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Glencore PLC 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 $16.01 billion from $2.01 billion in the prior year.
The Baar, Switzerland-based commodity trader and miner said revenue rose by 43% to $134.44 billion from $93.81 billion.
The energy products were significant drivers for both the marketing and industrial businesses, lifting adjusted earnings before interest, taxes, depreciation and amortisation to $18.9 billion from $8.7 billion.
Glencore said it will ‘top-up’ shareholder returns of $4.5 billion, comprising a $1.45 billion special distribution, or $0.11 a share, and a $3.0 billion share buyback.
Total shareholder returns for 2022 amount to $8.5 billion, including the $3.4 billion base distribution and $0.6 billion buyback announced in February.
For the first half, basic earnings per share multiplied to $0.92 from $0.10.
Despite the working capital build, significant cash was generated during the first half, helping reduce net funding and net debt to $28.0 billion and $2.3 billion respectively, from $30.8 billion and $6.0 billion previously.
The group said Marketing posted a record performance, with adjusted earnings before interest and tax more than doubling to $3.7 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 $8.4 billion to $15.0 billion, benefitting primarily from record coal prices.
Operational performance at some industrial assets was disappointing, primarily related to weather, geological and logistics challenges, as well as continuing Covid-19 impacts, particularly in relation to increased absenteeism.
Looking ahead, tightening financial conditions and a deteriorating macroeconomic environment presented some uncertainty for commodity markets through the second half of the year, Glencore Chief Executive Gary Nagle warned.
‘However, with few short-term solutions to rebalance global energy markets, coal and gas prices look set to remain elevated during this period, particularly given the current challenge of securing sufficient and reliable energy supply for the Northern hemisphere winter ahead,’ Nagle said.
For metals, he said, the outlook was more ‘complex’, as the miner looks to balance supply risks amid labour, water and energy shortages, supply chain disruptions, growing sovereign risk uncertainty and rising costs, against likely weakening end-use markets, excluding China.
He added: ‘There are some recent signs of China recovering from its second quarter trough, which could help to offset potentially weaker conditions in other key consuming markets.’
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