Glencore's profit surge hints at £60bn value

Glencore, the world's largest commodity trader, posted a 40 per cent jump in full-year profit yesterday, strengthening its hand for a possible stock market listing that could value it at about $60 billion (£37bn).

Net profit at the trading, mining and resource investment conglomerate rose to $3.8bn, boosted by higher prices for metals and agricultural products, while revenues in 2010 rose 36 per cent to $145bn.

Company executives spent two days in London this week telling analysts about the group's business ahead of what could be Britain's biggest initial public offering (IPO) this year.

Sources familiar with privately-held Glencore's plans have said it could float 20 per cent or more of its stock, possibly split between London and Hong Kong, raising up to $16bn.

Miriam Hehir, director of credit research at RBC Capital Markets, said: "These strong results will benefit any theoretical or public value of the currently private Swiss group."

A $60bn valuation put on it by one analyst would make Glencore about the same size as Barclays Bank, T-Mobile-owner Deutsche Telekom and US carmaker Ford.

Henri Alexaline, credit analyst at BNP Paribas, said: "I suppose the consensus valuation at the moment is probably $50bn to $60bn. But as every quarter passes by and metal prices keep going up, the mark-to-market value of those industrial holdings are shooting up.

"This range could pretty easily move to $60-$70bn or $60-$80bn. The goal posts are moving."

The unique combination of businesses makes it difficult for analysts to assess its worth.