© Reuters. FILE PHOTO: The logo of commodities trader Glencore is pictured outside the company’s headquarters in Baar, Switzerland November 20, 2012. REUTERS/Arnd Wiegmann
LONDON (Reuters) – Miner and trader glencore (LON:) on Friday forecast its business division’s half-year adjusted operating profit to exceed $3.2 billion, the upper 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 volatility in commodity markets and shortages during prolonged COVID-related shutdowns and the war in Ukraine.
The London-listed company, which made 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 semester of the fiscal year.
Glencore raised its forecast for thermal coal benchmarks in the first half of the year to between $82 and $86 a tonne, from a February forecast of $32.8 a tonne for the full year.
With costs rising due to widespread inflationary pressure resulting from soaring diesel and electricity prices, the company expects its average thermal FOB (freight on board) unit cost for the first half of the year to be 75 at $78 per ton, compared to an earlier forecast of $59.3. for 2022.
RBC Capital Markets expects Glencore’s coal profits to hit $7.9 billion in the first half and believes full-year consensus EBITDA will rise based on results.
“We continue to expect higher costs to weigh (as they will across the industry) leaving us below consensus at $17.2 billion,” he added.
Glencore said last year it plans to achieve net zero carbon emissions by 2050 and responsibly operate its mines producing thermal coal, the dirtiest fossil fuel, by the middle. of the 2040s.
But around 24% of investors voted against the miners’ and traders’ climate progress report at April’s annual general meeting, after some cited slow progress in cutting coal output.