Glencore PLC on Thursday reported a significantly improved profit for the first half of the year and said that it will pay $4.5 billion in “top-up” shareholder returns.
The multinational commodity mining and trading group made a net profit of $12.09 billion for the six months ended June 30, up from $1.28 billion a year earlier, mainly reflecting the performance of its coal business.
Adjusted earnings before interest, taxes, depreciation and amortization more than doubled to $18.92 billion, beating the market consensus of $18.76 billion–provided by Visible Alpha and averaged from eight brokers.
“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,” Chief Executive Gary Nagle said.
The mining division generated adjusted Ebitda of $15.03 billion, mainly reflecting higher coal prices and the acquisition of an additional stake in the Cerrejon coal mine in Colombia in January.
However, the company said the operational performance of some of its mining assets was disappointing due to weather, geological and logistics challenges and the coronavirus affecting staffing. “We are confident, however, in being able to deliver an overall improved production performance in the second half,” Glencore said.
The trading division more than doubled its adjusted EBIT to $3.7 billion amid extreme market dislocations and price movements, and Glencore expects more normal conditions for this business in the second half.
The company said net working capital increased significantly in the first half, with its trading business accounting for around $5 billion of net working capital investment. Still, Glencore said it was able to generate significant cash in the period, reducing net debt to $2.31 billion as at June 30.
This debt reduction allowed the group to declare “top-up” shareholder returns of $4.5 billion. This includes a special distribution of $1.45 billion, or $0.11 a share, and a new share buyback of $3.0 billion, or $0.23 a share. This lifts total 2022 shareholder returns to around $8.5 billion, it said.
Looking ahead, Glencore said energy prices are set to remain high in the second half, while the outlook for metals is more complex.
Write to Jaime Llinares Taboada at email@example.com; @JaimeLlinaresT