GLENCORE unveiled a trading update showing a 60 per cent rise in pre-tax profit yesterday, with the results particularly buoyed by rising prices for metals and agricultural products.
The privately owned Swiss commodities trader is currently lining up investors for an initial public offering (IPO), with its chief executive Ivan Glasenberg making a major presentation to analysts on Monday and Tuesday in preparation for the float.
It is being advised by Morgan Stanley, Citigroup and Credit Suisse, although further banks could be brought on to underwrite the deal, which could be worth up to $60bn. As City A.M. revealed in December, however, a large portion of its shares could be taken to Hong Kong in a dual-listing, rather than staying in London.
By the terms of bonds it issued last year, Glencore must either float by 2013 or buy back its debt with a high interest rate.
But it is expected to go public sooner rather than later to take advantage of a benign commodities environment: its revenues swelled 36 per cent last year to $145bn, with earnings before interest and taxes of $5.29bn.
The firm said that energy commodities trading was disproportionately hit by “an unusually stable price environment characterised by surplus refinery capacity and a weak freight market”. Oil and coal are expected to make a comeback this year, with oil already at two-and-a-half year highs.
The weak energy trading was countered by higher volumes in grain due to bad weather in Russia, Ukraine and Australia.
Glencore also disclosed that it refinanced its debt to the tune of $10.3bn last year, including the issue of $3bn of long-term bonds and $300m of contingent convertible bonds (coco’s).