June 14, 2011 / 7:35 AM / in 6 years

UPDATE 4-Trader Glencore disappoints with maiden Q1 earnings

* Q1 operating profit jumps 45 pct, oil boosts trading

* Metals trading arm misses expectations

* First results since May record listing

* Says not actively considering bid for ENRC

* Shares down 3.3 percent

(Recasts, updates shares, adds details)

By Clara Ferreira-Marques and Julie Crust

LONDON, June 14 (Reuters) - Commodities trader Glencore missed forecasts despite posting a dramatic 45 percent jump in first-quarter earnings, after its key metals trading unit was hit by a drop in Japanese demand and lower volatility.

Shares in the world's largest diversified commodities trader, reporting earnings for the first time since its record London and Hong Kong listing in May, fell 3.3 percent, also dampened by low growth at some of its industrial assets.

"It was a strong quarter, but if you look at the consensus numbers (for 2011), they are going to have to have stronger quarters for the rest of the year to deliver on those estimates," analyst Tim Dudley at Collins Stewart said.

"The forecasts in the market at the time of the IPO were quite aggressive and may now have to pull back slightly. The share price weakness reflects that."

At 1115 GMT, the stock was down 3.3 percent at 506.2 pence, compared with its 530 pence initial offer price.

Glencore's adjusted earnings before interest and tax (EBIT) rose to $1.8 billion in the first three months of the year. Deutsche Bank analysts had forecast an adjusted operating profit (EBIT) of $1.94 billion, with a 45 percent contribution from the metals and minerals division.

Net income, up 47 percent, was also below most available analyst forecats. Banks involved in Glencore's float are still restricted on the stock and unable to comment publicly.

"The earnings were 6 percent below our expectations and that was mainly driven by a slightly disappointing number in the marketing business," Nomura analyst Paul Cliff said.

Operating profit for Glencore's whole trading, or marketing, division rose 37 percent, but most of that came from energy products, where profit more than doubled from a weak 2010, thanks to volatility which boosted arbitrage opportunities.

"There was a lot of (arbitrage) opportunity in the first quarter," Chief Executive Ivan Glasenberg said of the oil trading division. "It slowed down a little in the second quarter but it looks like it is coming back during the latter part of the quarter."

Energy products represented a quarter of overall operating earnings in the three months, compared to a fifth last year.

Glencore's metals and minerals unit, where comparisons were with a bumper first months of 2010, was hit by the Japanese earthquake, which stopped imports, and a drop in volatility.

Metals and minings marketing operating profit was down 20 percent to $263 million, a level Glencore said would be sustainable through the year, though it did not exclude a return to 2010's bumper levels as Japan recovers.

On the industrial side, which includes Glencore's metals, energy and agricultural production, operating profit rose 50 percent, boosted by production ramping up in the metals unit.

Glencore warned its Prodeco coal project in Colombia had been hit by delays in equipment deliveries from Japan, and could now miss its output target for the year.

But it gave a positive outlook and said it was not concerned by the "pull back" in commodities including copper in recent weeks, with demand fundamentals still strong. It said its own second quarter was tracking in line with expectations.

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BREAKINGVIEWS-Glencore Q1 feeds bears [ID:nLDE75D0O8]

BREAKINGVIEWS-Glencore move on ENRC [ID:nLDE75C15D]

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DAMPENS ACQUISITION TALK

Glencore, which listed in part to gain fire power for larger acquisitions, has been seen as a potential catalyst for the return of large-scale deals to the sector, not least with the takeover of Xstrata XTA.L, in which it owns 34.5 percent.

But Glasenberg poured cold water on talk of a major deal -- he said Glencore has no active plans to bid for Kazakh rival ENRC ENRC.L and is also not in firm talks with Xstrata.

"Glencore monitors a wide range of opportunities in the sector and will continue to do so," he told reporters.

"However, we can confirm that although we talk to a lot of people in the sector, we are not actively considering a bid for ENRC," he added. Miner ENRC, with a free float of less than 20 percent, has long been seen as a potential target for Glencore.

Industry sources say Glencore could be tempted by the Kazakh group's undervalued assets and by a heavy fall in the shares as a result of a boardroom spat over its leadership that has seen the departure of two independent directors. [ID:nLDE73D1MR]

Shares in ENRC jumped almost 8 percent on Monday after a newspaper report Glencore had held talks with its trio of founder shareholders, and was pondering a takeover.

The stock, which trades at a hefty 15 percent discount to the sector, was down 2.2 percent at 759.5 pence.

A source familiar with the matter confirmed on Tuesday that ENRC's general counsel, Randal Barker, has also left the firm.

Glencore's opportunistic approach to acquisitions has made its fortune and that of top shareholders including Glasenberg. He said the company would continue to take the same view, with little appetite for hostile deals.

Reflecting that approach, Glencore has agreed to buy CST Mining's (0985.HK) CST Resources unit for $475 million, gaining control of Peru's Mina Justa copper mine. [ID:nH9E7GN02R]

Additional reporting by Alison Leung in Hong Kong; editing by Sophie Walker

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