Glencore profits drive hunt for more acquisitions
Friday 26 August 2011
Glencore yesterday said it was looking for more acquisitions after the giant commodities trader unveiled first-half profit up 50 per cent in its first set of results since its huge flotation.
The world's biggest commodities trader forecast continued strong demand from Asia and said recent market turmoil presented it with a range of buying opportunities.
The company's shares gained more than 6 per cent in early trading but closed down 0.3 per cent, leaving investors 26 per cent out of pocket from May's world record initial public offering at 530p a share. The shares have been battered in recent market turmoil.
Ivan Glasenberg, the chief executive, said falling valuations gave Glencore the chance to use its cash to buy up publicly traded companies and private businesses.
He said: "We are an opportunistic company [and] we are in a fortunate position in that now we have the robust balance sheet to look at assets more aggressively. Companies are a lot cheaper. It's definitely, we believe, a very opportune time."
The company owns mines and plants as well as trading operations and launched on Wednesday a A$268m (£172m) bid for full control of Minara Resources, the Australian nickel miner in which it already owns a 73 per cent stake.
Glencore is set to complete its £295m purchase of 70 per cent of the Peruvian Mina Justa copper mining project in October.
The Swiss-based company also owns 34 per cent of Xstrata, the London-listed miner, and Mr Glasenberg has said he would like to combine the two companies.
Glencore's adjusted earnings before interest and tax rose by half to $3.3bn (£2bn) in the first six months of the year on strong demand from developing Asian markets.
Urbanisation and industrialisation in those markets, led by China and India, have sent the price of commodities such as oil, metals and food products to record highs but the weakening global economy has raised concerns that prices could fall.
Infrastructure improvements and the drive for higher living standards in Asia will continue to underpin global trade and demand for commodities, Mr Glasenberg predicted.
Mr Glasenberg said: "We still see demand very strong in Asia. The Chinese see this as a buying opportunity and we see increased purchasing in Asia."
His upbeat outlook echoed comments from BHP Billiton on Wednesday. The world's biggest miner said it expected "robust demand" for commodities in the short and medium term.
The company proposed a first interim dividend of 5p a share. Glencore shares closed at 388.5p.
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