(Sharecast News) – Mining giant Glencore said its marketing division should deliver earnings at the top end of guidance and expected higher commodity prices to more than offset the impact of the Iran war.
Chief executive Gary Nagle said recent and emerging impacts from the war were now manifesting, “primarily as an increase in input costs, most notably diesel and acid consumption, and the generally weaker USD”.
“While the Middle East conflict has created numerous dislocations, particularly around the supply of crude, refined products and sulphuric acid, our energy marketing business has supported the supply of fuels to our assets,” said chief executive Gary Nagle.
“Critically, basis the current stronger commodity prices (e.g. year-to-date copper +c.5%, zinc +c.7% and energy coal +c.22%), we expect these cost impacts to be more than offset, which would result in margin expansion.”
He added that if the first quarter performance from the marketing division was extrapolated across the year, annual operating profit performance would “comfortably” exceed the top end of its long-term Adjusted EBIT guidance range of $2.3bn – $3.5bn.
Glencore also reported a sharp jump in first-quarter copper production due to improved grades in Africa.
The company produced 199,600 tonnes of copper in the first three months of the year, up 19%, driven by better grades at its African mines and higher output from the Peruvian Antamina operation.
Reporting by Frank Prenesti for Sharecast.com
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