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Investing.com -- Goldman Sachs downgraded Glencore (LON:GLEN) shares to Neutral from Buy, flagging a challenging free cash flow (FCF) outlook and limited near-term upside.
The Wall Street bank also cut its 12-month target price to £3.10 per share from £3.30.
Shares in the Anglo-Swiss miner and trader fell 2.8% in London trading.
Glencore reported first-half (H1) 2025 EBITDA of $5.4 billion, broadly in line with the consensus estimate.
But attention shifted to weaker-than-expected free cash flow, with net debt rising to $14.5 billion—above Goldman’s $13.5 billion forecast and well above the Visible Alpha consensus of $12.4 billion.
This follows a similar pattern to full-year 2024 results, where earnings met expectations but FCF conversion fell short. Goldman analysts expect cash generation to remain under pressure in the second half, forecasting year-end net debt nearing $15 billion.
“While GLEN’s spot illustrative FCF stands at $4bn for the full year, we forecast a more conservative $0.8bn,” the analysts wrote.
Meanwhile, commodity market dynamics remain mixed. Coal prices remain subdued, while operational performance in copper has disappointed, particularly in the Democratic Republic of Congo.
Management reiterated that the expected second-half uplift in copper output “is not driven by selective mining but by disciplined execution of the mine plan."
However, Goldman analysts warned that “the need to double output in H2 and the ongoing cobalt export ban presents risks to margin recovery and cash generation within the copper division.”
The company reaffirmed its $1 billion structural cost-out plan, with half of the savings expected in the second half. These are measured against a 2024 baseline and largely stem from overhead efficiencies and asset-level initiatives, with no significant restructuring costs anticipated.
“We downgrade GLEN to Neutral (from Buy), reflecting limited upside to our revised target price of £3.10/sh,” Goldman said, pointing to ongoing coal market weakness, operational issues in copper, and elevated capex as key headwinds.
Since being added to Goldman’s Buy List in January, Glencore shares have fallen 36%, underperforming the Stoxx 600 index, which gained 14%.
The bank noted declines of 46% and 28% in metallurgical and thermal coal prices, respectively, over the same period. Copper prices have risen 16%, but Glencore’s copper production is expected to fall about 15% this year versus 2023.