4th Aug 2022 18:30
(Alliance News) - Glencore PLC shareholders look set to enjoy a bountiful period of cash returns as the commodities house benefits from rising coal demand.
Glencore on Thursday described its first-half financial performance as "exceptional" notwithstanding a "very complex environment" marked by global macroeconomic and geopolitical uncertainty.
For the six months to June 30, pretax profit skyrocketed to USD16.01 billion from USD2.01 billion in the prior year.
The Baar, Switzerland-based commodity trader and miner said revenue rose by 43% to USD134.44 billion from USD93.81 billion.
The energy products were significant drivers for both the marketing and industrial businesses, lifting adjusted earnings before interest, taxes, depreciation and amortisation to USD18.9 billion from USD8.7 billion.
The group said Marketing posted a record performance, with adjusted earnings before interest and tax more than doubling to USD3.7 billion, driven primarily by extreme dislocations and price movements across crude oil, gas, refined products and logistics infrastructure.
But its Metals & Minerals unit adjusted Ebit contribution was 17% below the first half of 2021, given challenging market conditions towards the end of the period, reflecting global recessionary fears and a Chinese economy still hurt by lockdown restrictions.
Industrial Ebitda surged more than USD8.4 billion to USD15.0 billion, benefitting primarily from record coal prices.
Glencore remains one of the world's most prolific producers of coal despite incessant criticism from environmentalists to lower its output due to the fuel's high carbon emissions.
Glencore also said it will "top-up" shareholder returns of USD4.5 billion, comprising a USD1.45 billion special distribution, or USD0.11 a share, and a USD3.0 billion share buyback.
Jefferies analyst Christopher LaFemina said "king coal was the star of the show" in Glencore's "extraordinary" results as the business looks set to continue to shine in the near to medium term.
The analyst also highlighted Glencore's leverage to copper, nickel, cobalt, and zinc prices was a positive and it is uniquely positioned to benefit from fossil fuel price strength now and global decarbonisation in the long term.
"Marketing has also been stellar and should continue to exceed the top end of the EBIT guidance range (partly on market share gains); we believe the through-cycle Marketing EBIT guidance of USD2.2 billion to USD3.2bn is too low. We think larger capital returns are coming (thanks to coal), even in a weaker economy," LaFemina added.
The stock closed up 3.1% at 459.85 pence on Thursday in London. Glencore's Johannesburg shares closed 2.1% higher at ZAR92.90.
By Arvind Bhunjun; [email protected]
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