Analyst Note| Mathew Hodge, CFA |
No-moat-rated Glencore’s 2020 adjusted net profit of USD 2.5 billion was slightly better than our forecast and the prior year’s USD 2.4 billion profit. Adjusted EBIT improved to USD 4.4 billion versus USD 4.2 billion in 2019. The better result reflected a stronger contribution from the marketing division where profit from trading commodities increased 41% to USD 3.3 billion. Mining EBIT fell to USD 1.1 billion from 1.8 billion a year ago. The swing primarily reflected the lower thermal coal price, but the lower metallurgical coal and oil prices also detracted. Glencore’s energy assets--coal and petroleum--swung from an EBIT profit of USD 1.3 billion in 2019 to a loss of USD 1.4 billion in 2020, mostly due to price.