(Alliance News) - Glencore PLC said on Tuesday its interim profit tumbled due to underperforming Marketing and Industrial businesses, but the diversified miner declared a special dividend and announced another share buyback.
In August 2022, the group launched a USD3.0 billion buyback programme.
For the first six months of 2023, the Barr, Switzerland-based miner and commodity trader saw its net income attributable to equity holders plunge by 62% to USD4.57 billion from USD12.09 billion a year earlier.
Revenue for this period dropped 20 to USD107.42 billion from USD134.44 billion, hurting profitability. Adjusted earnings before interest, tax, depreciation and amortisation halved to USD9.39 billion from USD18.91 billion, reflecting the normalisation of primarily energy market imbalances and volatility from the extreme levels seen in 2022.
Adjusted Ebitda in Marketing activities nearly halve to USD1.98 billion. In Industrial activities, adjusted Ebitda declined by 51% to USD7.41 billion, driven by a USD4.4 billion lower contribution from its Coal operations.
Earnings per share plummeted 61% to USD0.36 from USD0.92.
Despite sharply lower earnings, Glencore declared a special dividend of USD0.08 and announced a new USD1.2 billion buyback programme intended to run until the release of full year results in February 2024.
The "top-up" special distribution of USD0.08 will be paid alongside the second tranche of the 2022 distribution, lifting the total payment to USD0.30 on September 22.
As at June 30, net debt surged to USD1.54 billion from USD75 million as at December 31 due to "top-up" shareholder payments.
Glencore expects Bunge's merger with its 50%-held Viterra to close in mid-2024.
In June, Glencore agreed to dispose of its interest in Viterra in a cash and shares transaction with Bunge. For its 50% stake, Glencore will receive USD1.0 billion in cash and USD3.1 billion in Bunge.
The company said 2022 was characterised by extreme global geopolitical and economic turbulence, generating extraordinary energy market dislocation, volatility, supply disruption and record prices for many coal and gas benchmarks. But 2023 has seen energy trade flows rebalance and normalise, with coal, oil and gas prices materially declining over the first half, it added.
In addition to the significant weakening in energy markets, the recent overall cycle of inflation, tighter monetary conditions and limited global economic growth, contributed to average period-over-period price reductions in copper, cobalt, nickel and zinc.
Gencore said moderating inflation and supportive government policy in China across key end-user sectors are bringing a more positive macroeconomic backdrop in second half of 2023.
Low metal inventories, higher production costs, geopolitical uncertainty and energy transition demand are all supportive of above-average real-term prices through the cycle and into the longer term, it said.
Last month, Glencore maintained its annual production guidance unchanged.
Copper production is guided to drop to 1.04 million tonnes in 2023 from 1.05 million tonnes in 2022.
Coal output is expected to remain flat at 110 million tonnes.
On cobalt, production is estimated at 30,000 tonnes from 43,800 tonnes, and zinc is projected at 950,00 tonnes, compared to 939,000 tonnes.
Nickel production is expected to increase to 112,000 tonnes from 108,000 tonnes, but ferrochrome is forecast at 1.31 million tonnes from 1.48 million tonnes.
In its Marketing segment, Glencore continues to expect a full-year adjusted earnings before interest and tax to be above the top end of its USD2.2 billion and USD3.2 billion per annum long-term guidance range, likely in the USD3.5 billion to ZAR4.0 billion range.
Glencore shares fell 2.6% to 444.85 pence per share on Tuesday morning in London.
By Artwell Dlamini, Alliance News reporter
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