Due to the higher interest rate environment and the group’s increased scale, Glencore has updated its framework linking expected earnings to inventory levels and funding costs. Consequently, the Marketing division’s long-term guidance range has risen from $2.3bn–$3.5bn to around $2.8bn–$4.2bn.
For 2026, Glencore now expects Marketing adjusted operating profit to exceed $5bn, up from previous expectations of around $4.9bn.
The shares were up 2.3% in early afternoon trading.
Our view
After a strong first half, Glencore’s Marketing arm has continued to perform well, prompting a further, albeit modest, upgrade to this year’s guidance. Taken together with an improved longer-term outlook, that was enough to draw a warm response from investors.
On the mining side, commodity prices boosted first-half earnings and have remained broadly supportive. Production should improve in the second half, led by steelmaking coal. But higher cost guidance means any price falls would hit the bottom line harder.
Glencore’s thermal coal arm remains an important cash generator, but its role should diminish as cleaner energy grows. The transition will be uneven, and recent disruption has reinforced the need for reliable supply.
Constrained supply could support coal prices and earnings for some time. Glencore’s plan to halve managed production from 2019 levels by 2035 therefore looks sensible, capturing near-term cash while steadily reducing exposure.
Over time, we expect transition metals such as copper and nickel to become more important, a shift we support. Copper demand should benefit from electrification and investment in power networks, while new supply can take years to develop. Glencore has ambitious growth plans, with strong execution and attractive financing key to unlocking value. However, investors seeking purer exposure to copper may find more direct options elsewhere.
Volatile oil and gas markets are also playing into the group’s hands. Glencore’s Marketing division helps customers secure commodities and move them where they are needed. Disrupted supply chains and unpredictable markets make that service more valuable. The increased scale of the business, supported by higher inventory levels, should expand its capacity and support higher earnings over the cycle.
That provides greater reassurance over the sustainability of Marketing earnings, although the new long-term range remains below the impressive profits being earned currently. Greater scale also requires more inventory and funding, adding complexity and risk. If energy markets stabilise, the division’s exceptional recent performance is unlikely to continue.
Glencore’s balance sheet is in good shape, and the 3.6% prospective dividend yield looks well supported, with buybacks now in the mix as well. But neither shareholder return is guaranteed.
Overall, the outlook is encouraging, with improving production, growing copper exposure, a measured plan for coal and a larger Marketing platform supporting a stronger returns profile. But commodity prices remain a key driver, and favourable conditions have pushed the valuation close to ten-year highs. Alongside an uncertain geopolitical backdrop, that could mean more volatility than usual.
Environmental, social and governance (ESG) risk
Mining companies tend to come with relatively high ESG risk. Emissions, effluences and waste, and community relations are key risk drivers in this sector. Carbon emissions, resource use, health and safety and bribery, and corruption are also contributors to ESG risk.
According to Sustainalytics, Glencore's management of material ESG issues is strong.
Glencore's already paid $1.1bn in fines relating to past governance issues, but anti-corruption policies have improved more recently. A new 2024-26 climate action plan was recently approved by 90% of shareholders, which includes plans for a phasing down of thermal coal operations. There’s also a 2050 net-zero carbon emissions target in place along with interim plans to reduce direct, indirect and supply chain emissions by 15% and 50% by 2026 and 2035.
Glencore key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.