Glencore (GLEN) has decided to maintain its primary listing in London, citing concerns over whether the group would be included within the S&P 500 index if it made the move to New York. The revelation would have cheered administrators at the London Stock Exchange, but it did little to distract attention away from a rather drab set of interim figures.
The mining heavyweight reported industrial adjusted cash profits of $3.8bn (£2.9bn), a 17 per cent decline from the 2024 comparator. In keeping with earlier updates, the fall was laid at the door of weaker coal prices and the impact of lower copper production through the period, with the latter partially down to falling grades and mine sequencing.
The group has taken a $900mn impairment on the Cerrejón coal mine in Colombia, but the underlying price determinant is linked to oversupply in major markets such as China, to say nothing of the impact of the global tariff spat during the first half of the year. The upshot is that group aggregate cash profits fell by 14 per cent to $5.4bn.
Borrowings increased by just under a third through the period, with financial draws of $3.2bn in net capex, $1.8bn of shareholder returns, and a $1.1bn increase in “non-readily marketable inventories”. But following a root-and-branch review of the business, management has identified around $1bn of recurring cost savings, which will precipitate major reductions in its global workforce by the end of 2026.
Assuming no further ructions, the easing of trade tensions should underpin recovering industrial demand through the remainder of the year. The group now trades on a 23 per cent discount to the FactSet consensus target price of 19 sell-side analysts, and on a slim price/book multiple of 1.2 times, leaving headroom for share price retracement. Buy.
Last IC view: Buy, 340p, 19 Feb 2025
GLENCORE (GLEN) ORD PRICE:290pMARKET VALUE:£3.5bnTOUCH:289-290p12-MONTH HIGH:439pLOW: 205pDIVIDEND YIELD:3.4%PE RATIO:NILNET ASSET VALUE:3,176¢NET DEBT:119%Half-year to 30 JunTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (¢)2024117-0.37-2.006.52025117-1.13-5.005.0% change+0.3—23Ex-div:28 AugPayment:19 Sep£1 = $1.33. NB: Net debt does not include $4.49bn in “other financial liabilities” linked to derivatives.