Glencore shares gained 1.6% to 453.4p in late morning trading on Thursday following a 43% revenue growth to $134.4 billion in HY1 2022 against $93.8 billion in HY1 2021.
The mining giant reported an adjusted EBITDA surge of 119% to $18.9 billion from $8.6 billion linked to record pricing across coal, gas and physical premia.
“Global macroeconomic and geopolitical events during the half created extraordinary energy market dislocation, volatility, risk, and supply disruption, resulting in record pricing for many coal and gas benchmarks and physical premia, underpinning a $10.3 billion increase (119%) in Group Adjusted EBITDA to $18.9 billion,” said Glencore CEO Gary Nagle.
Meanwhile, Glencore confirmed an 846% spike in income attributable to equity holders to $12 billion compared to $1.2 billion the year before.
The company announced a basic EPS rise of 820% to 92c from 10c in the previous year.
Glencore further mentioned a 62% reduction in net debt to $2.3 billion against $6 billion year-on-year.
The commodities firm also highlighted shareholder returns of $4.5 billion, consisting of an 11c per share special distribution and a $3 billion share buyback, amounting to $8.5 billion in total shareholder returns in FY 2022.
“Allied to the record EBITDA, our net working capital significantly increased during the period, with some $5 billion invested into Marketing, primarily Energy, in line with the materially higher oil, gas and coal prices, and their elevated volatilities,” said Nagle.
“Despite this build, significant cash was generated, which reduced Net debt to $2.3 billion, allowing for today’s announcement of $4.5 billion of “top-up” shareholder returns, comprising a $1.45 billion special distribution ($0.11 per share) alongside a new $3.0 billion buyback program ($0.23 per share).”
“Today’s additional returns lift total 2022 shareholder returns to $8.5 billion.”
FY 2022 guidance
Glencore reported a strong outlook for LNG and coal prices as a result of the volatile macroeconomic environment.
However, the firm said its outlook for metals held less clarity, with labour, water and energy shortages, alongside supply chain problems and rising costs, and the prospect of a weak Chinese economic recovery.
“Looking ahead, tightening financial conditions and a deteriorating macroeconomic environment present some uncertainty for commodity markets through the second half of the year,” said Nagle.
“However, with few short-term solutions to rebalance global energy markets, coal and LNG 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.”
“For metals, the outlook is more complex, balancing supply risks, amid labour, water and energy shortages, supply chain disruptions, growing sovereign risk uncertainty and rising costs, against likely weakening end-use markets ex-China. There are some recent signs of China recovering from its Q2 trough, which could help to offset potentially weaker conditions in other key consuming markets.”