Glencore to return $7.1B to shareholders after surge in annual profit

By Scott Kanowsky

Investing.com -- Glencore PLC (LON:GLEN) has unveiled a plan to return $7.1 billion to shareholders after the mining giant posted bumper full-year earnings thanks in large part to a spike in energy prices in 2022.

The Swiss miner and trading house was boosted heavily by what it called a "generally high and volatile" year in commodity price movements. Costs for items like raw materials and metals soared during the 12-month period, partly due to the outbreak of the war in Ukraine and supply chain constraints stemming from strict COVID-19 rules in China.

Russia's invasion of Ukraine generated one the largest dislocations in global energy markets in recent history, Glencore said, leading in particular to a jump in coal prices. Glencore is one of the world's most profitable coal miners, despite announcing in December that it would close many of its operations extracting the dirty fuel to meet emissions targets.

The trends were enough to send preliminary annual adjusted core earnings up to $34.1B, a 60% rise compared to the prior year. Net income pre-significant items also more than doubled to $18.9B.

The elevated coal prices brought results at the company's industrial division to a record $27.3B, while Glencore's trading unit reported adjusted core profit of $6.4B, an all-time high as well.

With year-end net debt hovering at just $100M, the group said it would recommend a $5.1B base distribution to shareholders, along with a $500 million cash distribution and $1.5B of further buybacks for 2023.

In a statement, chief executive officer Gary Nagle added that Glencore has a "solid foundation" to begin its current fiscal year, but flagged lingering "shorter-term challenges."

"High inflation rates and associated tighter monetary conditions present some risk to the economic outlook in 2023. China’s reopening, however, together with a continued global focus on energy security and decarbonisation/electrification, mean that demand for many of our commodities is likely to remain healthy, while supply constraints persist and inventories remain relatively low," Nagle said.

London-listed shares in Glencore slipped in early European trading on Wednesday.