Glencore shares were slightly weaker on Wednesday morning despite reporting a 60% increase in adjusted EBITDA for 2022, and an additional $1.5bn share buyback programme.
Glencore shares were off by 1.8% at the time of writing on Wednesday.
Unlike the other FTSE 100 diversified miners, Glencore operates a significant energy business and enjoyed the benefits of the elevated prices across hydrocarbons and coal last year.
Glencore’s decision to shrug of the pressure to become more environmentally friendly and push on with their coal business has provided a much needed source of revenue and earnings growth.
Indeed, it was the energy segment of Glencore’s business driving earnings growth in 2022. Their Industrial Assets unit saw EBITDA grow 59% to $27.3bn with energy products including coal adding $13bn to earnings.
Metals earnings were weaker across the board due to the impact of Covid-19 restrictions in China curtailing demand and trading activity.
“The top line may have missed market expectations, but Glencore’s taking full advantage of a messy energy market to line its coffers and there’s good news for shareholders as they get to share in the spoils, with a topped-up dividend and fresh $1.5bn buyback,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
“Glencore’s marketing business is perfectly poised for a scenario like this, fragmented energy markets due to the war in Ukraine meant there’s been an abundance of price discrepancies across multiple world markets – that’s exactly the scenario that makes this business unit tick.”
Glencore will distribute a total of $7.1bn to shareholders for 2022. This includes already announced distributions and a fresh $1.5bn buyback.