Glencore, the largest natural resources company in the world, yesterday reported a record surge in annual profit, boosted by its coal and trading divisions, as it declared a $7 billion (R121bn) dividend to its shareholders.
In its preliminary results for 2022, released yesterday, the group posted an adjusted Ebitda of $6.4bn, a 73% increase from 2021. Glencore’s core profit increased by 60% to $34.1bn and $17.9bn from that amount was reported from coal production.
The mining giant said it increased coal output from its own mining activities by 7% to 110 million tonnes.
This was a major contributing factor to the 59% increase in adjusted Earnings Before Interest, Taxes, Depreciation, and Amortisation (Ebitda) of $27.3 billion (R470bn) from its industrial operations. Earnings from coal mining accounted for about two-thirds of total earnings.
Its coal guidance for 2023 is at the same level as 2022, at about 110 million tonnes, with a possible positive or negative variance of 5 million tonnes.
The miner produced 1.058 million tonnes of copper in 2022, a 12% decrease from the previous year.
The miner's South African thermal production of 16.4 million tonnes was an 18% decrease from 2021, due to the disposal of the Middelburg mine and the wet weather challenges that affected the mine.
Glencore said it would return more than $7bn to shareholders in dividends and buybacks.
“The dividend comprises of a $5.1bn base cash distribution, an additional $0.5bn ‘top-up’ cash distribution, and a new $1.5bn buyback programme,” the group said.
Glencore CEO Gary Nagle said: “The global pandemic, recovery from it, and years of underinvestment, followed by conflict in Europe, exposed pre-existing vulnerabilities in energy security and supply chains, underpinning the generally high and volatile 2022 commodity price environment, which enabled the group to generate record profitability for the year.”
According to Nagle, the unprecedented developments in global energy markets were material drivers for both its marketing and industrial businesses, lifting the group's adjusted Ebitda to $34.1bn, up $12.8bn over the period.
“Marketing posted another record performance, with adjusted Ebit of $6.4bn, up 73% year on year, driven primarily by our energy departments successfully navigating the extreme market imbalances, volatility, and dislocations across crude oil, LNG, refined products, coal, and logistics infrastructure,” he said.
Nagle said the Industrial Ebitda increased by $10.2bn to $27.3bn, benefiting primarily from record prices for the key coal benchmarks, amplified by the incremental contribution from the two-thirds of Cerrejón, acquired in January 2022, that Glencore did not previously own.
“The strength of our diversified business model across industrial and marketing, focusing on metals and energy, has proved itself adept in a range of market conditions, giving us a solid foundation to successfully navigate shorter-term challenges that may arise, as well as meet the resource needs of the future,” he said.
Looking ahead, Nagle said high inflation rates and associated tighter monetary conditions presented 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,” he said.
BUSINESS REPORT