Record interim profit for Glencore fails to impress investors

GLENCORE may have increased its profits by almost a quarter to set a new record for its interim results, but investors were left unimpressed as the mining behemoth fell short of expectations and faces higher costs to come.

The embattled FTSE 100 giant, currently implicated in an alleged corruption scandal, revealed profits of $8.3bn (£6.5bn) for the first six months of 2018.

The record interim result is up 23pc from 2017 but still stands around 3pc below consensus forecasts in the City.

Glencore blamed higher costs as well as lower market prices for cobalt, among other products. Cost inflation has emerged as a key threat across the industry as commodity prices recover from a three-year market rout.

But its share price, which has lagged its rivals, closed up just 0.25p at 326.55p yesterday, despite repeated pledges from the group that billions of pounds worth of shareholder payouts are on the way. Ivan Glasenberg, the group’s chief executive, said: “It is our view that our current equity price materially undervalues the business.”

He pointed to the group’s growing cash flows, which reached $5.6bn in the first half, and a strong portfolio of diverse mined commodities as evidence of the group’s confidence.

Glencore recently sought to boost market confidence in the group by announcing $2.85bn of shareholder distributions and a $1bn buyback programme. The £43bn mega-miner lost around £5bn in market value at the start of the month when it revealed that the US Department of Justice had served the group a subpoena relating to corruption and money laundering.

Glencore formed a separate committee to handle the investigation, and Mr Glasenberg said he would not comment further on the process.

Graham Spooner, of The Share Centre, said: “Despite a solid performance, the shares are no better than a ‘hold’.”