; the supply side is very tight," he said, adding that prices were unlikely to fall.

He added: "This strong profitability translated into cash flows, which, together with the IPO proceeds, has provided us with a balance sheet of record strength and flexibility at a time of great potential advantage," adding that he saw "cheap opportunities" to buy, both among privately owned and publicly listed companies.

"It is a very opportune time," he said, referring to the plunge in companies' valuations."

Elsewhere, BHP Billiton, the Anglo Australian mining giant, catapulted itself into the world's top 10 companies by earnings as the global commodities boom saw it post record profits, reports the Independent .

But despite a net profit of $23.6bn (£14.3bn), up from $12.7bn last year, on turnover of $71.7bn, up 35 per cent for the year to 30 June, the numbers missed City forecasts.

And the company, whose earnings growth was fuelled by iron ore, where the profits doubled, gave a cautious assessment of the short-term outlook. The caution owes to the fact that both materials and labour costs are rising across the industry.

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