Glencore Agriculture has reported a steep increase in profitability on higher revenues from its global activities in the first half of 2017.
The Glencore Group divested just under half of the equity in its Agricultural Products division last year, leading to a global restructure under the Glencore Agriculture brand. Accordingly, its results for trading up to June 30th 2017 are stated as a 50% share – an adjusted EBITA of $166 million on revenues of $6.34 billion.
But for comparison, the 100% figures are an EBITA of $331m on sales of $12.67bn in the first six months of 2017, respective increases of 81% and 12% on the $183m and $11.29bn from H1 2016.
The group says the increases reflect the impact of a record Australian crop, which benefited its local origination and Viterra grain businesses. It also more than offset Viterra Canada’s performance – although this was satisfactory, it was held back by low prices, farmer retention and some crop quality issues, all of which pressurised margins.
Globally, commodity prices remained at low levels during In H1 2017, particularly for grains, until the late period wheat rally due to US spring weather concerns. Glencore’s grain, oilseeds, cotton and freight marketing activities performed well, but sugar was more challenging. Soft seed crushing and biodiesel margins in the EU continued to be under pressure.
Glencore processed 6.53m tonnes of agricultural commodities in the period (6.44m tonnes in H1 2016) and its grain volumes handled were 2% up at 22m tonnes with a 13% lift in oils and oilseeds to 15.2m tonnes.
Glencore chief executive Ivan Glasenberg notes that Agricultural Products is in the group’s Tier 1 commodity portfolio alongside metals and thermal coal as a key part of Glencore’s differentiated portfolio, which will be increasingly important over the longer-term.