Glencore PLC on Wednesday reported a hefty fall in profit, and cut its dividend, as markets ‘normalised’, and commodity prices fell.
The Barr, Switzerland-based diversified mining group said net income in 2023 plunged 75% to $4.28 billion from $17.32 billion the year before, while adjusted earnings before interest, tax, depreciation and amortisation halved to $17.10 billion from $34.06 billion.
Earnings per share declined by 74% to $0.34 from $1.33.
Glencore said this primarily reflected the rebalancing and normalisation of international energy trade flows, with coal and liquid natural gas, and to a lesser extent, oil prices materially declining.
Revenue slipped 15% to $217.83 billion from $255.98 billion in 2022.
Glencore reduced the dividend to $0.13 per share after paying out $0.56 per share in 2022, as it reported a rise in debt to $4.92 billion from $75 million in 2022.
There was no share buyback.
Chief Executive Officer, Gary Nagle said the dividend needed to be put in the context of the $6.93 billion acquisition of Teck Resources Ltd.
This deal is expected to close ‘no later’ than the third quarter of 2024.
Glencore said Industrial Assets adjusted Ebitda fell 52% to $13.2 billion, primarily reflecting lower coal earnings with the significant reduction in energy prices in 2023.
Metals adjusted Ebitda slid 41% to $5.4 billion, reflecting lower realised cobalt, nickel and zinc prices, and reduced volumes, while earnings in the energy business collapsed by 55% to $8.5 billion, mainly due to significantly lower coal prices.
Glencore said although the current macroeconomic environment remains ‘challenging’, global economic growth is forecast to bottom out in 2024.
‘Expected interest rate cuts and corresponding restocking along the supply chain are likely to bring an improvement in demand conditions in Western markets later in the year’ the company added.
Glencore pointed out that supply constraints and energy transition demand prevented large inventory increases in most commodities during this cyclical trough, ‘leaving markets well-positioned for a strong recovery as demand conditions improve’.
Shares in Glencore fell 5.5% to 368.95 pence in London on Wednesday. In Johannesburg, shares were down 4.8% to R 88.87.
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